Plumas Bancorp(PLBC) - 2025 Q2 - Quarterly Results

Financial Highlights Second Quarter 2025 Performance Plumas Bancorp's Q2 2025 net income declined to $6.3 million due to lower net interest income and increased non-interest expenses, including merger costs | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $6.3 million | $6.8 million | -$465 thousand | | Diluted EPS | $1.05 | $1.14 | -$0.09 | | Return on Average Assets (ROA) | 1.56% | 1.67% | -11 bps | | Return on Average Equity (ROE) | 13.4% | 17.1% | -370 bps | - Net interest income decreased by $222 thousand to $18.2 million in Q2 2025, down from $18.4 million in Q2 2024[3] - Non-interest expense increased by $616 thousand year-over-year to $11.0 million, largely due to $481 thousand in costs associated with the acquisition of Cornerstone Community Bancorp[4] - The provision for credit losses decreased slightly to $860 thousand from $925 thousand in the prior-year quarter[3] Six-Month 2025 Performance Six-month 2025 net income rose to $13.5 million, driven by increased non-interest income and lower credit loss provisions, despite higher merger-related expenses | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $13.5 million | $13.0 million | +$461 thousand | | Diluted EPS | $2.25 | $2.19 | +$0.06 | | Return on Average Assets (ROA) | 1.67% | 1.61% | +6 bps | | Return on Average Equity (ROE) | 14.7% | 16.7% | -200 bps | - Net interest income for the six-month period increased by $860 thousand to $36.7 million[8] - Non-interest income saw a significant increase of $1.2 million, mainly due to a $1.1 million legal settlement related to the Dixie Fire[9] - Non-interest expense rose by $1.7 million, with $1.1 million of the increase attributed to costs from the pending acquisition of Cornerstone Community Bancorp[11] Management Commentary President's Comments President Ryback highlighted the successful Cornerstone acquisition, expanding the bank's California presence, and noted internal efforts to enhance services and lending efficiency - Successfully completed the acquisition of Cornerstone Community Bank and Bancorp on July 1, 2025, expanding presence in California's northern Sacramento Valley[14] - Key personnel from Cornerstone, including Ken Robison (Director) and Matt Moseley (Market President), have joined Plumas Bancorp's leadership[14] - The company is focused on internal improvements, such as expanding treasury management services and refining lending platforms for greater efficiency[14] Financial Condition Balance Sheet Highlights As of June 30, 2025, the balance sheet showed increased deposits and gross loans, reduced borrowings, and strengthened total equity and book value per share | Metric (as of June 30, 2025) | Value | YoY Change | YoY % Change | | :--- | :--- | :--- | :--- | | Gross Loans | $1.0 billion | +$21 million | +2% | | Total Deposits | $1.4 billion | +$62 million | +5% | | Borrowings | $15 million | -$105 million | -88% | | Total Equity | $193 million | +$28 million | +17% | | Book Value Per Share | $32.54 | +$4.53 | +16% | Loans, Deposits, Investments and Cash Gross loans increased from commercial real estate growth, deposits rose from money market and time accounts, while investment securities and cash balances decreased - Loan growth was led by an $85 million increase in commercial real estate loans, partially offset by decreases in automobile (-$29 million), construction (-$27 million), and agricultural (-$10 million) loans[15] - Approximately 78% of the loan portfolio consists of variable rate loans as of June 30, 2025[17] - Deposit growth was driven by a $67 million increase in money market accounts and a $29 million increase in time deposits. Non-interest-bearing demand deposits constituted 49% of total deposits[18] - Total investment securities decreased by $5 million to $440 million, while cash and due from banks decreased by $31 million to $79 million[19] Asset Quality Asset quality deteriorated with increased nonperforming assets, primarily due to one agricultural loan, while the allowance for credit losses remained stable | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Nonperforming Assets | $13.7 million | $9.1 million | | Nonperforming Assets / Total Assets | 0.84% | 0.56% | | Nonperforming Loans | $13.6 million | $9.0 million | | Nonperforming Loans / Total Loans | 1.34% | 0.90% | | Allowance for Credit Losses / Total Loans | 1.39% | 1.41% | - The increase in nonperforming loans is mainly due to one agricultural loan relationship with 15 loans totaling $9.9 million being placed on nonaccrual status during the quarter[20] - Net charge-offs for the first six months of 2025 were $137 thousand, significantly lower than the $610 thousand recorded in the same period