Core Insights - Plumas Bancorp reported $27.42 million in revenue for the quarter ended September 2025, marking a year-over-year increase of 29.9% and an EPS of $1.35 compared to $1.31 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $28.1 million, resulting in a surprise of -2.41%, while the EPS exceeded expectations with a surprise of +104.55% against a consensus estimate of $0.66 [1] Financial Performance Metrics - Efficiency ratio stood at 55.2%, higher than the average estimate of 50% based on two analysts [4] - Net interest margin was reported at 4.8%, matching the two-analyst average estimate [4] - Total interest-earning assets averaged $2.07 billion, below the two-analyst average estimate of $2.13 billion [4] - Nonperforming loans amounted to $15.03 million, exceeding the average estimate of $13.59 million [4] - Nonperforming assets were reported at $15.17 million, compared to the average estimate of $13.68 million [4] - Net charge-offs as a percentage of average loans (annualized) were 0%, better than the average estimate of 0.1% [4] - Total non-interest income was $2.25 million, below the average estimate of $2.51 million [4] - Net interest income before provision for credit losses was $25.17 million, slightly lower than the average estimate of $25.57 million [4] Stock Performance - Shares of Plumas Bancorp have returned -0.8% over the past month, while the Zacks S&P 500 composite increased by +1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Plumas Bancorp (PLBC) reported quarterly earnings of $1.35 per share, exceeding the Zacks Consensus Estimate of $0.66 per share, and showing an increase from $1.31 per share a year ago, resulting in an earnings surprise of +104.55% [1][2] - The company posted revenues of $27.42 million for the quarter ended September 2025, which was 2.41% below the Zacks Consensus Estimate, but an increase from $21.11 million year-over-year [2] - Plumas Bancorp has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates two times in the same period [2] Earnings Outlook - The immediate price movement of Plumas Bancorp's stock will largely depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.41 on revenues of $28.3 million, and for the current fiscal year, it is $4.35 on revenues of $97.6 million [7] Industry Context - The Zacks Industry Rank indicates that the Banks - West industry is currently in the bottom 32% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5][6]

Executive Summary Plumas Bancorp's Q3 and YTD 2025 results show decreased net income and EPS, primarily due to the Cornerstone Community Bank acquisition's one-time impacts, increased credit loss provisions, and higher non-interest expenses [Third Quarter 2025 Financial Highlights](index=1&type=section&id=1.1%20Third%20Quarter%202025%20Financial%20Highlights) Plumas Bancorp reported a significant decrease in net income and diluted EPS for Q3 2025 compared to Q3 2024, primarily due to the acquisition of Cornerstone Community Bank (CCB) which introduced one-time items, increased provision for credit losses, and higher non-interest expenses | Metric | Q3 2025 | Q3 2024 | Change (YoY) | Percentage Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | :---------------------- | | Net Income | $5.1 million | $7.8 million | -$2.7 million | -34.6% | | Diluted EPS | $0.73 | $1.31 | -$0.58 | -44.3% | | Net Interest Income | Increased $6.3 million | N/A | +$6.3 million | N/A | | Provision for Credit Losses | Increased $5.8 million | N/A | +$5.8 million | N/A | | Non-Interest Expense | Increased $4.3 million | N/A | +$4.3 million | N/A | | Annualized Return on Average Assets | 0.90% | 1.84% | -0.94% | -51.1% | | Annualized Return on Average Equity | 8.5% | 18.1% | -9.6% | -53.0% | - Results were influenced by several one-time items due to the acquisition completed in the quarter[1](index=1&type=chunk) [Nine Months Ended September 30, 2025 Financial Highlights](index=1&type=section&id=1.2%20Nine%20Months%20Ended%20September%2030,%202025%20Financial%20Highlights) For the first nine months of 2025, Plumas Bancorp experienced a decrease in net income and diluted EPS compared to the same period in 2024, driven by increased provision for credit losses and non-interest expenses, despite growth in net interest and non-interest income | Metric | YTD 2025 | YTD 2024 | Change (YoY) | Percentage Change (YoY) | | :-------------------------------- | :------- | :------- | :----------- | :---------------------- | | Net Income | $18.6 million | $20.9 million | -$2.3 million | -11.0% | | Diluted EPS | $2.94 | $3.50 | -$0.56 | -16.0% | | Net Interest Income | Increased $7.2 million | N/A | +$7.2 million | N/A | | Non-Interest Income | Increased $1.2 million | N/A | +$1.2 million | N/A | | Provision for Credit Losses | Increased $5.1 million | N/A | +$5.1 million | N/A | | Non-Interest Expense | Increased $6.0 million | N/A | +$6.0 million | N/A | | Annualized Return on Average Assets | 1.35% | 1.69% | -0.34% | -20.1% | | Annualized Return on Average Equity | 12.2% | 17.2% | -5.0% | -29.1% | Strategic Overview & Acquisition Impact This section details the successful acquisition of Cornerstone Community Bank, its financial implications, and strategic initiatives to optimize net interest margin [Cornerstone Community Bank Acquisition](index=1&type=section&id=2.1%20Cornerstone%20Community%20Bank%20Acquisition) Plumas Bancorp successfully completed the acquisition of Cornerstone Community Bank (CCB) on July 1, 2025, significantly expanding its asset base, loan portfolio, and deposits, also resulting in substantial goodwill and core deposit intangibles - Acquisition of Cornerstone Community Bank (CCB) was effective July 1, 2025[3](index=3&type=chunk) Acquired Asset/Liability | Acquired Asset/Liability | Amount (excluding purchase adjustments, in millions) | | :----------------------- | :-------------------------------------- | | Total Assets | $658 million | | Gross Loans | $478 million | | Deposits | $580 million | | Goodwill | $18.7 million | | Core Deposit Intangible | $11.6 million | | Discount on Acquired Loans | $15.8 million | [President's Comments and Strategic Initiatives](index=2&type=section&id=2.2%20President's%20Comments%20and%20Strategic%20Initiatives) The President highlighted the successful integration of Cornerstone Community Bank, including a streamlined conversion and employee retention, with strategic actions taken to improve net interest margin - Successful completion and integration of Cornerstone Community Bancorp and Cornerstone Community Bank, including streamlined conversion and retention of most employees[9](index=9&type=chunk) - Sold acquired investment portfolio to provide liquidity, paying off **$38.5 million** in brokered CDs and a **$15 million** FHLB borrowing[10](index=10&type=chunk) - Reinvested residual liquidity into the investment portfolio at higher rates and transferred over **$60 million** of third-party reciprocal deposits to on-balance sheet repurchase agreement product[10](index=10&type=chunk) - Expect cost of funds to decrease slightly due to these changes and the Fed rate reduction in September 2025[10](index=10&type=chunk) [Fair Value Marks Amortization/Accretion](index=2&type=section&id=2.3%20Fair%20Value%20Marks%20Amortization/Accretion) The Company incurred expenses/income related to the amortization/accretion of Fair Value (FV) marks in Q3 2025, primarily from the acquisition, with projections indicating a negative impact for Q4 2025 and the full year 2026 Effect on Pretax Earnings of Amortization/Accretion of Fair Value Marks (in thousands) | Amortization/Accretion of Fair Value marks | Actual (3 Months Ending 9/30/2025) | Projected (3 Months Ending 12/31/2025) | Projected (12 Months Ending 12/31/2026) | | :--------------------------------------- | :--------------------------------- | :------------------------------------- | :-------------------------------------- | | Core Deposit Intangible | $(571) | $(557) | $(2,082) | | Discount on acquired loans | $455 | $336 | $1,290 | | Premium/discount on acquired time deposits | $651 | $(61) | $(92) | | Discount on acquired debentures | $(84) | $(58) | $(23) | | **Total amortization/accretion of Fair Value marks** | **$451** | **$(340)** | **$(907)** | - The projected accretion of the discount on acquired loans is based on contractual payment schedules and may differ from actual accretion[7](index=7&type=chunk) Consolidated Financial Results (GAAP) GAAP financial statements reveal a decline in net income and diluted EPS for Q3 and YTD 2025, driven by increased credit loss provisions and non-interest expenses, despite higher net interest income [Condensed Consolidated Statements of Income - Three Months Ended September 30, 2025](index=12&type=section&id=3.1%20Condensed%20Consolidated%20Statements%20of%20Income%20-%20Three%20Months%20Ended%20September%2030,%202025) For the third quarter of 2025, Plumas Bancorp reported a decrease in net income and diluted EPS compared to the prior year, primarily driven by a substantial increase in the provision for credit losses and non-interest expenses, despite a significant rise in net interest income Condensed Consolidated Statements of Income (Three Months Ended September 30, in thousands, except per share data) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :------------------------------------------ | :----- | :----- | :------------ | :---------------- | | Interest income | $29,797 | $21,862 | $7,935 | 36.3% | | Interest expense | $4,623 | $2,992 | $1,631 | 54.5% | | Net interest income before provision for credit losses | $25,174 | $18,870 | $6,304 | 33.4% | | Provision for credit losses | $5,373 | $(400) | $5,773 | 1443.3% | | Net interest income after provision for credit losses | $19,801 | $19,270 | $531 | 2.8% | | Non-interest income | $2,248 | $2,237 | $11 | 0.5% | | Non-interest expense | $15,134 | $10,824 | $4,310 | 39.8% | | Income before income taxes | $6,915 | $10,683 | $(3,768) | -35.3% | | Provision for income taxes | $1,769 | $2,853 | $(1,084) | -38.0% | | Net income | $5,146 | $7,830 | $(2,684) | -34.3% | | Basic earnings per share | $0.74 | $1.33 | $(0.59) | -44.4% | | Diluted earnings per share | $0.73 | $1.31 | $(0.58) | -44.3% | [Condensed Consolidated Statements of Income - Nine Months Ended September 30, 2025](index=12&type=section&id=3.2%20Condensed%20Consolidated%20Statements%20of%20Income%20-%20Nine%20Months%20Ended%20September%2030,%202025) For the nine months ended September 30, 2025, the Company reported a decline in net income and diluted EPS compared to the prior year, primarily due to a significant increase in the provision for credit losses and non-interest expenses, partially offset by growth in net interest income and non-interest income Condensed Consolidated Statements of Income (Nine Months Ended September 30, in thousands, except per share data) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :------------------------------------------ | :----- | :----- | :------------ | :---------------- | | Interest income | $71,020 | $63,049 | $7,971 | 12.6% | | Interest expense | $9,124 | $8,317 | $807 | 9.7% | | Net interest income before provision for credit losses | $61,896 | $54,732 | $7,164 | 13.1% | | Provision for credit losses | $6,483 | $1,346 | $5,137 | 381.6% | | Net interest income after provision for credit losses | $55,413 | $53,386 | $2,027 | 3.8% | | Non-interest income | $7,822 | $6,579 | $1,243 | 18.9% | | Non-interest expense | $37,612 | $31,617 | $5,995 | 19.0% | | Income before income taxes | $25,623 | $28,348 | $(2,725) | -9.6% | | Provision for income taxes | $6,977 | $7,478 | $(501) | -6.7% | | Net income | $18,646 | $20,870 | $(2,224) | -10.7% | | Basic