<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT PURSUANT TO SECTION 12 (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002



                         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 12 (g) 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
     --

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

     Common Stock                                     182,212
     ------------                           -----------------------------
        Class                               Outstanding at March 31, 2002

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        March 31, 2002     December 31, 2001
                                                                        --------------     -----------------
                                                                          (UNAUDITED)
<S>                                                                     <C>                <C>
                     ASSETS
                     ------

Cash                                                                    $       34,830                83,442

Investments in equity securities (cost of $2,276,744
   at March 31, 2002 and December 31, 2001)                                 14,039,748            12,720,054
Certificates of deposit                                                        475,993               474,050
Accrued investment income                                                        1,164                 1,027
Other assets                                                                       100                   100
                                                                        --------------     -----------------
         Total assets                                                   $   14,551,835            13,278,673
                                                                        ==============     =================

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

Liabilities:
   Life policy claims reserves                                                   8,108                 8,228
   Deferred income taxes                                                     4,567,832             4,041,174
   Notes payable                                                               899,205               899,205
   Accrued interest payable                                                      2,031                 2,480
                                                                        --------------     -----------------
         Total liabilities                                                   5,477,175             4,951,087
                                                                        --------------     -----------------

Shareholders' equity:
   Common stock, par value $1 per share; authorized 500,000
     shares, issued andoutstanding 182,212 shares in 2002
     and 182,327 in 2001                                                       182,212               182,327
   Retained earnings                                                         1,742,379             1,771,747
   Accumulated other comprehensive income                                    7,150,069             6,373,512
                                                                        --------------     -----------------
         Total shareholders' equity                                          9,074,660             8,327,586
                                                                        --------------     -----------------
         Total liabilities and shareholders' equity                     $   14,551,835            13,278,673
                                                                        ==============     =================
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)


<TABLE>
<CAPTION>
                                                       For the three      For the three
                                                        months ended       Months ended
                                                       March 31, 2002     March 31, 2001
                                                       --------------     --------------
                                                         UNAUDITED          UNAUDITED
<S>                                                    <C>                <C>
Premiums and other revenue:
    Life premium                                       $       48,168     $       52,304
    Dividend income                                            13,936             13,936
    Interest income                                             2,192              6,454
                                                       --------------     --------------
                                                               64,296             72,694
                                                       --------------     --------------

Benefits and expenses:
    Death benefits                                             29,653              5,137
    Decrease in life policy claims reserve                       (120)                 -
Operating expenses:
    Commissions                                                21,682             24,554
    Interest                                                    6,556             14,002
    Professional fees                                          16,188             17,176
    Management fees                                             8,252              8,263
    General, administrative and other                          25,747             20,253
                                                       --------------     --------------
                                                              107,958             89,385
                                                       --------------     --------------

       Loss before income taxes                               (43,662)           (16,691)

Income tax benefit                                            (16,479)            (2,085)
                                                       --------------     --------------

       Net loss                                        $      (27,183)           (14,606)
                                                       ==============     ==============
Net loss per share                                     $         0.15               0.08
                                                       ==============     ==============
Weighted average shares outstanding                           182,270            183,055
                                                       ==============     ==============
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                 FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2002

<TABLE>
<CAPTION>
                                                                                    Accumulated
                                                                                       other             Total
                                                       Common         Retained     comprehensive     shareholders'
                                                        stock         earnings        income             equity
                                                     -----------   -------------   -------------    ---------------
<S>                                                  <C>           <C>             <C>              <C>
Balance at December 31, 2001                         $  182,327       1,771,747       6,373,512          8,327,586

Comprehensive income:
    Net loss                                                  -         (27,183)              -            (27,183)
    Net unrealized gains on securities available
        for sale, net of income taxes of $543,137             -               -         776,557            776,557
                                                                                                    ---------------
                Comprehensive income                                                                       749,374

Redemption of 115 shares of common stock                   (115)         (2,185)              -             (2,300)
                                                     -----------   -------------   -------------    ---------------
Balance at March 31, 2002                            $  182,212       1,742,379       7,150,069          9,074,660
                                                     ===========   =============   =============    ===============
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                       2002              2001
                                                                                    -----------      -----------
                                                                                    UNAUDITED         UNAUDITED
<S>                                                                                 <C>              <C>
Operating activities :
    Net loss                                                                           (27,183)         (14,606)

     Adjustments to reconcile net loss to net
        Cash used by operating activities:
              Deferred tax benefit                                                     (16,479)          (5,675)
              Decrease in other assets                                                       -           17,811
              Decrease in reserve  for life policy claims                                 (120)               -
              Decrease in federal and state income taxes recoverable                         -            3,590
              Increase in accrued investment income                                       (137)          (2,423)
              Decrease in accrued interest payable                                        (449)          (1,597)
                                                                                    -----------      -----------
                    Net cash used by operating activities                              (44,369)          (2,900)
                                                                                    -----------      -----------

Investing activities :
     Purchases of certificates of deposit                                             (375,993)        (450,365)
     Maturities of certificates of deposit                                             374,050          453,000
                                                                                    -----------      -----------
               Net cash provided (used) by investing activities                         (1,943)           2,635
                                                                                    -----------      -----------

