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Correspondence Letter

 YADKIN VALLEY COMPANY

 Post Office Box 18747

 Raleigh, North Carolina 27619

 919-716-2266

 November 7, 2005

 Mr. Mark
Brunhofert

 Staff Accountant

 Division of Corporation Finance

 Securities and Exchange Commission

 Washington, D.C. 20549

RE:
Yadkin Valley Company

File No. 0-28356

Our File 810534-00030

 Dear Mr. Brunhofer:

 Pursuant to the
Staff’s comment letter dated August 24, 2005, and our subsequent telephone conversations with the Staff regarding Yadkin Valley Company’s filings, attached for your review as exhibits to this letter are preliminary
drafts of the following documents proposed to be filed by the company:

(1)
Exhibit A - a Form 10-KSB/A for the year ended December 31, 2004;

(2)
Exhibit B - a Form 10-QSB/A for the quarter ended March 31, 2005; and

(3)
Exhibit C - a Form 10-QSB/A for the quarter ended June 30, 2005.

 I hope you will find that the proposed filings address each of the Staff’s comments in a satisfactory manner.

 Following your review, you may contact me directly by
telephone at (919) 716-2266, or by facsimile at (919) 716-7031.

 Thank you for your cooperation in reviewing the enclosures.

Sincerely,

 /S/ David S. Perry

David S. Perry

President

 EXHIBIT A

 U.S. SECURITIES AND EXCHANGE COMMISSION

 Washington, DC 20549

 DRAFT

 FORM 10-KSB/A

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

 OF THE SECURITIES EXCHANGE ACT OF 1934

 For the Fiscal Year Ended December 31,
2004.                                    Commission File
No. 1-14081

 YADKIN VALLEY COMPANY

 (Name of small business issurer 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

27602

(Address of Principal Executive Offices)

(Zip Code)

 (919) 716-2266

 (Registrant’s Telephone Number including area code)

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

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

                 (Title of Class)

 Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes      X            No

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

 Registrant’s revenue for its most recent fiscal year was: $237,248.

 On March 8, 2005, the aggregate market value of the voting and non-voting common equity held by nonaffiliates (computed by reference to the price at
which the common equity was sold, or the average bid and asked price of such common equity) was $3,481,657.

 On December 31, 2004, the number of outstanding shares of Registrant’s common stock was 180,700.

 Documents Incorporated by Reference

 Portions of Registrant’s Annual Report to Shareholders for the year ended
December 31, 2004 are incorporated herein in Part II.

 Portions of Registrant’s definitive Proxy Statement dated March 25, 2005, are incorporated herein in Part III.

 Explanatory Note

 This Amendment to the Annual Report on Form 10-KSB/A for the year ended December 31, 2004 is being filed in response to comments
received from the Securities and Exchange Commission in connection with its review of the Registrant’s filed reports. Among other revisions, this amendment changes the values at which certain investment securities are recorded in the
Registrant’s consolidated financial statements. Those investment securities consist of equity securities which do not have readily determinable fair values and previously were carried at the lower of the cost or fair value. The change is to
carry those securities at their fair value as required by U.S. generally accepted accounting principles. The impact of the change is to increase the values at which the investment securities are reflected in the consolidated financial statements,
and to increase total assets, deferred income taxes and accumulated other comprehensive income. The change does not have an impact on previously reported earnings. Additionally, this report is amended to remove the “Unaudited” designation
from Note 5 and provide additional detail about the Company’s life reserve methodology. See Note 2 to the Company’s consolidated financial statements for additional discussion.

 1

 PART I

 Item 1. Description of Business.

 Yadkin Valley Company (the “Registrant”) was incorporated under the laws of North Carolina during 1979. Its primary activity is the ownership of
all the outstanding capital stock, and serving as the parent holding company, of Yadkin Valley Life Insurance Company (“Yadkin Valley Life”) which is incorporated under the laws of Arizona and is engaged in the business of reinsuring
credit life insurance policies.

 Yadkin Valley Life’s
reinsurance activities currently are limited to assuming risks associated with credit life insurance policies (“credit life policies”), up to a maximum risk of $25,000 on any one insured, issued only by Triangle Life Insurance Company,
Raleigh, North Carolina (“Triangle Life”), and sold only in North Carolina by Southern Bank and Trust Company, Mount Olive, North Carolina (“Southern”), The Fidelity Bank, Fuquay-Varina, North Carolina (“Fidelity”) and
The Heritage Bank, Lucama, North Carolina (“Heritage”). Triangle Life is a wholly owned subsidiary of First-Citizens Bank & Trust Company, Raleigh, North Carolina (“FCB”). Registrant is affiliated with Southern,
Fidelity, Heritage and FCB through certain common control relationships. See “Item 12. Certain Relationships and Related Transactions.” In consideration of its assumption of risk, Yadkin Valley Life receives a portion of the premium income
on policies it reinsures, less the amount of claims paid.

