Yadkin Valley Financial Corporation, Elkin, North Carolina (NASDAQ: YAVY) and Cardinal State Bank, Durham, North Carolina (NASDAQ: CSNC) today jointly announced that they have entered into a definitive agreement whereby Yadkin Valley Financial Corporation and its wholly owned subsidiary Yadkin Valley Bank and Trust Company will acquire Cardinal State Bank. Cardinal shareholders will receive $17.62 per Cardinal share in a transaction with a total value of approximately $41.8 million, based on the recent trading price for Yadkin Valley Financial shares. Under the terms of the agreement, Cardinal shareholders will have the right to elect to receive either shares of Yadkin Valley Financial Corp. or $17.62 in cash, subject to allocation as follows: 42% of Cardinal's outstanding shares will be exchanged for stock of Yadkin Valley Financial and 58% will be exchanged for cash. Those Cardinal shares exchanged for stock will be exchanged for .91771 shares of Yadkin Valley Financial stock in a tax free exchange. Cash will also be paid in lieu of fractional shares. The total transaction value represents 203% of Cardinal's book value, 21.7% of total assets, a 16.3% core deposit premium, and 35 times Cardinal's trailing twelve months net income. Closing of the merger, which is expected to occur in the fourth quarter of 2007, is subject to certain conditions, including approval by Cardinal shareholders and regulatory approval.

Yadkin Valley Financial Corporation is a one bank holding company for Yadkin Valley Bank and Trust. Established in 1968, Yadkin now has 24 banking offices in Iredell (6), Ashe (3), Watauga (4), Yadkin (3), Surry (2), Wilkes (2), Mecklenburg (2), Avery (1), and Forsyth (1) Counties, North Carolina. As of March 31, 2007, the Company had $1.135 billion in assets, $849 million in loans, $925 million in deposits and $127 million in stockholders' equity. Yadkin has 10.6 million shares outstanding, which are traded on NASDAQ under the symbol YAVY, and have a market capitalization of $201 million.

Cardinal State Bank is a North Carolina state-chartered bank with three offices in Durham County, North Carolina and one office in Orange County. As of March 31, 2007, the Bank had $193 million in assets, $153 million in loans, $164 million in deposits and $20.7 million in stockholders' equity. Cardinal shares are traded on NASDAQ under the symbol CSNC.

The Carson Medlin Company, with lead banker W. Gray Medlin, served as the financial advisor to Yadkin Valley Financial Corporation.