Financing activities :
     Proceeds from issuance of notes payable                                               -             30,000
     Purchases and retirement of common stock                                           (2,300)         (16,400)
                                                                                    -----------      -----------
               Net cash provided (used) by financing activities                         (2,300)          13,600
                                                                                    -----------      -----------

                    Net increase (decrease) in cash                                    (48,612)          13,335

Cash at beginning of reporting period                                                   83,442           57,611
                                                                                    -----------      -----------
Cash at end of reporting period                                                     $   34,830           70,946
                                                                                    ===========      ===========

Cash payments for :
     Interest                                                                       $    7,005           15,599
                                                                                    ===========      ===========
     Income taxes                                                                            -                -
                                                                                    ===========      ===========

Non-cash investing and financing activities:
     Increase (decrease) in unrealized gain on marketable equity
        Securities, net of applicable income taxes of $543,137 and
        $631,581                                                                    $  776,557          990,297
                                                                                    ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1:  Basis of Presentation

The accompanying 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 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 consolidated
financial statements, included in the Company's Form 10-KSB, should be
referenced when reading these unaudited 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, 2002.

For the three months ended March 31, 2002 and 2001, total comprehensive income
(loss) consisting of net income (loss) and unrealized gains (losses) on
securities available for sale, net of taxes, was $749,374 and $975,691,
respectively.

Note 2:  Related Parties

Certain significant shareholders of the Company are also significant
shareholders of First Citizens BancShares, Inc. ("FCB"), First Citizens
Bancorporation of South Carolina, 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 March 31, 2002 and December 31, 2001, the Company had $375,993 and $360,362,
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 $8,252 for the three months ending March 31, 2002 and $8,263 for the
corresponding period in 2001.

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 three months ended March 31, 2002
and the corresponding period in 2001 is as follows:

                                                  2002       2001
                                                --------   --------

         Premiums assumed                       $ 48,168    53,204
         Death benefits assumed                   29,533     5,137
         Life policy claim reserves assumed        8,108     8,712
         Commissions assumed                      21,682    24,554

<PAGE>

An executive officer and director of the Company is also a director of Heritage.
As a part of reinsurance commissions assumed, the Company paid approximately
$3,151 in commissions to Heritage for the three months ended March 31, 2002 and
$3,533 for the corresponding period in 2001.


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


         RESULTS OF OPERATIONS. The Company realized an increase in consolidated
loss before income taxes of $26,971 during the period reported compared to the
corresponding period in 2001. The increase was primarily due to a $24,516
increase in death claims paid. Consolidated net loss during the period was
$27,183 compared to consolidated net loss of $14,606 during the corresponding
period of 2001.

         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 $4,136 (7.9%) from the corresponding period in 2001 and
management expects the decline may continue for the remainder of the year. 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 $24,396
(575.0%) from the corresponding period in 2001. The increase 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 significant increase is not indicative of a trend nor is expected
to continue during the remainder of the year. 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 2002 versus 2001 is directly correlated to the decline in assumed
premium written. Operating expenses, excluding commissions, increased by $2,951
(4.9%) for the period reported from the corresponding period of 2001, primarily
due to a decrease in loan interest of $7,446 (53.2%) and a decrease in
professional fees of $988, which increases were offset by a $5,494 (27.1%)
increase in general, administrative and other expenses.

         During 2002, 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 $1,319,694 (10.40%) from December 31, 2001. The increase
in fair values of the Company's investments as of March 31, 2002 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 2.66 at March 31, 2002 and 2.68
at December 31, 2001, which ratio continues to remain constant. Investments in
equity securities had a carrying value at March 31, 2002 and December 31, 2001
of $14,039,748 and $12,720,054 respectively.

<PAGE>

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 issuances, 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 that sales of these investments would not appear necessary for
the foreseeable future.

         FINANCIAL CONDITION. The increase in total assets from December 31,
2001 was primarily due to an increase in unrealized gains on marketable equity
securities. There were no other material changes in assets during 2002.

         During 2002, total liabilities increased from $4,951,087 at December
31, 2001 to $5,477,175 at March 31, 2002. The increase in deferred federal
income taxes on the unrealized gains on investments was $526,657 while total
liabilities increased $526,088.

         CAPITAL RESOURCES. There are no material commitments for capital
expenditures and none are anticipated. At March 31, 2002, Registrant had
outstanding borrowings, which is with an unrelated bank, of $899,205 secured by
18,139 shares of First Citizens BancShares, Inc. of North Carolina Class A
Common Stock, which have a carrying value of $1,867,591; and 1,725 shares of
First Citizens BancShares, Inc. of North Carolina Class B Common Stock, which
have a carrying value of $159,845; and 10,000 voting common shares of First
Citizens Bancorporation of South Carolina, Inc, which have a carrying value of
$3,200,000. 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.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         There are no material pending legal proceedings involving the company.

Item 2.  Changes in Securities and Use of Proceeds

         None.

Item 3.  Default Upon Senior Securities

         Not Applicable

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

<PAGE>

         Not Applicable

Item 5.  Other Information

         Not Applicable

Item 6.  Exhibits and Reports on Form 8-K

         Not Applicable

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            YADKIN VALLEY COMPANY

Date:  May 10, 2002                         By: /s/ David S. Perry
                                                --------------------------

                                            David S. Perry, President and
                                            Principal Financial Officer