earnings per share | $2.98 | $3.54 | $(0.56) | -15.8% | | Diluted earnings per share | $2.94 | $3.50 | $(0.56) | -16.0% | Non-GAAP Financial Measures Plumas Bancorp provides non-GAAP financial measures to offer a clearer view of core operations by excluding non-recurring merger-related expenses, significantly improving reported net income, diluted EPS, and return on average assets for Q3 and YTD 2025 - Non-GAAP financial measures are presented to provide useful and comparative information to assess trends in core operations, excluding merger-related activities[55](index=55&type=chunk) Reconciliation of Non-GAAP Disclosure (in thousands, except per share data) | Metric | GAAP (Q3 2025) | Non-GAAP (Q3 2025) | GAAP (YTD 2025) | Non-GAAP (YTD 2025) | | :--------------------------------------- | :------------- | :----------------- | :-------------- | :------------------ | | Income before tax | $6,915 | $13,117 | $25,623 | $32,875 | | Total merger related items (excluded) | N/A | $6,202 | N/A | $7,252 | | Net Income | $5,146 | $9,515 | $18,646 | $23,754 | | Diluted earnings per share | $0.73 | $1.35 | $2.94 | $3.74 | | Return on average assets | 0.90% | 1.66% | 1.35% | 1.72% | Net Interest Income and Margin Analysis This section analyzes the drivers of net interest income and margin for Q3 and YTD 2025, highlighting the impact of loan growth, yields, and interest expenses [Three Months Ended September 30, 2025](index=6&type=section&id=5.1%20Three%20Months%20Ended%20September%2030,%202025) Net interest income increased significantly in Q3 2025, driven by higher interest income from loan growth and increased yields on loans and investment securities, leading to an improved net interest margin Net Interest Income and Margin (Three Months Ended September 30, in thousands) | Metric | Q3 2025 | Q3 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net Interest Income | $25,174 | $18,870 | +$6,304 | | Interest Income | $29,797 | $21,862 | +$7,935 | | Interest Expense | $4,623 | $2,992 | +$1,631 | | Net Interest Margin | 4.83% | 4.76% | +0.07% | | Average Loan Balances | $1,476,275 | $1,001,505 | +$474,770 | | Average Yield on Loans | 6.35% | 6.21% | +0.14% | | Average Investment Securities Balance | $481,862 | $446,868 | +$34,994 | | Average Yield on Investment Securities | 4.06% | 3.99% | +0.07% | | Average Rate Paid on Interest-Bearing Liabilities | 1.67% | 1.52% | +0.15% | | Average Rate Paid on Interest-Bearing Deposits | 1.56% | 0.97% | +0.59% | - Interest on cash balances decreased by **$518 thousand** due to a decline in average balance and a **94 basis point** decrease in average rate paid to **4.50%**[34](index=34&type=chunk) - Interest paid on deposits increased by **$2.3 million**, with money market accounts seeing the largest increase (**$1.8 million**) due to higher rates and balances from the CCB acquisition[36](index=36&type=chunk) [Nine Months Ended September 30, 2025](index=7&type=section&id=5.2%20Nine%20Months%20Ended%20September%2030,%202025) For the first nine months of 2025, net interest income increased, primarily driven by higher interest income from increased average loan balances and yields, leading to an improved overall net interest margin despite rising interest expense Net Interest Income and Margin (Nine Months Ended September 30, in thousands) | Metric | YTD 2025 | YTD 2024 | Change | | :-------------------------------- | :------- | :------- | :----- | | Net Interest Income | $61,896 | $54,732 | +$7,164 | | Interest Income | $71,020 | $63,049 | +$7,971 | | Interest Expense | $9,124 | $8,317 | +$807 | | Net Interest Margin | 4.87% | 4.76% | +0.11% | | Average Loan Balances | $1,171,116 | $982,191 | +$188,925 | | Average Yield on Loans | 6.24% | 6.21% | +0.03% | | Average Investment Securities Balance | $456,208 | $456,944 | -$736 | | Average Yield on Investment Securities | 4.09% | 3.92% | +0.17% | | Average Rate Paid on Interest-Bearing Liabilities | 1.43% | 1.43% | 0.00% | | Average Rate Paid on Interest-Bearing Deposits | 1.35% | 0.85% | +0.50% | - Interest on cash balances declined by **$1.6 million** due to a decrease in both balance and yield, with the rate earned on cash balances falling by **99 basis points** to **4.5%**[42](index=42&type=chunk) - Interest paid on deposits increased by **$4.0 million**, with money market accounts contributing the largest share (**$3.4 million**)[44](index=44&type=chunk) Non-Interest Income and Expense Analysis This section examines the components of non-interest income and expense for Q3 and YTD 2025, noting the influence of the CCB acquisition and specific one-time events [Three Months Ended September 30, 2025](index=8&type=section&id=6.1%20Three%20Months%20Ended%20September%2030,%202025) Non-interest income remained relatively stable in Q3 2025, with gains from an interest rate swap and BOLI largely offset by a loss on the sale of CCB's investment portfolio, while non-interest expense significantly increased due to merger-related costs and higher salary and benefit expenses Non-Interest Income (Three Months Ended September 30, in thousands) | Category | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------- | :----- | :----- | :------------ | :---------------- | | Total non-interest income | $2,248 | $2,237 | $11 | 0.5% | | Gain on termination of interest rate swap (acquired from CCB) | N/A | N/A | +$254 | N/A | | Earnings on bank owned life insurance (BOLI) | $261 | $104 | +$157 | 151.0% | | Loss on sale of investment securities | $(628) | $0 | $(628) | -100.0% | Non-Interest Expense (Three Months Ended September 30, in thousands) | Category | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------- | :----- | :----- | :------------ | :---------------- | | Total non-interest expense | $15,134 | $10,824 | $4,310 | 39.8% | | Merger and acquisition expenses | $879 | $0 | +$879 | 100.0% | | Salaries and employee benefits | $7,418 | $5,481 | +$1,937 | 35.3% | | Occupancy and equipment | $2,471 | $1,988 | +$483 | 24.3% | | Outside service fees | $1,584 | $1,114 | +$470 | 42.2% | | Amortization of Core Deposit Intangible | $615 | $51 | +$564 | 1105.9% | - Increase in salary and benefit expense includes **$1.3 million** related to former CCB employees, **$312 thousand** in bonus expense, **$217 thousand** in SBA loan funding commissions, and a **$150 thousand** increase in accrued vacation liability (viewed as non-recurring)[47](index=47&type=chunk) [Nine Months Ended September 30, 2025](index=9&type=section&id=6.2%20Nine%20Months%20Ended%20September%2030,%202025) For the nine months ended September 30, 2025, non-interest income increased, largely due to a legal settlement, despite a significant loss on the sale of investment securities, while non-interest expense saw a substantial increase driven by higher salary and benefit expenses and merger-related costs Non-Interest Income (Nine Months Ended September 30, in thousands) | Category | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------- | :----- | :----- | :------------ | :---------------- | | Total non-interest income | $7,822 | $6,579 | $1,243 | 18.9% | | Legal settlement (Dixie Fire) | N/A | N/A | +$1,100 | N/A | | Loss on sale of investment securities | $(625) | $(19,817) | +$19,192 | 96.8% | | Gain on sale of buildings | $0 | $19,854 | $(19,854) | -100.0% | Non-Interest Expense (Nine Months Ended September 30, in thousands) | Category | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------- | :----- | :----- | :------------ | :---------------- | | Total non-interest expense | $37,612 | $31,617 | $5,995 | 19.0% | | Salaries and employee benefits | $18,851 | $16,129 | +$2,722 | 16.9% | | Merger and acquisition expenses | $1,929 | $0 | +$1,929 | 100.0% | | Occupancy and equipment | $6,535 | $5,627 | +$908 | 16.1% | | Amortization of Core Deposit Intangible | $702 | $153 | +$549 | 358.8% | - Increase in salary and benefit expense includes **$1.8 million** primarily related to the acquisition of CCB, and other increases in bonus expense, health insurance, payroll taxes, and accrued vacation[49](index=49&type=chunk) Balance Sheet Highlights The balance sheet expanded significantly year-over-year, primarily due to the Cornerstone Community Bank acquisition, impacting assets, loans, deposits, and equity [Overall Balance Sheet Changes](index=2&type=section&id=7.1%20Overall%20Balance%20Sheet%20Changes) Plumas Bancorp's balance sheet grew significantly year-over-year, primarily driven by the Cornerstone Community Bank acquisition, with total assets, loans, deposits, and shareholders' equity all seeing substantial increases, while borrowings decreased Balance Sheet Highlights (September 30, in thousands) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------- | :----------- | :----------- | :------------ | :---------------- | | Total Assets | $2,229,408 | $1,663,974 | $565,434 | 34.0% | | Gross Loans | $1,496,494 | $1,003,488 | $493,006 | 49.1% | | Deposits | $1,819,536 | $1,350,996 | $468,540 | 34.7% | | Shareholders' Equity | $245,950 | $181,942 | $64,008 | 35.2% | | Book Value Per Share | $35.38 | $30.85 | $4.53 | 14.7% | | Borrowings | $26,705 | $75,000 | $(48,295) | -64.4% | | Repurchase Agreements | $93,900 | $17,000 | $76,900 | 452.4% | | Goodwill | $24,215 | $5,502 | $18,713 | 340.1% | | Bank Owned Life Insurance | $33,396 | $16,415 | $16,981 | 103.4% | [Loans, Deposits, and Investments](index=3&type=section&id=7.2%20Loans,%20Deposits,%20and%20Investments) The acquisition of CCB significantly impacted the composition and volume of loans and deposits, with gross loans increasing substantially across most categories and deposits growing, while investment securities saw a modest increase and cash balances decreased [Loans](index=3&type=section&id=7.2.1%20Loans) Gross loans increased by 49% to $1.5 billion, primarily due to the CCB acquisition, with commercial real estate loans representing the largest portion of the portfolio, and approximately 80% of the loan portfolio consisting of variable rate loans - Gross loans increased by **$493 million**, or **49%**, to **$1.5 billion**, mostly related to the acquisition of CCB[12](index=12&type=chunk) Loan Portfolio Distribution (September 30, in thousands) | Loan Type | 9/30/2025 Balance | 9/30/2025 % of Total | 9/30/2024 Balance | 9/30/2024 % of Total | | :-------------------------- | :------------------ | :------------------- | :------------------ | :------------------- | | Commercial | $161,667 | 10.8% | $82,192 | 8.2% | | Agricultural | $154,107 | 10.3% | $121,709 | 12.1% | | Real estate – residential | $33,657 | 2.2% | $11,672 | 1.2% | | Real estate – commercial | $980,694 | 65.5% | $618,236 | 61.6% | | Real estate – construction & land | $49,199 | 3.3% | $54,287 | 5.4% | | Equity Lines of Credit | $53,283 | 3.6% | $37,652 | 3.8% | | Auto | $45,142 | 3.0% | $72,388 | 7.2% | | Other | $18,745 | 1.3% | $5,352 | 0.5% | | **Total Gross Loans** | **$1,496,494** | **100%** | **$1,003,488** | **100%** | - Approximately **80%** of the Company's loan portfolio was comprised of variable rate loans at September 30, 2025[13](index=13&type=chunk) [Deposits](index=3&type=section&id=7.2.2%20Deposits) Total deposits increased by 35% to $1.8 billion, largely due to the CCB acquisition, with significant increases in demand deposits, money market accounts, and time deposits, and non-interest-bearing demand deposits constituting 47% of total deposits - Total deposits increased by **$469 million** from **$1.3 billion** to **$1.8 billion**, related to the acquisition of CCB[14](index=14&type=chunk) Deposit Distribution by Type (September 30, in thousands) | Deposit Type | 9/30/2025 Balance | 9/30/2025 % of Total | 9/30/2024 Balance | 9/30/2024 % of Total | | :------------------ | :------------------ | :------------------- | :------------------ | :------------------- | | Non-interest bearing | $862,085 | 47.4% | $703,005 | 52.0% | | Money Market | $433,832 | 23.8% | $229,267 | 17.0% | | Savings | $309,030 | 17.0% | $316,483 | 23.4% | | Time | $214,589 | 11.8% | $102,241 | 7.6% | | **Total Deposits** | **$1,819,536** | **100%** | **$1,350,996** | **100%** | - Transferred over **$60 million** of third-party reciprocal deposits acquired from CCB to repurchase agreements and paid off **$38.5 million** in brokered time deposits[14](index=14&type=chunk) [Investment Securities and Cash](index=3&type=section&id=7.2.3%20Investment%20Securities%20and%20Cash) Total investment securities increased modestly, while cash and due from banks decreased, and the unrealized loss on investment securities also increased Investment Securities and Cash (September 30, in thousands) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------- | :----- | :----- | :------------ | :---------------- | | Total investment securities | $485,000 | $457,000 | +$28,000 | 6.1% | | Unrealized loss on investment securities | $23,000 | $21,000 | +$2,000 | 9.5% | | Cash and due from banks | $87,000 | $118,000 | $(31,000) | -26.3% | [Shareholders' Equity](index=4&type=section&id=7.3%20Shareholders'%20Equity) Total shareholders' equity increased by $64 million, primarily driven by earnings and the issuance of common stock and stock options for the Cornerstone acquisition, partially offset by cash dividends and an increase in accumulated other comprehensive loss - Total shareholders' equity increased by **$64 million** from **$182 million** to **$246 million**[21](index=21&type=chunk) - Increase includes **$26.4 million** in earnings, **$45.2 million** from common stock and stock options issued for the Cornerstone acquisition, and **$1.4 million** from restricted stock and stock option activity[21](index=21&type=chunk) - Partially offset by **$7.2 million** in cash dividends and a **$1.8 million** increase in accumulated other comprehensive loss[21](index=21&type=chunk) Asset Quality and Credit Losses This section details the increase in nonperforming assets and the substantial provision for credit losses, largely influenced by loan growth and the CCB acquisition [Nonperforming Assets](index=3&type=section&id=8.1%20Nonperforming%20Assets) Nonperforming assets and loans increased significantly year-over-year, with nonperforming loans rising to 1.0% of total loans, largely attributed to a single agricultural loan relationship totaling $9.8 million Nonperforming Assets (September 30, in thousands) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------- | :----- | :----- | :------------ | :---------------- | | Nonperforming assets | $15,169 | $4,753 | +$10,416 | 219.1% | | Nonperforming assets as % of total assets | 0.68% | 0.29% | +0.39% | 134.5% | | Nonperforming loans | $15,029 | $4,455 | +$10,574 | 237.4% | | Nonperforming loans as % of total loans | 1.0% | 0.44% | +0.56% | 127.3% | | OREO | $114 | $141 | $(27) | -19.1% | - The increase in nonperforming loans is related to one agricultural loan relationship of **15 loans** totaling **$9.8 million**, which were placed on nonaccrual status during Q2 2025[16](index=16&type=chunk) [Provision for Credit Losses and Allowance](index=4&type=section&id=8.2%20Provision%20for%20Credit%20Losses%20and%20Allowance) The provision for credit losses increased substantially for the nine months ended September 30, 2025, primarily due to loan portfolio growth, the CECL Day 1 provision on acquired non-PCD loans from CCB, and a reserve for unfunded commitments, while the allowance for credit losses also increased and net charge-offs decreased Provision for Credit Losses (Nine Months Ended September 30, in thousands) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------- | :----- | :----- | :------------ | :---------------- | | Provision for credit losses | $6,500 | $1,300 | +$5,200 | 400.0% | | Provision for credit losses on loans | $6,300 | $1,500 | +$4,800 | 320.0% | | Increase in reserve for unfunded commitments | $211 | $(129) | +$340 | N/A | - The provision includes growth in the loan portfolio, the CECL Day 1 provision on non-PCD loans acquired from CCB, and a reserve for unfunded commitments on acquired loans[17](index=17&type=chunk) Allowance for Credit Losses (September 30, in thousands) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------- | :----- | :----- | :------------ | :---------------- | | Allowance for credit losses | $19,564 | $13,606 | +$5,958 | 43.8% | | Allowance for credit losses as % of total loans | 1.30% | 1.35% | -0.05% | -3.7% | | Net charge-offs (YTD) | $219 | $736 | $(517) | -70.2% | Funding and Liquidity Management This section outlines the company's funding sources, liquidity management strategies, and borrowing capacities, including the impact of the CCB acquisition on repurchase agreements [Borrowings](index=4&type=section&id=9.1%20Borrowings) The Company paid off all BTFP borrowings during 2024, while repurchase agreements significantly increased due to the conversion of reciprocal deposits from the CCB acquisition, and other borrowings include a correspondent bank loan and assumed subordinated notes from Cornerstone, with plans to redeem the 2030 notes - All Bank Term Funding Program (BTFP) borrowings totaling **$60 million** at September 30, 2024, were paid off during 2024[22](index=22&type=chunk) Repurchase Agreements (September 30, in thousands) | Metric | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------- | :----- | :----- | :------------ | :---------------- | | Securities sold under agreements to repurchase | $93,900 | $17,000 | +$76,900 | 452.4% | | Interest expense (Q3) | $317 | $8 | +$309 | 3862.5% | | Interest expense (YTD) | $347 | $26 | +$321 | 1234.6% | - Assumed **$12 million** in subordinated notes from Cornerstone (**$2 million** due 2035, **$10 million** due 2030), with an intention to redeem the 2030 notes on December 30, 2025[25](index=25&type=chunk) - An outstanding FHLB borrowing of **$15 million** from CCB was paid in full in August 2025[26](index=26&type=chunk) [Liquidity Sources and Management](index=5&type=section&id=9.2%20Liquidity%20Sources%20and%20Management) The Company manages liquidity through asset and liability strategies, utilizing its investment portfolio, cash, competitive deposit rates, and established lines of credit, with significant borrowing capacity from FHLB and FRB Discount Window, and customer deposits remaining the primary source of funds - Liquidity is managed using assets (cash, investment portfolio with unpledged securities) and liabilities (competitive deposit rates, established lines of credit)[27](index=27&type=chunk) - Can borrow up to **$272 million** from FHLB (secured by commercial and residential mortgage loans) and up to **$63 million** at the FRB Discount Window (secured by investment securities)[28](index=28&type=chunk) - Has unsecured short-term borrowing agreements with two correspondent banks totaling **$70 million**[28](index=28&type=chunk) - Estimates approximately **$718 million** in uninsured deposits, of which **$162 million** are collateralized[29](index=29&type=chunk) Performance and Capital Ratios This section presents key performance and regulatory capital ratios, showing a decline in profitability metrics but an improvement in net interest margin, reflecting the acquisition's impact [Performance Ratios](index=13&type=section&id=10.1%20Performance%20Ratios) Performance ratios for Q3 and YTD 2025 show a decline in return on average assets and equity compared to 2024, reflecting the impact of the acquisition and associated expenses, though net interest margin improved and the efficiency ratio slightly increased Performance Ratios (Annualized) | Metric | Q3 2025 | Q3 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Return on average assets | 0.90% | 1.84% | 1.35% | 1.69% | | Return on average equity | 8.5% | 18.1% | 12.2% | 17.2% | | Yield on earning assets | 5.72% | 5.52% | 5.59% | 5.48% | | Rate paid on interest-bearing liabilities | 1.67% | 1.52% | 1.43% | 1.43% | | Net interest margin | 4.83% | 4.76% | 4.87% | 4.76% | | Noninterest income to average assets | 0.39% | 0.53% | 0.57% | 0.53% | | Noninterest expense to average assets | 2.65% | 2.55% | 2.73% | 2.56% | | Efficiency ratio | 55.2% | 51.3% | 53.9% | 51.6% | [Capital Ratios](index=13&type=section&id=10.2%20Capital%20Ratios) Plumas Bank's regulatory capital ratios, including Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios, decreased from Q3 2024 to Q3 2025, reflecting the impact of the acquisition on the capital structure Plumas Bank Regulatory Capital Ratios (September 30) | Ratio | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Tier 1 Leverage Ratio | 10.6% | 11.3% | | Common Equity Tier 1 Ratio | 14.3% | 16.9% | | Tier 1 Risk-Based Capital Ratio | 14.3% | 16.9% | | Total Risk-Based Capital Ratio | 15.5% | 18.2% | Tangible Common Equity (September 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Tangible common equity | $210,036 | $175,601 | | Tangible book value per common share | $30.21 | $29.78 | | Tangible common equity to total assets | 9.4% | 10.6% | Company Information and Forward-Looking Statements This section provides a profile of Plumas Bancorp and Plumas Bank, along with important disclaimers regarding forward-looking statements and associated risks [Company Profile](index=9&type=section&id=11.1%20Company%20Profile) Plumas Bancorp, headquartered in Reno, Nevada, is the parent company of Plumas Bank, a full-service community bank founded in 1980 and headquartered in Quincy, California, operating nineteen branches across California and Nevada, along with two loan production offices, offering a wide range of financial services and holding Preferred Lender status with the SBA - Plumas Bancorp is headquartered in Reno, Nevada, and its principal subsidiary, Plumas Bank, is headquartered in Quincy, California[50](index=50&type=chunk) - Plumas Bank operates nineteen branches across California (Butte, Lassen, Modoc, Nevada, Placer, Plumas, Shasta, Sutter, Tehama counties) and Nevada (Carson City and Washoe counties), plus two loan production offices in Auburn, California, and Klamath Falls, Oregon[50](index=50&type=chunk) - Offers a wide range of financial and investment services to consumers and businesses and has nationwide Preferred Lender status with the United States Small Business Administration[50](index=50&type=chunk) [Forward-Looking Statements](index=9&type=section&id=11.2%20Forward-Looking%20Statements) The report includes forward-looking statements, which are subject to inherent risks and uncertainties that may cause actual results to differ materially from expectations, and these statements are not guarantees of future performance and should not be solely relied upon - Forward-looking statements are covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[51](index=51&type=chunk) - Future events are difficult to predict, and expectations are subject to risk and uncertainty that may cause actual results to differ materially and adversely[51](index=51&type=chunk) - Factors that might cause differences include changes in economic conditions, interest rates, industry consolidation, litigation, competitive challenges, regulatory changes, loss of key personnel, and changes in accounting policies[52](index=52&type=chunk)

The statements contained herein that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There can be no assurance that future developments affecting us will be the same as those anticipated by management. We caution readers that a number of i ...

