1366367--3/5/2010--YADKIN_VALLEY_FINANCIAL

related topics

{condition, economic, financial}

{loan, real, estate}

{acquisition, growth, future}

{stock, price, share}

{regulation, change, law}

{capital, credit, financial}

{financial, litigation, operation}

{personnel, key, retain}

{competitive, industry, competition}

{tax, income, asset}

{loss, insurance, financial}

{cost, contract, operation}

{cost, operation, labor}

{system, service, information}

{investment, property, distribution}

We could continue to sustain losses from a further decline in credit quality. Continued changes in local economic conditions have and could continue to lead to higher loan charge-offs and reduce our net income and growth. We are exposed to higher credit risk by commercial real estate, commercial business, and construction lending. Weakness in the markets for residential or commercial real estate, including the secondary residential mortgage loan markets, could reduce our net income and profitability. Continuation of the economic downturn could reduce our customer base, our level of deposits, and demand for financial products such as loans. If we do not perform well, we may be required to recognize additional impairment of our goodwill or to establish a valuation allowance against the deferred income tax asset, which could have a material adverse effect on our results of operations and financial condition. There can be no assurance that recently enacted legislation will help stabilize the U.S. financial system. Yadkin may identify material weaknesses in its internal control over financial reporting that may adversely affect Yadkin s ability to properly account for non-routine transactions. Because of our participation in the CPP, we are subject to several restrictions including restrictions on compensation paid to our executives. Our small- to medium-sized business target markets may have fewer financial resources to weather a downturn in the economy. We are exposed to changes in the regulation of financial services companies. The FDIC Deposit Insurance assessments that we are required to pay may materially increase in the future, which would have an adverse effect on our earnings and our ability to pay our liabilities as they come due. Our continued pace of growth may require us to raise additional capital in the future, but that capital may not be available when it is needed. We depend heavily on out of market deposits as a source of funding. Liquidity needs could adversely affect our financial condition and results of operations. We are exposed to the possibility of technology failure. The capital and credit markets have experienced unprecedented levels of volatility. Significant risks accompany our recent and continued expansion. Our business strategy includes the continuation of significant growth plans, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. The success of our growth strategy depends on our ability to identify and retain individuals with experience and relationships in the markets in which we intend to expand. New or acquired banking office facilities and other facilities may not be profitable. We depend on key individuals, and the unexpected loss of one or more of these key individuals could curtail our growth and adversely affect our prospects. We depend on the accuracy and completeness of information about clients and counterparties and our financial condition could be adversely affected if we rely on misleading information. Interest rate volatility could significantly harm our business. We are exposed to the possibility that more prepayments may be made by customers to pay down loan balances, which could reduce our interest income and profitability. We are subject to extensive regulation that could limit or restrict our activities. We face strong competition in our market area, which may limit our asset growth and profitability. Negative public opinion surrounding our company and the financial institutions industry generally could damage our reputation and adversely impact our earnings. We have implemented anti-takeover strategies that could make it more difficult for another company to purchase us, even though such a purchase may increase shareholder value. Changes in banking laws could have a material adverse effect on us. Our trading volume has been low compared with larger banks and bank holding companies and the sale of substantial amounts of our common stock in the public market could depress the price of our common stock. We may be adversely affected by the soundness of other financial institutions. Legislation or regulatory changes could cause us to seek to repurchase the preferred stock and warrants that we sold to the Treasury pursuant to the Capital Purchase Program.

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1366367--3/5/2010--YADKIN_VALLEY_FINANCIAL_CORP