Nominating And Compensation Committee Charter

Role

As required by law, the Board of Directors hereby delegates to the Nominating and Compensation Committee (the “Committee”), in its capacity as a committee of the Board of Directors (the “Board”) of Yadkin Valley Financial Corporation (the “Company”), the dual roles of: (i) identifying individuals qualified to become Board members and selecting the director nominees for the next annual meeting of the shareholders; and (ii) sole authority to determine the compensation of the executive officers of the Company, and providing oversight to the employee benefit plans for the Company and its subsidiaries. The Committee oversees all material aspects of the Company's Board nominations process and compensation policies, except those specifically related to the responsibilities of another standing committee of the Board. It may also have such other duties as may from time to time be assigned to it by the Board.

Independence

The membership of the Committee shall consist of at least three directors, who are each free of any relationship that, in the opinion of the Board, may interfere with such member’s individual exercise of independent judgment. The members of the Committee shall meet the independence requirements of The Nasdaq Stock Market, Inc. The Committee shall maintain free and open communication with Company management. The Committee may retain outside counsel and other advisors as it determines necessary to carry out its duties. The Committee shall have sole authority to approve related fees and retention terms.

Organization

One member of the Committee shall be appointed as chair. The chair shall be responsible for leadership of the Committee, including scheduling and presiding over meetings, preparing agendas, and making regular reports to the Board. The chair will also maintain regular liaison with Company management. The Committee shall meet at least twice a year, or more frequently as the Committee considers necessary.

Responsibilities

While the Committee and the Board may wish to consider other duties from time to time, the general recurring activities of the Committee in carrying out its oversight role are described below. The duties specified below are not intended to limit the scope of activities of the Committee. The Committee shall have the following authority and responsibilities:

• To lead the search for individuals qualified to become members of the Board and to select director nominees to be presented for shareholder approval at the annual meeting. The Committee shall select individuals as director nominees who shall have the highest personal and professional integrity, who shall have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of the Company’s shareholders. When considering a person to be recommended for nomination as a director of the Company, the Committee shall consider the skills and background needed by the Company and possessed by the person, diversity of the Board, and the ability of the person to devote the necessary time to service as a director. The Committee has developed lists of criteria to be considered in evaluating director candidates and guidelines for the consideration of unsolicited nominations for Board membership, which are attached as an Addendum hereto. The Committee shall update these lists and guidelines as needed.
• To review the appropriateness of the size of the Board relative to its various responsibilities and the overall composition of the Board (taking into consideration such factors as business experience and specific areas of expertise of each Board member), and make recommendations to the Board as necessary.
• To oversee the orientation and continuing education of directors.
• To recommend to the Board director nominees for each Board committee upon a review of the recommendations of director nominees for each Board committee presented to it by the Chairman of the Committee, the Chairman of the Board, and the Chief Executive Officer. Recommendations should consider the qualifications of membership on each committee, the desirability of rotation among directors and any limitation of the number of consecutive years a director should serve on a committee. The Committee shall also advise the Board on removal of any Board committee members.
• To develop base salary and short and long term incentive compensation policies for the executive officers of the Company. The Committee shall annually review executive officer compensation and benefits. The Committee shall annually review the mission and objectives of the Company’s executive officers and evaluate the performance of the Company’s executive officers, in accordance with these policies, and shall have sole authority to establish their base salaries and incentive awards.
• To award equity grants under the Company’s equity incentive plans as a long-term incentive to align the interests of the Company’s employees with those of other shareholders and to encourage significant stock ownership by employees of the Company.
• To issue annually a report on executive compensation to be included in the Company’s proxy statement as required by the rules of the Securities and Exchange Commission.
• To review and evaluate at least annually the compensation policies and practices for the Company’s employees, including the employee benefit plans, and consider whether risks arising from such policies and practices are likely to have a material adverse effect on the Company. If the Compensation Committee determines that such risks are likely to have a material adverse effect on the Company, then the Compensation Committee should review the Company’s related proxy disclosure regarding such risks under SEC Regulation S-K Rule 402(s).

The Committee shall have the authority to delegate any of its responsibilities to subcommittees as the Committee may deem appropriate in its sole discretion.

The Committee shall maintain minutes of the meetings and shall report its actions and recommendations to the Board after each Committee meeting. The Committee shall review at least annually the adequacy of this charter and recommend any proposed changes to the Board for approval.

ADDENDUM

To the Yadkin Valley Financial Corporation
Nominating and Compensation Committee Charter

Director Qualifications and Criteria for Evaluation of Director Candidates

General

The Committee has the responsibility and authority to recommend to the Board qualifications for nominees to the Board and the criteria and procedures for the evaluation of candidates for nomination to the Board. These guidelines have been recommended by the Committee and approved by the Board.

Director Qualifications

Directors of the Company should possess, at a minimum, the following qualities:

(i) The highest ethics, integrity, and values;

(ii) An outstanding personal and professional reputation;

(iii) Professional experience that adds to the mix of the Board as a whole;

(iv) The ability to exercise sound independent business judgment;

(v) Freedom from conflicts of interest;

(vi) Demonstrated leadership skills;

(vii) The willingness and ability to devote the time necessary to perform the duties and responsibilities of a director; and

(viii) Relevant expertise and experience, and the ability to offer advice and guidance to the chief executive officer based on that expertise and experience.

Evaluation of Director Candidates

In evaluating director candidates, the Committee should consider an appropriate balance of experience, skills, and background and should apply the criteria that it deems appropriate, including the following:

(i) Whether the candidate possesses the qualities described above;

(ii) Whether the candidate possesses significant contacts within the Company’s market area and the ability to generate additional business for the Company;

(iii) Whether the candidate qualifies as an independent director under the Company’s guidelines;

(iv) The extent to which the candidate contributes to the diversity of the Board in terms of background, specialized experience, age, and race;

(v) The candidate’s management experience in complex organizations and experience in dealing with complex business problems;

(vi) The candidate’s other commitments, such as employment and other board positions;

(vii) Whether the candidate would qualify under the Company’s guidelines for membership on the Audit Committee or the Committee; and

(viii) Whether the candidate complies with any minimum qualifications or restrictions set forth in the Company’s bylaws.

Shareholder Proposals for Director Nominees

The Committee will consider written proposals from shareholders for director candidates. Any such proposal must be submitted to the Committee in a manner that complies with the provisions of the Company’s bylaws for submission of shareholder proposals.

In evaluating any candidates that are proposed by shareholders, the Committee will follow the same process and apply the same criteria as it does for candidates identified by the Committee or the Board.