Core Points - Plumas Bancorp reported a net income of $5.1 million or $0.74 per share for Q3 2025, a decrease from $7.8 million or $1.33 per share in Q3 2024 [1] - The company completed the acquisition of Cornerstone Community Bank, which significantly impacted its financial results [3][9] Financial Performance - For the nine months ended September 30, 2025, net income was $18.6 million or $2.98 per share, down from $20.9 million or $3.54 per share in the same period of 2024 [2] - Net interest income increased by $6.3 million in Q3 2025, totaling $25.2 million, while the provision for credit losses rose by $5.8 million [1][32] - The annualized return on average assets decreased to 0.90% in Q3 2025 from 1.84% in Q3 2024, and return on average equity fell from 18.1% to 8.5% [1] Acquisition Details - The acquisition of Cornerstone Community Bank included total assets of $658 million, gross loans of $478 million, and deposits of $580 million [3] - Goodwill from the acquisition was recorded at $18.7 million, with a core deposit intangible of $11.6 million [3] Balance Sheet Highlights - Total assets increased by 34% to $2.23 billion as of September 30, 2025, compared to $1.66 billion a year earlier [57] - Gross loans rose by 49% to $1.5 billion, while total deposits increased by 35% to $1.8 billion [11][13][14] Non-Interest Income and Expenses - Non-interest income for Q3 2025 was $2.2 million, a slight increase from the previous year, with notable gains from the acquisition [46] - Non-interest expenses rose by $4.3 million to $15.1 million, driven by merger-related costs and increased salary expenses [47] Asset Quality - Nonperforming assets increased to $15.2 million, representing 0.68% of total assets, up from 0.29% a year prior [16] - The provision for credit losses for the first nine months of 2025 was $6.5 million, significantly higher than $1.3 million in the same period of 2024 [17] Shareholders' Equity - Total shareholders' equity increased by $64 million to $246 million as of September 30, 2025, reflecting earnings and stock issued during the acquisition [21]

Core Points - Plumas Bancorp reported third-quarter 2025 earnings of $5.1 million or $0.74 per share, a decrease from $7.8 million or $1.33 per share in the same quarter of 2024 [1] - The annualized return on average assets fell to 0.90% from 1.84% year-over-year, while the return on average equity decreased from 18.1% to 8.5% [1] - The company completed the acquisition of Cornerstone Community Bank, which significantly impacted its financial results [3][9] Financial Performance - For the nine months ended September 30, 2025, net income was $18.6 million or $2.98 per share, down from $20.9 million or $3.54 per share in the same period of 2024 [2] - Net interest income increased by $6.3 million in Q3 2025, totaling $25.2 million, while the provision for credit losses rose by $5.8 million [1][33] - Non-interest income for Q3 2025 was $2.2 million, a slight increase from the previous year, with notable gains from the acquisition [48] Acquisition Details - The acquisition of Cornerstone Community Bank added $658 million in total assets, $478 million in gross loans, and $580 million in deposits [3] - Goodwill from the acquisition amounted to $18.7 million, with a core deposit intangible of $11.6 million [3] - The acquisition resulted in various non-recurring expenses totaling $6.2 million for Q3 2025 [4] Balance Sheet Highlights - Total assets increased by 34% to $2.23 billion as of September 30, 2025, compared to $1.66 billion a year earlier [61] - Gross loans rose by 49% to $1.5 billion, while total deposits increased by 35% to $1.8 billion [11][13] - Shareholders' equity grew by 35% to $246 million, driven by earnings and stock issued during the acquisition [23] Asset Quality - Nonperforming assets increased to $15.2 million, representing 0.68% of total assets, up from 0.29% a year prior [17] - The provision for credit losses for the first nine months of 2025 was $6.5 million, significantly higher than $1.3 million in the same period of 2024 [18] Net Interest Income and Margin - Net interest margin for Q3 2025 was 4.83%, up from 4.76% in Q3 2024 [40] - Interest income from loans increased by $8.0 million, primarily due to growth in the loan portfolio related to the acquisition [34] - Interest expense rose to $4.6 million, largely due to the acquisition, with the average rate on interest-bearing liabilities increasing from 1.52% to 1.67% [37][39] Non-Interest Expense - Total non-interest expense for Q3 2025 was $15.1 million, an increase of $4.3 million from the previous year, driven by merger-related costs and increased salary expenses [49] - For the nine months ended September 30, 2025, non-interest expense totaled $37.6 million, up from $31.6 million in the same period of 2024 [51]

Core Insights - Jeff Moore, Executive Vice President and Chief Credit Officer of Plumas Bank, will retire at the end of the year after joining the bank in 2018 [1] - Moore's leadership has significantly advanced the bank's credit functions, including the adoption of new underwriting platforms and modernization of loan processes [2] - Kevin Kaiser, currently SVP/Credit Administrator, will succeed Moore, ensuring continuity in leadership and expertise within the bank's credit operations [3] Company Overview - Plumas Bank, founded in 1980, is a full-service community bank headquartered in Quincy, California, with a holding company, Plumas Bancorp, established in 2002 [5] - The bank operates nineteen branches across California and Nevada, providing a wide range of financial services and holding Preferred Lender status with the SBA [5]

Core Insights - Plumas Bank's 2025 Corporate Citizenship Report emphasizes the bank's values-based philosophy that drives growth, competitiveness, and measurable returns for investors [1][2] - The report outlines a refined mission, vision, and values framework that guides the bank's strategy and practices, enhancing its position in the financial services sector [2][4] Company Overview - Plumas Bank, founded in 1980, has grown to have combined assets of $2.3 billion and a workforce of 250, demonstrating a strong record of profitability and regional presence [4] - The bank has expanded its footprint through organic growth and strategic acquisitions, including the recent acquisition of Cornerstone Community Bank in 2025, which broadens its client base and enhances stability [6] Governance and Performance - The bank's governance culture and commitment to stakeholders have resulted in consistent performance and stability, reinforcing investor confidence [4][6] - Plumas Bank is recognized for its financial strength and risk management, maintaining its reputation as a well-capitalized institution [6] Community Commitment - The bank emphasizes client advocacy through personalized solutions and high-touch engagement, fostering client loyalty and long-term stability [6] - Plumas Bank's commitment to community extends to employee volunteerism, promoting financial literacy and strengthening local economies [6]

PART I – FINANCIAL INFORMATION This section presents Plumas Bancorp's unaudited condensed consolidated financial statements and management's analysis [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Plumas Bancorp's unaudited condensed consolidated financial statements, covering balance sheets, income, comprehensive income, equity, and cash flows [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of Plumas Bancorp's financial position at specific dates, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $79,266 | $82,018 | | Investment securities available for sale, net | $439,676 | $437,735 | | Loans, less allowance for credit losses | $1,006,873 | $1,005,375 | | Total assets | $1,628,517 | $1,623,326 | | **Liabilities** | | | | Total deposits | $1,366,827 | $1,371,101 | | Total liabilities | $1,435,438 | $1,445,426 | | **Shareholders' Equity** | | | | Total shareholders' equity | $193,079 | $177,900 | | Total liabilities and shareholders' equity | $1,628,517 | $1,623,326 | - Total assets increased by **$5.2 million** (**0.32%**) from December 31, 2024, to June 30, 2025, primarily driven by increases in investment securities and net loans, partially offset by a decrease in cash and cash equivalents[5](index=5&type=chunk) - Total shareholders' equity increased by **$15.179 million** (**8.53%**) from December 31, 2024, to June 30, 2025, mainly due to retained earnings and a reduction in accumulated other comprehensive loss[6](index=6&type=chunk) [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details Plumas Bancorp's financial performance over specific periods, showing revenues, expenses, and net income Condensed Consolidated Statements of Income (In thousands, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $20,633 | $21,160 | $41,223 | $41,187 | | Total interest expense | $2,450 | $2,755 | $4,501 | $5,325 | | Net interest income before provision for credit losses | $18,183 | $18,405 | $36,722 | $35,862 | | Provision for Credit Losses | $860 | $925 | $1,110 | $1,746 | | Net income | $6,321 | $6,786 | $13,501 | $13,040 | | Basic earnings per share | $1.07 | $1.15 | $2.28 | $2.21 | | Diluted earnings per share | $1.05 | $1.14 | $2.25 | $2.19 | - Net income for the three months ended June 30, 2025, decreased by **$465 thousand** (**6.85%**) compared to the same period in 2024, primarily due to a decline in net interest income and an increase in non-interest expenses[9](index=9&type=chunk) - Net income for the six months ended June 30, 2025, increased by **$461 thousand** (**3.54%**) compared to the same period in 2024, driven by higher net interest income and lower provision for credit losses, despite increased non-interest expenses[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents Plumas Bancorp's total comprehensive income, including net income and other comprehensive income (loss) components Condensed Consolidated Statements of Comprehensive Income (In thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $6,321 | $6,786 | $13,501 | $13,040 | | Other comprehensive income (loss) | $584 | $(1,694) | $4,467 | $7,355 | | Total comprehensive income | $6,905 | $5,092 | $17,968 | $20,395 | - Other comprehensive income significantly improved, moving from a loss of **$1,694 thousand** in Q2 2024 to a gain of **$584 thousand** in Q2 2025, primarily due to changes in net unrealized gains/losses on securities[12](index=12&type=chunk) - Total comprehensive income for the six months ended June 30, 2025, decreased by **$2,427 thousand** (**11.9%**) compared to the same period in 2024, despite an increase in net income, due to a larger other comprehensive income in the prior year[12](index=12&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section outlines changes in Plumas Bancorp's shareholders' equity, reflecting net income, dividends, and other comprehensive income Consolidated Statements of Changes in Shareholders' Equity (In thousands, except shares) | Item | December 31, 2024 | June 30, 2025 | | :--------------------------------------- | :---------------- | :------------ | | Total Shareholders' Equity | $177,900 | $193,079 | | Net Income (6 months) | $13,501 | $13,501 | | Other comprehensive income (6 months) | $4,467 | $4,467 | | Cash dividends on common stock (6 months) | $(3,549) | $(3,549) | | Exercise of stock options (6 months) | $583 | $583 | | Stock-based compensation expense (6 months) | $177 | $177 | | Shares outstanding at June 30, 2025 | 5,933,706 | 5,933,706 | | Shares outstanding at December 31, 2024 | 5,903,368 | 5,903,368 | - Total shareholders' equity increased by **$15,179 thousand** from December 31, 2024, to June 30, 2025, primarily driven by net income and other comprehensive income, partially offset by cash dividends[15](index=15&type=chunk) - Cash dividends paid per share increased from **$0.54** for the six months ended June 30, 2024, to **$0.60** for the six months ended June 30, 2025[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details Plumas Bancorp's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $9,568 | $14,238 | | Net cash provided by investing activities | $2,053 | $21,024 | | Net cash used in financing activities | $(14,373) | $(11,065) | | (Decrease) increase in cash and cash equivalents | $(2,752) | $24,197 | | Cash and Cash Equivalents at End of Period | $79,266 | $109,852 | - Net cash provided by operating activities decreased by **$4,670 thousand** (**32.8%**) for the six months ended June 30, 2025, compared to the same period in 2024[17](index=17&type=chunk) - Net cash provided by investing activities significantly decreased by **$18,971 thousand** (**90.2%**) for the six months ended June 30, 2025, primarily due to lower proceeds from the sale of available-for-sale securities and buildings compared to the prior year[17](index=17&type=chunk) - Cash and cash equivalents decreased by **$2,752 thousand** for the six months ended June 30, 2025, resulting in an ending balance of **$79,266 thousand**, a notable shift from an increase of **$24,197 thousand** in the prior year[20](index=20&type=chunk) [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes on Plumas Bancorp's business, accounting policies, investment securities, loans, commitments, earnings, and fair value measurements [1. THE BUSINESS OF PLUMAS BANCORP](index=8&type=section&id=1.