Yadkin Valley to get $36M federal investment

Community bank owner Yadkin Valley Financial Corp. said Wednesday it received preliminary approval for an infusion of $36 million in federal bailout money.

The Elkin, N.C.-based company, parent of 29-branch Yadkin Valley Bank and Trust Co., said it expects to issue $36 million in preferred stock to the Treasury Department along with warrants to purchase $5.4 million in common shares.

The nonvoting preferred stock will pay a 5 percent annual dividend for the first five years and a 9 percent annual dividend after that. The deal is expected to be closed within 30 days.

The bailout program, created Oct. 3, is designed to break through a debilitating credit clog and spur financial markets to operate more normally again. Credit and financial woes, along with a severe housing crisis, have plunged the economy into a painful recession.

Both Democratic and Republican lawmakers on Capitol Hill have complained that Treasury Secretary Henry Paulson has sent confusing signals to taxpayers and Wall Street investors by shifting strategy and not communicating clearly about the bailout plan's objectives.

Shares of Yadkin Valley fell 4 cents to $14.21 in afternoon trading.