 Southern, Fidelity and Heritage sell credit life policies pursuant to insurance contracts between them and Triangle Life and pursuant to which they each receive commissions from Triangle Life on policies sold. These policies provide life
insurance coverage, subject to the amount, age and other limitations specified in the insurance contracts. The policies are written on the lives of customers of Southern, Fidelity and Heritage in connection with various extensions of credit to those
customers, including consumer and commercial loans (installment and term), overdraft and equity lines of credit, and credit card accounts. Yadkin Valley Life, pursuant to a Reinsurance Agreement between it and Triangle Life, reinsures certain of
these policies. The Reinsurance Agreement provides that Triangle Life will automatically cede to Yadkin Valley Life, and Yadkin Valley Life will accept from Triangle Life, 100% of the rights, obligations, liabilities and risks on credit life
policies up to a maximum of $25,000 of insurance in force on any one life. At December 31, 2004 and December 31, 2003, respectively, there were 1,862 and 2,573 policies in force which were reinsured by Yadkin Valley Life.

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

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

 2

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

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

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

At 12/31/ 04

At 12/31/03

Amount

%

Amount

%

 BancShares

$
3,071,647

12.7
%

$
2,502,623

10.7
%

 Bancorporation

20,592,206

85.0

20,396,091

87.1

 Heritage BancShares, Inc

555,075

2.3

518,069

2.2

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

 Item 2. Description of Property.

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

 Item 3. Legal Proceedings

 At December 31, 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.

 3

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

 Not applicable.

 PART II

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

 Market and other information regarding Registrant’s
outstanding common stock are incorporated herein by reference to page 6 (under the Caption “Market for Common Equity and Related Stockholders Matters”) of Registrant’s 2004 Annual Report to Shareholders.

 Registrant did not sell any equity securities during 2004 and, during the
fourth quarter of 2004, it did not repurchase any of its outstanding equity securities.

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

 Management’s Discussion and Analysis of Financial Condition and Results of Operation are incorporated herein by reference to pages 4 through 6 of Registrant’s 2004 Annual Report to Shareholders.

 Item 7. Financial Statements.

 Registrant’s audited financial statements are incorporated herein by
reference to pages 8 through 25 of Registrant’s 2004 Annual Report to Shareholders.

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

 Not applicable.

 Item 8(A). Controls and Procedures

 Registrant’s original Annual Report on Form 10-KSB for the year ended December 31, 2004 (the “Original Report”) indicated that Registrant’s Chief Executive Officer, who also serves as
Registrant’s Chief Financial Officer, had concluded that, as of the end of the period covered by the Original Report, Registrant’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), 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.

 Subsequently, on August 24, 2005,
Registrant received notification by the Division of Corporation Finance of the Securities and Exchange Commission (“SEC”) of comments and questions regarding Registrant’s method of determining the values of certain non-marketable
equity securities as reported in its consolidated financial statements. Following discussions between Registrant’s management, Registrant’s current and former independent public accountants, and the SEC staff, Registrant determined that
its method of valuing those non-marketable equity securities was not consistent with accounting principles generally accepted in the United States.

 4

 As a result, on September 8, 2005, Registrant’s Board of Directors concluded that
Registrant’s previously issued consolidated financial statements for the fiscal years ended December 31, 2004 and 2003, and the quarterly periods ended March 31, 2005 and June 30, 2005, should be restated and no longer should be
relied upon.

 In connection with the restatement and
preparation of this Form 10-KSB/A, Registrant’s Chief Executive Officer carried out another evaluation of the effectiveness of the design and operation of Registrant’s disclosure controls and procedures. Based upon that evaluation,
Registrant’s Chief Executive Officer concluded that, as discussed below, a change should be made in Registrant’s disclosure controls and procedures to ensure that the information required to be disclosed in reports Registrant files under
the Exchange Act is recorded, processed, summarized and reported in a timely manner.

 Internal Control over Financial Reporting

 As
discussed more fully elsewhere in this Form 10-KSB/A, as a result of comments received from the SEC following its review of