%20THE%20BUSINESS%20OF%20PLUMAS%20BANCORP) This section describes Plumas Bancorp's operations, including its branch network and primary revenue sources, and recent acquisition activities - Plumas Bancorp, a bank holding company, operates Plumas Bank with **13 branches** in California and **2** in Nevada, plus lending offices in California and Oregon. Its primary revenue source is providing loans to small and middle-market businesses and individuals[21](index=21&type=chunk)[22](index=22&type=chunk) - On **July 1, 2025**, the Company completed the acquisition of Cornerstone Community Bancorp, adding **four branches** in California, increasing its total branch network to **nineteen**[22](index=22&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines Plumas Bancorp's key accounting policies, including consolidation principles and segment reporting - The consolidated financial statements include Plumas Bancorp and its wholly-owned subsidiary, Plumas Bank, with all significant intercompany balances and transactions eliminated[23](index=23&type=chunk) - The Company operates as a single reportable segment, community banking, with the Chief Financial Officer assessing performance based on consolidated net income and various business components[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [Consolidation and Basis of Presentation](index=8&type=section&id=Consolidation%20and%20Basis%20of%20Presentation) This section details the consolidation principles and basis of presentation for the Company's financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim reporting on Form 10-Q, omitting certain annual disclosures[24](index=24&type=chunk)[25](index=25&type=chunk) [Segment Information](index=8&type=section&id=Segment%20Information) This section describes Plumas Bancorp's operating segments and how performance is assessed by management - The Company's sole operating segment is community banking, with performance assessed by the CFO through review of loan and deposit products, revenue streams, significant expenses, and budget-to-actual results[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [3. INVESTMENT SECURITIES AVAILABLE FOR SALE](index=10&type=section&id=3.%20INVESTMENT%20SECURITIES%20AVAILABLE%20FOR%20SALE) This section details Plumas Bancorp's investment securities portfolio, including fair values, unrealized gains/losses, and sales activity Investment Securities Available-for-Sale (In thousands) | Item | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :---------------------------------------------------------------- | :----------------------- | :------------------------- | | U.S. Government-sponsored agencies collateralized by mortgage obligations - residential | $222,524 | $228,391 | | U.S. Government-sponsored agencies collateralized by mortgage obligations - commercial | $129,241 | $121,870 | | Obligations of states and political subdivisions | $87,911 | $87,474 | | Total Fair Value | $439,676 | $437,735 | - Unrealized losses on available-for-sale investment securities totaled **$29.355 million** (net of tax benefit) at June 30, 2025, an improvement from **$35.698 million** at December 31, 2024[29](index=29&type=chunk)[30](index=30&type=chunk) - The Company sold four available-for-sale securities for **$1.122 million**, recording a **$3 thousand** gain on sale during the six months ended June 30, 2025, a significant change from a **$19.826 million** loss on sale from **155 securities** in the prior year period[29](index=29&type=chunk) - At June 30, 2025, **221 out of 311 securities** were in an unrealized loss position, primarily due to interest rate increases, but management does not intend to sell these securities before recovery of their amortized cost basis[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [4. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES](index=13&type=section&id=4.%20LOANS%20AND%20THE%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This section provides a detailed analysis of Plumas Bancorp's loan portfolio, credit quality, and the allowance for credit losses Outstanding Loans (In thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Commercial | $81,118 | $77,444 | | Agricultural | $113,850 | $118,866 | | Real estate – residential | $11,053 | $11,539 | | Real estate – commercial | $673,129 | $646,378 | | Real estate – construction and land development | $40,798 | $53,503 | | Equity lines of credit (Equity LOC) | $41,620 | $37,888 | | Auto | $51,487 | $64,734 | | Other | $4,791 | $5,072 | | Total loans | $1,017,846 | $1,015,424 | | Allowance for credit losses | $(14,209) | $(13,196) | | Total net loans | $1,006,873 | $1,005,375 | - Total gross loans increased by **$2.422 million** (**0.24%**) from December 31, 2024, to June 30, 2025, with significant growth in commercial real estate loans and equity lines of credit, offset by declines in construction and land development, auto, and agricultural loans[38](index=38&type=chunk) - The allowance for credit losses increased by **$1.013 million** (**7.68%**) from December 31, 2024, to June 30, 2025, reflecting management's assessment of inherent risks in the loan portfolio[38](index=38&type=chunk) [Outstanding Loans Summary](index=13&type=section&id=Outstanding%20Loans%20Summary) This section summarizes the composition and balances of Plumas Bancorp's outstanding loan portfolio by category Outstanding Loans (In thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Commercial | $81,118 | $77,444 | | Agricultural | $113,850 | $118,866 | | Real estate – residential | $11,053 | $11,539 | | Real estate – commercial | $673,129 | $646,378 | | Real estate – construction and land development | $40,798 | $53,503 | | Equity lines of credit (Equity LOC) | $41,620 | $37,888 | | Auto | $51,487 | $64,734 | | Other | $4,791 | $5,072 | | Total loans | $1,017,846 | $1,015,424 | [Credit Quality Indicators (Risk Ratings)](index=13&type=section&id=Credit%20Quality%20Indicators%20(Risk%20Ratings)) This section outlines the Company's methodology for assessing loan credit quality through risk ratings and non-performing loan definitions - The Company assigns risk ratings (Special Mention, Substandard, Doubtful, Pass-rated) to all loans, with detailed reviews for criticized and classified loans over **$100,000**, to assess collectability and credit risks[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - For consumer and automobile loans, credit quality is evaluated based on aging status and payment activity, with non-performing loans defined as nonaccrual or **90+ days** past due and still accruing[43](index=43&type=chunk) [Other Real Estate Owned](index=13&type=section&id=Other%20Real%20Estate%20Owned) This section details the Company's Other Real Estate Owned (OREO) and loans undergoing formal foreclosure proceedings - Other real estate owned (OREO) remained at **$91 thousand** at both June 30, 2025, and December 31, 2024, consisting of one single-family residential property[44](index=44&type=chunk) - At June 30, 2025, formal foreclosure proceedings were in process for **two commercial** real estate loans (**$302 thousand**), **one commercial** real estate loan secured by SFR (**$25 thousand**), and **three equity** lines of credit secured by SFR property (**$269 thousand**)[44](index=44&type=chunk) [Amortized Cost Basis by Origination Year and Risk Grades](index=15&type=section&id=Amortized%20Cost%20Basis%20by%20Origination%20Year%20and%20Risk%20Grades) This section presents the amortized cost basis of loans categorized by risk grade and origination year Total Loans Amortized Cost Basis by Risk Grade (June 30, 2025, in thousands) | Risk Grade | Total Amortized Cost Basis | | :---------------- | :------------------------- | | Pass | $913,175 | | Special Mention | $28,902 | | Substandard | $22,043 | | Auto Performing | $51,312 | | Auto Non-performing | $790 | | Other Performing | $4,853 | | Other Non-performing | $7 | | **Total Loans** | **$1,021,082** | - At June 30, 2025, the majority of the loan portfolio (**$913,175 thousand**) was classified as 'Pass', indicating sound credit quality, while 'Special Mention' and 'Substandard' loans totaled **$28,902 thousand** and **$22,043 thousand** respectively[46](index=46&type=chunk) - Total gross charge-offs for the current period (June 30, 2025) were **$506 thousand**, with Auto loans contributing the largest portion at **$251 thousand**[46](index=46&type=chunk) [Non-Performing Loans](index=17&type=section&id=Non-Performing%20Loans) This section provides an overview of Plumas Bancorp's non-performing loans, including nonaccrual status and related interest reversals Non-Performing Loans (In thousands) | Loan Category | June 30, 2025 Total Nonaccrual | December 31, 2024 Total Nonaccrual | | :------------------------------------ | :------------------------------- | :------------------------------- | | Commercial | $353 | $355 | | Agricultural | $9,905 | $567 | | Real estate – residential | $227 | $83 | | Real estate – commercial | $1,281 | $1,579 | | Equity lines of credit | $1,089 | $650 | | Auto | $790 | $792 | | Other | $7 | $79 | | **Total Gross Loans** | **$13,652** | **$4,105** | - Total nonaccrual loans significantly increased to **$13,652 thousand** at June 30, 2025, from **$4,105 thousand** at December 31, 2024, primarily driven by a **$9,338 thousand** increase in agricultural nonaccrual loans[49](index=49&type=chunk) - Interest reversed against income for loans placed on nonaccrual status totaled **$364 thousand** for the three months ended June 30, 2025, a substantial increase from **$7 thousand** in the prior year period[51](index=51&type=chunk) [Loan Modifications](index=19&type=section&id=Loan%20Modifications) This section details loans modified for borrowers experiencing financial difficulty, including their amortized cost basis and impact Loans Modified to Borrowers in Financial Difficulty (Six Months Ended June 30, 2025, in thousands) | Loan Class | Amortized Cost Basis | Percentage of Class | | :------------------------ | :------------------- | :------------------ | | Agricultural | $7,186 | 6.30% | | Real estate – commercial | $772 | 0.11% | | **Total** | **$7,958** | **0.78%** | - For the six months ended June 30, 2025, **$7,958 thousand** in loans were modified for borrowers experiencing financial difficulty, primarily through term extensions, with agricultural loans accounting for the largest portion[55](index=55&type=chunk) - Loans with payment defaults by borrowers experiencing financial difficulty, which had material modifications in the prior twelve months, totaled **$7.0 million** in agricultural loans for the six months ended June 30, 2025, an increase from **$6.2 million** in the prior year[56](index=56&type=chunk) [Allowance for Credit Losses Activity](index=20&type=section&id=Allowance%20for%20Credit%20Losses%20Activity) This section outlines the activity within the allowance for credit losses, including charge-offs, recoveries, and provisions Allowance for Credit Losses Activity (Six Months Ended June 30, 2025, in thousands) | Item | Commercial | Agricultural | RE Residential | RE Commercial | RE Construction | Equity LOC | Auto | Other | Total | | :-------------------------------- | :--------- | :----------- | :------------- | :------------ | :-------------- | :--------- | :--- | :---- | :------ | | Beginning balance | $1,265 | $1,802 | $102 | $7,459 | $815 | $460 | $1,215 | $78 | $13,196 | | Charge-offs | $(165) | $(11) | $- | $- | $- | $- | $(251) | $(79) | $(506) | | Recoveries | $10 | $- | $2 | $- | $- | $- | $349 | $8 | $369 | | Provision for credit losses | $287 | $866 | $6 | $283 | $(121) | $102 | $(358) | $85 | $1,150 | | **Ending balance** | **$1,397** | **$2,657** | **$110** | **$7,742** | **$694** | **$562** | **$955** | **$92** | **$14,209** | - The allowance for credit losses increased to **$14,209 thousand** at June 30, 2025, from **$13,196 thousand** at the beginning of the period, primarily due to a **$1,150 thousand** provision for credit losses on loans[57](index=57&type=chunk) - Net charge-offs for the six months ended June 30, 2025, were **$137 thousand**, significantly lower than **$610 thousand** for the same period in 2024[57](index=57&type=chunk) [Aging Analysis of Loan Portfolio](index=21&type=section&id=Aging%20Analysis%20of%20Loan%20Portfolio) This section presents an aging analysis of Plumas Bancorp's loan portfolio, categorizing loans by delinquency status Aging Analysis of Loan Portfolio (June 30, 2025, in thousands) | Loan Category | 30-59 Days Past Due | 60-89 Days Past Due | Nonaccrual | Total Past Due and Nonaccrual | Current | Total | | :------------------------------------ | :------------------ | :------------------ | :--------- | :---------------------------- | :------ | :------ | | Commercial | $903 | $444 | $353 | $1,700 | $80,199 | $81,899 | | Agricultural | $170 | $2,581 | $9,905 | $12,656 | $101,452 | $114,108 | | Real estate – residential | $- | $34 | $227 | $261 | $10,819 | $11,080 | | Real estate – commercial | $2,042 | $965 | $1,281 | $4,288 | $669,520 | $673,808 | | Real estate - construction & land | $534 | $- | $- | $534 | $40,165 | $40,699 | | Equity Lines of Credit | $592 | $235 | $1,089 | $1,916 | $40,610 | $42,526 | | Auto | $1,237 | $292 | $790 | $2,319 | $49,783 | $52,102 | | Other | $68 | $6 | $7 | $81 | $4,779 | $4,860 | | **Total** | **$5,546** | **$4,557** | **$13,652** | **$23,755** | **$997,327** | **$1,021,082** | - Total past due and nonaccrual loans increased to **$23,755 thousand** at June 30, 2025, from **$13,998 thousand** at December 31, 2024, primarily driven by a significant increase in agricultural nonaccrual loans[60](index=60&type=chunk) [Collateral Dependent Loans](index=22&type=section&id=Collateral%20Dependent%20Loans) This section details loans whose repayment is expected to be provided substantially through the operation or sale of the collateral Collateral Dependent Loans (June 30, 2025, in thousands) | Collateral Type | Commercial | Agricultural | RE Residential | RE Commercial | Equity LOC | Total | | :---------------- | :--------- | :----------- | :------------- | :------------ | :--------- | :------ | | Equipment | $11 | $- | $- | $- | $- | $11 | | Crops | $- | $4,953 | $- | $- | $- | $4,953 | | Farmland | $- | $2,307 | $- | $- | $- | $2,307 | | Commercial - 1st Deed | $- | $- | $- | $770 | $- | $770 | | SFR - 1st Deed | $- | $2,242 | $151 | $407 | $- | $2,800 | | SFR - 2nd Deed | $- | $336 | $- | $150 | $418 | $904 | | SFR - 3rd Deed | $- | $- | $- | $43 | $- | $43 | | **Total** | **$11** | **$9,838** | **$151** | **$1,370** | **$418** | **$11,788** | - Total collateral-dependent loans increased to **$11,788 thousand** at June 30, 2025, from **$2,447 thousand** at December 31, 2024, with agricultural loans showing the most significant increase[61](index=61&type=chunk) [5. COMMITMENTS AND CONTINGENCIES](index=22&type=section&id=5.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines Plumas Bancorp's unfunded loan commitments and other contingent liabilities - The Company had **$152.2 million** in unfunded loan commitments at June 30, 2025, a slight decrease from **$155.4 million** at December 31, 2024[62](index=62&type=chunk) - Of the outstanding loan commitments, **$18.5 million** are real estate construction loan commitments expected to fund within the next twelve months[63](index=63&type=chunk) - The reserve for unfunded commitments decreased to **$580 thousand** at June 30, 2025, from **$620 thousand** at December 31, 2024[63](index=63&type=chunk) [6. EARNINGS PER SHARE](index=23&type=section&id=6.%20EARNINGS%20PER%20SHARE) This section presents Plumas Bancorp's basic and diluted earnings per share for various reporting periods Earnings Per Share (In thousands, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $6,321 | $6,786 | $13,501 | $13,040 | | Basic earnings per share | $1.07 | $1.15 | $2.28 | $2.21 | | Diluted earnings per share | $1.05 | $1.14 | $2.25 | $2.19 | | Basic shares | 5,929 | 5,896 | 5,920 | 5,892 | | Diluted shares | 6,006 | 5,946 | 6,006 | 5,946 | - Basic EPS decreased to **$1.07** for the three months ended June 30, 2025, from **$1.15** in the prior year, while diluted EPS also decreased to **$1.05** from **$1.14**[66](index=66&type=chunk) - For the six months ended June 30, 2025, basic EPS increased to **$2.28** from **$2.21**, and diluted EPS increased to **$2.25** from **$2.19**, reflecting higher net income over the longer period[66](index=66&type=chunk) [7. STOCK-BASED COMPENSATION](index=23&type=section&id=7.%20STOCK-BASED%20COMPENSATION) This section details Plumas Bancorp's stock-based compensation plans, including option grants, exercises, and unrecognized costs - The Company's 2022 Equity Incentive Plan allows for the grant of up to **576,550 shares** of common stock, replacing the 2013 Stock Option Plan for new grants[67](index=67&type=chunk)[68](index=68&type=chunk) - No options were granted under the 2022 Plan during the six months ended June 30, 2025, compared to **107,200 options** granted in the same period of 2024[69](index=69&type=chunk) Stock-Based Compensation (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Fair value of options vested | $193 | $7 | | Intrinsic value of options exercised | $614 | $536 | | Cash received from option exercises | $583 | $367 | | Tax benefit from option exercises | $19 | $69 | | Compensation cost | $163 | $219 | | Tax benefit associated with compensation cost | $9 | $20 | - As of June 30, 2025, there was **$1.1 million** in total unrecognized compensation cost related to non-vested stock options under the 2022 plan, expected to be recognized over a weighted average period of **2.9 years**[72](index=72&type=chunk) [8. INCOME TAXES](index=25&type=section&id=8.%20INCOME%20TAXES) This section describes Plumas Bancorp's income tax policies, including deferred taxes and unrecognized tax benefits - The Company files income taxes on a consolidated basis, recognizing deferred tax assets and liabilities for temporary differences between reported and tax bases of assets and liabilities[76](index=76&type=chunk)[77](index=77&type=chunk) - Interest expense and penalties associated with unrecognized tax benefits are classified as income tax expense, with no significant changes for the six months ended June 30, 2025 and 2024[80](index=80&type=chunk) [9. FAIR VALUE MEASUREMENT](index=27&type=section&id=9.%20FAIR%20VALUE%20MEASUREMENT) This section explains Plumas Bancorp's fair value measurement methodologies and the fair value hierarchy for financial instruments - The Company uses the fair value hierarchy (Level 1, 2, and 3) to measure financial instruments, prioritizing observable inputs[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - Loans are generally valued using discounted expected cash flows with market and internal assumptions, classifying them as Level 3 due to significant unobservable inputs[91](index=91&type=chunk) [Fair Value Hierarchy](index=27&type=section&id=Fair%20Value%20Hierarchy) This section defines the fair value hierarchy levels (1, 2, and 3) used for financial instrument measurement - Level 1 inputs are quoted prices for identical instruments in active markets, Level 2 uses quoted prices for similar instruments or model-based techniques with observable inputs, and Level 3 uses model-based techniques with significant unobservable assumptions[83](index=83&type=chunk)[84](index=84&type=chunk) [Fair Value of Financial Instruments](index=27&type=section&id=Fair%20Value%20of%20Financial%20Instruments) This section presents the fair values of Plumas Bancorp's financial instruments compared to their carrying values Fair Value of Financial Instruments (June 30, 2025, in thousands) | Item | Carrying Value | Total Fair Value | | :------------------------ | :------------- | :--------------- | | **Financial assets:** | | | | Cash and cash equivalents | $79,266 | $79,266 | | Investment securities | $439,676 | $439,676 | | Loans, net | $1,006,873 | $971,530 | | FHLB stock | $6,234 | $6,234 | | FRB Stock | $1,384 | $1,384 | | **Financial liabilities:** | | | | Deposits | $1,366,827 | $1,365,575 | | Repurchase agreements | $14,940 | $14,940 | | Borrowings | $15,000 | $14,202 | - The fair value of loans, net, was **$971,530 thousand** at June 30, 2025, lower than its carrying value of **$1,006,873 thousand**, indicating a market discount[89](index=89&type=chunk) - The fair value of deposits was **$1,365,575 thousand**, slightly lower than its carrying value of **$1,366,827 thousand** at June 30, 2025[89](index=89&type=chunk) [Assets and Liabilities Measured at Fair Value on a Recurring Basis](index=29&type=section&id=Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value%20on%20a%20Recurring%20Basis) This section details assets and liabilities that are regularly measured at fair value, primarily using Level 2 inputs Assets Measured at Fair Value on a Recurring Basis (June 30, 2025, in thousands) | Asset Type | Total Fair Value | Level 2 Inputs | | :---------------------------------------------------------------- | :--------------- | :------------- | | U.S. Government-sponsored agencies collateralized by mortgage obligations- residential | $222,524 | $222,524 | | U.S. Government agencies collateralized by mortgage obligations commercial | $129,241 | $129,241 | | Obligations of states and political subdivisions | $87,911 | $87,911 | | **Total** | **$439,676** | **$439,676** | - All investment securities available-for-sale are measured at fair value on a recurring basis using Level 2 inputs, indicating that their fair values are determined using quoted market prices for similar securities or matrix pricing[97](index=97&type=chunk)[98](index=98&type=chunk) [Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis](index=31&type=section&id=Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value%20on%20a%20Non-Recurring%20Basis) This section describes assets and liabilities measured at fair value only under specific conditions, typically using Level 3 inputs Assets Measured at Fair Value on a Non-Recurring Basis (June 30, 2025, in thousands) | Asset Type | Total Fair Value | Level 3 Inputs | Total Losses Six Months Ended June 30, 2025 | | :------------------------ | :--------------- | :------------- | :------------------------------------ | | Collateral-dependent loans: | | | | | Commercial | $24 | $24 | $- | | Agricultural | $2,060 | $2,060 | $931 | | **Total** | **$2,084** | **$2,084** | **$931** | | Other Real Estate Owned: | | | | | RE – Residential | $91 | $91 | $- | - Collateral-dependent loans and Other Real Estate Owned are measured at fair value on a non-recurring basis using Level 3 inputs, based on appraisals adjusted for current conditions and selling costs[100](index=100&type=chunk)[101](index=101&type=chunk) - Impairment charges recognized on collateral-dependent loans totaled **$931 thousand** for the six months ended June 30, 2025, compared to **$0** in the prior year, primarily impacting agricultural loans[99](index=99&type=chunk)[100](index=100&type=chunk) [Quantitative Information about Level 3 Fair Value Measurements](index=33&type=section&id=Quantitative%20Information%20about%20Level%203%20Fair%20Value%20Measurements) This section provides quantitative details on Level 3 fair value measurements, including significant unobservable inputs and ranges Level 3 Fair Value Measurements (June 30, 2025, in thousands) | Description | Fair Value 6/30/2025 | Significant Unobservable Input | Range (Weighted Average) 6/30/2025 | | :------------------------ | :------------------- | :----------------------------- | :--------------------------------- | | Collateral-dependent loans: | | | | | Commercial | $24 | Management Adjustments to Reflect Current Conditions and Selling Costs | 54% | | Agricultural | $2,060 | Management Adjustments to Reflect Current Conditions and Selling Costs | 31% | | Other Real Estate: | | | | | RE – Residential | $91 | Management Adjustments to Reflect Current Conditions and Selling Costs | 60% | - Management adjustments to reflect current conditions and selling costs are the significant unobservable inputs for Level 3 fair value measurements, with weighted average adjustments ranging from **31% to 60%** for collateral-dependent loans and OREO[103](index=103&type=chunk) [10. OTHER COMPREHENSIVE LOSS](index=33&type=section&id=10.%20OTHER%20COMPREHENSIVE%20LOSS) This section details changes in Plumas Bancorp's accumulated other comprehensive loss, including reclassification adjustments Changes in Accumulated Other Comprehensive Loss (Net of Tax, in thousands) | Item | June 30, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------ | | Beginning Balance, January 1 | $(25,145) | $(32,464) | | Current year-to-date other comprehensive income | $4,467 | $7,355 | | Ending balance | $(20,678) | $(25,109) | - The accumulated other comprehensive loss improved to **$(20,678) thousand** at June 30, 2025, from **$(25,145) thousand** at the beginning of the year, driven by **$4,467 thousand** in current year-to-date other comprehensive income[104](index=104&type=chunk) - Reclassifications out of accumulated other comprehensive loss resulted in a net gain of **$2 thousand** for the six months ended June 30, 2025, a significant shift from a net loss of **$13,965 thousand** in the prior year, primarily due to changes in gain/loss on sale of investment securities[104](index=104&type=chunk) [11. SUBSEQUENT EVENTS](index=33&type=section&id=11.%20SUBSEQUENT%20EVENTS) This section reports significant events occurring after the balance sheet date, including the Cornerstone Community Bancorp acquisition - On **July 1, 2025**, Plumas Bancorp completed its acquisition of Cornerstone Community Bancorp, with Cornerstone merging into Plumas Bancorp and Cornerstone Community Bank merging into Plumas Bank[105](index=105&type=chunk)[106](index=106&type=chunk) - Cornerstone had total assets of **$658 million**, net loans of **$472 million**, and deposits of **$580 million** as of June 30, 2025[106](index=106&type=chunk) - The total aggregate consideration for the merger included **1,003,718 shares** of Company common stock and **$14.8 million** in cash, plus approximately **$1.3 million** paid for terminated Cornerstone stock options[107](index=107&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=35&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Plumas Bancorp's financial condition, operations, accounting policies, and asset quality for periods ended June 30, 2025 [Introduction](index=35&type=section&id=Introduction) This section introduces the scope of management's discussion and analysis for Plumas Bancorp's financial performance - The discussion and analysis covers statistical information for Plumas Bancorp as of June 30, 2025, and December 31, 2024, and for the three and six-month periods ended June 30, 2025 and 2024[110](index=110&type=chunk) - The Company's stock trades on The NASDAQ Capital Market under the ticker symbol 'PLBC'[111](index=111&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no changes to Plumas Bancorp's critical accounting policies from the prior annual report - There have been no changes to the Company's critical accounting policies from those disclosed in its 2024 Annual Report on Form 10-K[112](index=112&type=chunk) [Sales/Leaseback and Investment Restructuring - February 2024](index=35&type=section&id=Sales%2FLeaseback%20and%20Investment%20Restructuring%20-%20February%202024) This section details Plumas Bank's **February 2024** sales/leaseback transaction and concurrent investment portfolio restructuring - In **February 2024**, Plumas Bank completed the sale of **nine branch** properties for approximately **$25.7 million**, resulting in a net gain on sale of **$19.9 million**[113](index=113&type=chunk) - Concurrently, the Company leased back the sold properties under triple net lease agreements with initial **15-year terms** and annual rent of approximately **$2.4 million**[114](index=114&type=chunk) - The gain on property sales was offset by a **$19.8 million** loss on the sale of **$115 million** in investment securities, followed by the purchase of **$120 million** in new investment securities with a higher weighted average yield of **5.25%**[115](index=115&type=chunk) [Results of Operations for the Six Months Ended June 30, 2025](index=36&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025) For the six months ended June 30, 2025, net income increased to **$13.5 million**, up from **$13.0 million** in the prior year, driven by an increase in net interest income and a decline in provision for credit losses, partially offset by higher non-interest expenses, including merger-related costs [Net Income](index=36&type=section&id=Net%20Income) This section analyzes Plumas Bancorp's net income performance and key profitability ratios for the six-month period Net Income Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Net income | $13,501 | $13,040 | $461 | 3.5% | | Net interest income | $36,722 | $35,862 | $860 | 2.4% | | Provision for credit losses | $1,110 | $1,746 | $(636) | (36.4%) | | Non-interest income | $5,574 | $4,342 | $1,232 | 28.4% | | Non-interest expense | $22,477 | $20,793 | $1,684 | 8.1% | | Provision for income taxes | $5,208 | $4,625 | $583 | 12.6% | | Annualized return on average assets | 1.67% | 1.61% | 0.06% | 3.7% | | Annualized return on average equity | 14.7% | 16.7% | (2.0%) | (12.0%) | - Net income increased by **$461 thousand** (**3.5%**) to **$13.5 million** for the six months ended June 30, 2025, compared to the same period in 2024[116](index=116&type=chunk) - The annualized return on average assets improved to **1.67%** in 2025 from **1.61%** in 2024, while the annualized return on average equity decreased to **14.7%** from **16.7%**[116](index=116&type=chunk) [Net Interest Income before Provision for Credit Losses](index=36&type=section&id=Net%20Interest%20Income%20before%20Provision%20for%20Credit%20Losses) This section details the components of net interest income and margin, including interest income and expense trends Net Interest Income Components (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Net interest income before provision for credit losses | $36,722 | $35,862 | $860 | 2.4% | | Total interest income | $41,223 | $41,187 | $36 | 0.1% | | Total interest expense | $4,501 | $5,325 | $(824) | (15.5%) | | Interest and fees on loans | $31,008 | $30,005 | $1,003 | 3.3% | | Interest on investment securities | $9,014 | $8,930 | $84 | 0.9% | | Interest on deposits | $4,180 | $2,502 | $1,678 | 67.1% | | Interest on borrowings | $290 | $2,798 | $(2,508) | (89.6%) | | Net interest margin | 4.89% | 4.76% | 0.13% | 2.7% | - Net interest income increased by **$860 thousand** (**2.4%**) to **$36.7 million**, primarily due to a **$824 thousand** decline in interest expense, driven by the repayment of BTFP borrowings[122](index=122&type=chunk) - Interest and fees on loans increased by **$1.0 million** due to a **$44 million** increase in average loan balance, despite a **6 basis point** decline in average yield[123](index=123&type=chunk) - Net interest margin increased by **13 basis points** to **4.89%** for the six months ended June 30, 2025[128](index=128&type=chunk) [Provision for Credit Losses](index=38&type=section&id=Provision%20for%20Credit%20Losses) This section analyzes the provision for credit losses, including changes in loan loss provisions and unfunded commitments Provision for Credit Losses (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Provision for credit losses | $1,110 | $1,746 | $(636) | (36.4%) | | Provision for credit losses on loans | $1,150 | $1,825 | $(675) | (37.0%) | | Decrease in reserve for unfunded commitments | $(40) | $(79) | $39 | (49.4%) | - The provision for credit losses decreased by **$636 thousand** (**36.4%**) to **$1.11 million** for the six months ended June 30, 2025, compared to **$1.746 million** in the prior year[133](index=133&type=chunk) [Non-Interest Income](index=38&type=section&id=Non-Interest%20Income) This section reviews Plumas Bancorp's non-interest income sources, including gains/losses on securities and other revenue streams Non-Interest Income (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Total non-interest income | $5,574 | $4,342 | $1,232 | 28.4% | | Net gain (loss) on sale of investment securities | $3 | $(19,826) | $19,829 | 100.0% | | Gain on sale of buildings | $- | $19,854 | $(19,854) | (100.0%) | | Other non-interest income | $1,788 | $473 | $1,315 | 278.0% | | Service charges on deposit accounts | $1,486 | $1,458 | $28 | 1.9% | | Interchange revenue | $1,474 | $1,522 | $(48) | (3.2%) | - Total non-interest income increased by **$1.2 million** (**28.4%**) to **$5.6 million**, primarily due to a **$1.1 million** legal settlement related to the Dixie Fire, included in 'Other' non-interest income[118](index=118&type=chunk)[134](index=134&type=chunk) - The Company recorded a **$3 thousand** net gain on sale of investment securities in 2025, a significant improvement from a **$19,826 thousand** loss in 2024[134](index=134&type=chunk) [Non-Interest Expense](index=39&type=section&id=Non-Interest%20Expense) This section details Plumas Bancorp's non-interest expenses, including salaries, occupancy, and merger-related costs Non-Interest Expense (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Total non-interest expense | $22,477 | $20,793 | $1,684 | 8.1% | | Salaries and employee benefits | $11,433 | $10,649 | $784 | 7.4% | | Occupancy and equipment | $4,064 | $3,639 | $425 | 11.7% | | Merger and acquisition expenses | $1,050 | $- | $1,050 | 100.0% | | Professional fees | $448 | $768 | $(320) | (41.7%) | - Total non-interest expense increased by **$1.7 million** (**8.1%**) to **$22.5 million**, primarily due to **$1.1 million** in merger-related expenses for the Cornerstone Community Bancorp acquisition[119](index=119&type=chunk)[135](index=135&type=chunk) - Salaries and employee benefits increased by **$784 thousand**, mainly due to merit and promotional salary increases, while occupancy and equipment expenses rose by **$425 thousand**, largely from increased rent post-sales/leaseback[135](index=135&type=chunk) [Provision for Income Taxes](index=39&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes Plumas Bancorp's income tax provision and effective tax rate for the six-month period Provision for Income Taxes (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Provision for Income Taxes | $5,208 | $4,625 | $583 | 12.6% | | Pre-tax income | $18,709 | $17,665 | $1,044 | 5.9% | | Effective tax rate | 27.8% | 26.2% | 1.6% | 6.1% | - The provision for income taxes increased by **$583 thousand** (**12.6%**) to **$5.2 million**, with the effective tax rate rising to **27.8%** from **26.2%** in the prior year, influenced by non-deductible merger transaction costs[120](index=120&type=chunk)[136](index=136&type=chunk) [Results of Operations for the Three Months Ended June 30, 2025](index=40&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025) For the three months ended June 30, 2025, net income decreased to **$6.3 million** from **$6.8 million** in the prior year, primarily due to a decline in net interest income and an increase in non-interest expenses, including merger-related costs, partially offset by lower provision for income taxes and credit losses [Net Income](index=40&type=section&id=Net%20Income) This section analyzes Plumas Bancorp's net income performance and key profitability ratios for the three-month period Net Income Performance (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Net income | $6,321 | $6,786 | $(465) | (6.8%) | | Net interest income | $18,183 | $18,405 | $(222) | (1.2%) | | Provision for credit losses | $860 | $925 | $(65) | (7.0%) | | Non-interest income | $2,361 | $2,202 | $159 | 7.2% | | Non-interest expense | $11,012 | $10,396 | $616 | 5.9% | | Provision for income taxes | $2,351 | $2,500 | $(149) | (6.0%) | | Annualized return on average assets | 1.56% | 1.67% | (0.11%) | (6.6%) | | Annualized return on average equity | 13.4% | 17.1% | (3.7%) | (21.6%) | - Net income decreased by **$465 thousand** (**6.8%**) to **$6.3 million** for the three months ended June 30, 2025, compared to the same period in 2024[138](index=138&type=chunk) - The annualized return on average assets decreased to **1.56%** in 2025 from **1.67%** in 2024, and the annualized return on average equity decreased to **13.4%** from **17.1%**[138](index=138&type=chunk) [Net Interest Income before Provision for Credit Losses](index=40&type=section&id=Net%20Interest%20Income%20before%20Provision%20for%20Credit%20Losses) This section details the components of net interest income and margin, including interest income and expense trends Net Interest Income Components (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Net interest income before provision for credit losses | $18,183 | $18,405 | $(222) | (1.2%) | | Total interest income | $20,633 | $21,160 | $(527) | (2.5%) | | Total interest expense | $2,450 | $2,755 | $(305) | (11.1%) | | Interest and fees on loans | $15,612 | $15,412 | $200 | 1.3% | | Interest on investment securities | $4,504 | $4,534 | $(30) | (0.7%) | | Interest on cash balances | $517 | $1,214 | $(697) | (57.4%) | | Interest paid on deposits | $2,284 | $1,316 | $968 | 73.6% | | Net interest margin | 4.83% | 4.89% | (0.06%) | (1.2%) | - Net interest income decreased by **$222 thousand** (**1.2%**) to **$18.2 million**, primarily due to a **$527 thousand** decrease in interest income, partially offset by a **$305 thousand** decrease in interest expense[143](index=143&type=chunk) - Interest and fees on loans increased by **$200 thousand**, driven by loan portfolio growth, but the average yield on loans decreased by **18 basis points** to **6.14%**, partly due to **$344 thousand** in interest reversal from nonaccrual loans[143](index=143&type=chunk)[144](index=144&type=chunk) - Net interest margin decreased by **6 basis points** to **4.83%**, but would have been **4.93%** excluding the interest reversal on nonaccrual loans[150](index=150&type=chunk) [Provision for Credit Losses](index=43&type=section&id=Provision%20for%20Credit%20Losses) This section analyzes the provision for credit losses, including changes in loan loss provisions and unfunded commitments Provision for Credit Losses (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Provision for credit losses | $860 | $925 | $(65) | (7.0%) | | Provision for credit losses on loans | $900 | $925 | $(25) | (2.7%) | | Reduction in provision for unfunded loan commitments | $(40) | $- | $(40) | (100.0%) | - The provision for credit losses decreased by **$65 thousand** (**7.0%**) to **$860 thousand** for the three months ended June 30, 2025, compared to **$925 thousand** in the prior year[155](index=155&type=chunk) [Non-Interest Income](index=43&type=section&id=Non-Interest%20Income) This section reviews Plumas Bancorp's non-interest income sources, including gains/losses on securities and other revenue streams Non-Interest Income (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Total non-interest income | $2,361 | $2,202 | $159 | 7.2% | | Other non-interest income | $405 | $251 | $154 | 61.4% | | Service charges on deposit accounts | $781 | $743 | $38 | 5.1% | | Loan servicing fees | $148 | $186 | $(38) | (20.4%) | - Non-interest income increased by **$159 thousand** (**7.2%**) to **$2.4 million**, primarily due to a **$184 thousand** adjustment to the value of stock holdings in a correspondent bank, included in 'Other' non-interest income[156](index=156&type=chunk) [Non-Interest Expense](index=44&type=section&id=Non-Interest%20Expense) This section details Plumas Bancorp's non-interest expenses, including salaries, occupancy, and merger-related costs Non-Interest Expense (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Total non-interest expense | $11,012 | $10,396 | $616 | 5.9% | | Merger and acquisition expenses | $481 | $- | $481 | 100.0% | | Salaries and employee benefits | $5,553 | $5,283 | $270 | 5.1% | | Professional fees | $219 | $329 | $(110) | (33.4%) | | Telephone and data communication | $124 | $204 | $(80) | (39.2%) | - Total non-interest expense increased by **$616 thousand** (**5.9%**) to **$11.0 million**, largely due to **$481 thousand** in merger-related expenses[157](index=157&type=chunk) - Salaries and employee benefits increased by **$270 thousand**, mainly from merit and promotional salary increases, while professional fees decreased by **$110 thousand**[157](index=157&type=chunk) [Provision for Income Taxes](index=44&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes Plumas Bancorp's income tax provision and effective tax rate for the three-month period Provision for Income Taxes (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :--- | :--- | :--------- | :--------- | | Provision for Income Taxes | $2,351 | $2,500 | $(149) | (6.0%) | | Pre-tax income | $8,672 | $9,286 | $(614) | (6.6%) | | Effective tax rate | 27.1% | 26.9% | 0.2% | 0.7% | - The provision for income taxes decreased by **$149 thousand** (**6.0%**) to **$2.4 million**, with the effective tax rate slightly increasing to **27.1%** from **26.9%**, influenced by non-deductible merger transaction costs[141](index=141&type=chunk)[158](index=158&type=chunk) [Financial Condition](index=45&type=section&id=Financial%20Condition) Plumas Bancorp's assets grew to **$1.6 billion**, driven by loans and investments; nonperforming loans increased, but capital ratios remained strong [Loan Portfolio](index=45&type=section&id=Loan%20Portfolio) This section details the composition and growth of Plumas Bancorp's loan portfolio, including real estate concentrations and variable rates Gross Loan Portfolio Distribution (in thousands) | Loan Category | June 30, 2025 Balance | June 30, 2025 % of Total | December 31, 2024 Balance | December 31, 2024 % of Total | | :------------------------------------ | :-------------------- | :----------------------- | :------------------------ | :------------------------- | | Commercial | $81,118 | 8.0% | $77,444 | 7.6% | | Agricultural | $113,850 | 11.2% | $118,866 | 11.7% | | Real estate – residential | $11,053 | 1.1% | $11,539 | 1.1% | | Real estate – commercial | $673,129 | 66.1% | $646,378 | 63.7% | | Real estate – construction and land development | $40,798 | 4.0% | $53,503 | 5.3% | | Equity Lines of Credit | $41,620 | 4.1% | $37,888 | 3.7% | | Auto | $51,487 | 5.1% | $64,734 | 6.4% | | Other | $4,791 | 0.4% | $5,072 | 0.5% | | **Total Gross Loans** | **$1,017,846** | **100%** | **$1,015,424** | **100%** | - Gross loans increased by **$2.4 million** (**0.2%**) to **$1.018 billion** at June 30, 2025, with commercial real estate loans showing the largest increase (**$26.7 million**)[161](index=161&type=chunk) - Real estate related loans comprised **83%** of the total loan portfolio at June 30, 2025, with commercial real estate (CRE) loans alone accounting for **66.1%**[164](index=164&type=chunk)[165](index=165&type=chunk) - Approximately **78%** of the Company's loan portfolio was comprised of variable rate loans at June 30, 2025, with **21%** indexed to the prime rate and **76%** indexed to the five-year T-Bill rate, repricing every **five years**[167](index=167&type=chunk) [Analysis of Asset Quality and Allowance for Credit Losses](index=46&type=section&id=Analysis%20of%20Asset%20Quality%20and%20Allowance%20for%20Credit%20Losses) This section analyzes Plumas Bancorp's asset quality, including nonperforming loans, charge-offs, and the allowance for credit losses Allowance for Credit Losses and Asset Quality Metrics (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Balance at end of period (ACL) | $14,209 | $13,196 | | Net charge-offs (6 months) | $137 | $1,046 (12 months) | | Net charge-offs to average loans (annualized) | 0.03% | 0.11% (12 months) | | Allowance for credit losses to total loans | 1.39% | 1.30% | | Nonaccrual loans | $13,652 | $4,105 | | Total nonperforming loans | $13,652 | $4,105 | | Total nonperforming assets | $13,747 | $4,307 | | Nonperforming loans to total loans | 1.34% | 0.40% | | Nonperforming assets to total assets | 0.84% | 0.27% | - Nonperforming assets increased to **$13.7 million** (**0.84%** of total assets) at June 30, 2025, from **$4.3 million** (**0.27%** of total assets) at December 31, 2024[179](index=179&type=chunk) - The increase in nonperforming loans to **$13.7 million** was primarily due to **one agricultural** loan relationship of **15 loans** totaling **$9.9 million** being placed on nonaccrual status, resulting in **$344 thousand** in interest reversal and **$931 thousand** in specific loan loss reserves[179](index=179&type=chunk) - The allowance for credit losses increased to **$14.2 million** (**1.39%** of total loans) at June 30, 2025, from **$13.2 million** (**1.30%** of total loans) at December 31, 2024[181](index=181&type=chunk) [Investment Portfolio and Federal Reserve Balances](index=49&type=section&id=Investment%20Portfolio%20and%20Federal%20Reserve%20Balances) This section reviews Plumas Bancorp's investment securities, unrealized losses, and interest-earning balances at the Federal Reserve - Total investment securities were **$439.7 million** at June 30, 2025, a slight increase from **$437.7 million** at December 31, 2024[182](index=182&type=chunk) - Unrealized losses on available-for-sale investment securities decreased to **$29.4 million** (net of tax) at June 30, 2025, from **$35.7 million** at December 31, 2024[182](index=182&type=chunk) - The investment portfolio consists primarily of U.S. Government-sponsored agencies and municipal securities, with all securities classified as available-for-sale[184](index=184&type=chunk)[186](index=186&type=chunk) - The Bank maintained interest-earning balances at the Federal Reserve Bank totaling **$41.1 million** at June 30, 2025, earning **4.40%** interest[185](index=185&type=chunk) [Deposits](index=51&type=section&id=Deposits) This section details Plumas Bancorp's deposit composition, including non-interest-bearing and uninsured deposits Distribution of Deposits by Type (in thousands) | Deposit Type | June 30, 2025 Balance | June 30, 2025 % of Total | December 31, 2024 Balance | December 31, 2024 % of Total | | :------------------------ | :-------------------- | :----------------------- | :------------------------ | :------------------------- | | Non-interest bearing | $668,086 | 48.9% | $699,401 | 51.0% | | Money Market | $281,516 | 20.6% | $267,582 | 19.5% | | Savings | $290,440 | 21.2% | $309,929 | 22.6% | | Time | $126,785 | 9.3% | $94,189 | 6.9% | | **Total Deposits** | **$1,366,827** | **100%** | **$1,371,101** | **100%** | - Total deposits decreased by **$4.3 million** to **$1.367 billion** at June 30, 2025, primarily due to decreases in savings and demand deposits, partially offset by increases in money market and time deposits[188](index=188&type=chunk) - Non-interest-bearing deposits comprised **48.9%** of total deposits at June 30, 2025, down from **51.0%** at December 31, 2024[190](index=190&type=chunk) - The Company estimates approximately **$516 million** in uninsured deposits, of which **$206 million** are collateralized[191](index=191&type=chunk) [Short-term Borrowing Arrangements](index=51&type=section&id=Short-term%20Borrowing%20Arrangements) This section outlines Plumas Bancorp's available short-term borrowing lines from FHLB and FRB - The Company has access to **$255 million** from the FHLB and **$98 million** at the FRB Discount Window, with no outstanding borrowings at June 30, 2025[193](index=193&type=chunk) - All **$105 million** in BTFP borrowings outstanding at June 30, 2024, were paid off during 2024[194](index=194&type=chunk) [Note Payable](index=52&type=section&id=Note%20Payable) This section describes Plumas Bancorp's Term Note, including its maturity, interest rate, and covenant compliance - The Company has a Term Note of **$15 million**, maturing in January 2035, with a fixed interest rate of **3.85%** for the first **5 years**, then floating[195](index=195&type=chunk) - The Company was in compliance with all covenants related to the Term Note at June 30, 2025[195](index=195&type=chunk) [Repurchase Agreements](index=52&type=section&id=Repurchase%20Agreements) This section details Plumas Bancorp's repurchase agreements, their purpose, and collateralization - Repurchase agreements decreased to **$14.9 million** at June 30, 2025, from **$22.1 million** at December 31, 2024, secured by U.S. Government agency securities[196](index=196&type=chunk) - These agreements serve as an alternative to interest-bearing deposits for larger customers and are not FDIC insured[196](index=196&type=chunk) [Shareholders' Equity](index=52&type=section&id=Shareholders'%20Equity) This section analyzes changes in Plumas Bancorp's shareholders' equity, including net income, dividends, and comprehensive loss - Shareholders' equity increased by **$15.2 million** to **$193.1 million** at June 30, 2025, driven by net income and a decline in accumulated other comprehensive loss, partially offset by dividends[197](index=197&type=chunk) - The Company paid quarterly cash dividends of **$0.30 per share** in Q1 and Q2 2025, an increase from **$0.27 per share** in 2024[198](index=198&type=chunk) [Capital Standards](index=52&type=section&id=Capital%20Standards) This section presents Plumas Bank's capital ratios and compliance with 'well capitalized' thresholds under Basel III Bank Capital Ratios (June 30, 2025, in thousands) | Capital Ratio | Actual Amount | Actual Ratio | Minimum for Capital Adequacy | Minimum to be Well-Capitalized | | :-------------------------- | :------------ | :----------- | :--------------------------- | :----------------------------- | | Common Equity Tier 1 Ratio | $208,487 | 17.9% | 4.5% | 6.5% | | Tier 1 Leverage Ratio | $208,487 | 12.7% | 4.0% | 5.0% | | Tier 1 Risk-Based Capital Ratio | $208,487 | 17.9% | 6.0% | 8.0% | | Total Risk-Based Capital Ratio | $223,028 | 19.2% | 8.0% | 10.0% | - At June 30, 2025, Plumas Bank's capital ratios exceeded the thresholds necessary to be considered 'well capitalized' under the Basel III framework[200](index=200&type=chunk)[203](index=203&type=chunk) - The Company qualifies for treatment under the FRB's Small Bank Holding Company Policy Statement, exempting it from Basel III consolidated capital rules at the holding company level, though Basel III still applies to the Bank[201](index=201&type=chunk) [Off-Balance Sheet Arrangements](index=53&type=section&id=Off-Balance%20Sheet%20Arrangements) This section details Plumas Bancorp's unfunded loan commitments and operating lease obligations - The Company had **$152.2 million** in unfunded loan commitments at June 30, 2025, a decrease from **$155.4 million** at December 31, 2024[205](index=205&type=chunk) - Of these commitments, **$89.7 million** were for commercial customers and **$62.5 million** for consumer customers, with **$82.5 million** secured by real estate[205](index=205&type=chunk) - Total rent expense for operating leases was **$1,723 thousand** for the six months ended June 30, 2025, up from **$1,349 thousand** in the prior year[206](index=206&type=chunk) [Liquidity](index=53&type=section&id=Liquidity) This section describes Plumas Bancorp's liquidity management strategies and primary sources of funds - The Company manages liquidity through its investment portfolio (including unpledged U.S. Government-sponsored agency securities), competitive deposit rates, and established lines of credit[207](index=207&type=chunk) - Primary liquidity sources include the securities portfolio, Discount Window advances (**$98 million** available), FHLB advances (**$255 million** available), and cash and due from banks[208](index=208&type=chunk)[210](index=210&type=chunk) - Deposits are the primary source of funds, with approximately **$516 million** estimated as uninsured, of which **$206 million** are collateralized[209](index=209&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=55&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This item is not required for the current filing - The Company is not required to provide quantitative and qualitative disclosures about market risk in this quarterly report[212](index=212&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter ended June 30, 2025 [Disclosure Controls and Procedures](index=55&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of Plumas Bancorp's disclosure controls and procedures as of June 30, 2025 - The Company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[213](index=213&type=chunk) [Changes in Internal Control over Financial Reporting](index=55&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in Plumas Bancorp's internal control over financial reporting during the quarter - There wer

Group 1 - The main event for Plumas Bancorp (PLBC) this year is the acquisition of Cornerstone Community Bancorp, which is expected to enhance Plumas' balance sheet and generate cost savings [1] - The acquisition will also lead to a reduction in margin and a dilution effect on Plumas Bancorp [1]