of 2024[22] Shareholders' Equity Shareholders' equity increased to $193.1 million, driven by net earnings and a positive change in AOCI, partially offset by cash dividends - Shareholders' equity grew by $27.9 million (16.9%) year-over-year to $193.1 million[25][53] - Key drivers of the increase were $29.1 million in net earnings and a $4.4 million positive change in AOCI, offset by $6.7 million in dividends paid[25] Liquidity The company maintains strong liquidity, primarily funded by customer deposits, with significant available borrowing capacity and all prior-year BTFP borrowings repaid - All $105 million in borrowings under the Bank Term Funding Program (BTFP) outstanding at June 30, 2024, were paid off during 2024[26] - The company has access to significant borrowing capacity: $255 million from FHLB, $98 million from the FRB Discount Window, and $70 million in unsecured lines with correspondent banks. There were no outstanding borrowings on these facilities[28] - Customer deposits are the primary source of funds, totaling $1.4 billion. The company estimates it has $516 million in uninsured deposits, of which $206 million are collateralized[29] Results of Operations Net Interest Income and Net Interest Margin Q2 2025 net interest income and NIM decreased due to a nonaccrual loan; six-month net interest income and NIM improved from lower interest expense due to BTFP repayment Three Months Ended June 30, 2025 Q2 2025 net interest income decreased to $18.2 million, with NIM compressing to 4.83%, primarily due to a nonaccrual loan interest reversal despite lower interest expense | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $18.2 million | $18.4 million | -$222 thousand | | Net Interest Margin | 4.83% | 4.89% | -6 bps | - The average yield on loans decreased by 18 basis points to 6.14%, with 13 basis points of the decline attributed to a $344 thousand interest reversal on loans placed on nonaccrual status[32] - Interest expense on deposits increased by $968 thousand, driven by higher balances and rates on money market accounts offered to public entities[36] - Total interest expense decreased by $305 thousand, primarily due to the repayment of BTFP borrowings, which had $1.3 million in interest expense in Q2 2024[35][26] Six Months Ended June 30, 2025 Six-month 2025 net interest income increased to $36.7 million, with NIM expanding to 4.89%, primarily due to reduced interest expense from repaid BTFP borrowings | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $36.7 million | $35.9 million | +$860 thousand | | Net Interest Margin | 4.89% | 4.76% | +13 bps | - Total interest expense decreased by $824 thousand, mainly due to a $2.5 million decline in interest on BTFP borrowings, which were fully repaid[41] - Interest paid on deposits increased by $1.7 million, as the average rate paid on interest-bearing deposits rose to 1.21% from 0.79% YoY[42] Non-Interest Income/Expense Q2 2025 non-interest income increased while expenses rose due to merger costs; six-month non-interest income grew from a legal settlement, with expenses also increasing from merger-related costs Three Months Ended June 30, 2025 Q2 2025 non-interest income increased to $2.4 million, while non-interest expense rose to $11.0 million, primarily due to merger-related and salary costs - Non-interest income increased by $159 thousand, with the largest contributor being a $184 thousand positive adjustment to the value of stock holdings in a correspondent bank[44] - Non-interest expense increased by $616 thousand, driven by $481 thousand in merger-related expenses and a $270 thousand increase in salaries and benefits[45] Six Months Ended June 30, 2025 Six-month 2025 non-interest income increased to $5.6 million due to a legal settlement, while non-interest expense rose to $22.5 million from merger, salary, and occupancy costs - Non-interest income increased by $1.2 million, primarily due to a $1.1 million legal settlement related to the 2021 Dixie Fire[46] - Non-interest expense increased by $1.7 million, with the largest components being $1.1 million in merger expenses and $784 thousand in higher salary and benefit costs[47] Financial Statements and Supplementary Data Condensed Consolidated Balance Sheets As of June 30, 2025, total assets slightly decreased, while liabilities shifted from borrowings to deposits, and shareholders' equity significantly increased | (In thousands) | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $1,628,517 | $1,642,097 | -$13,580 | | Loans, net | $1,006,873 | $986,517 | +$20,356 | | Total Deposits | $1,366,827 | $1,304,587 | +$62,240 | | Borrowings | $15,000 | $120,000 | -$105,000 | | Total Liabilities | $1,435,438 | $1,476,942 | -$41,504 | | Shareholders' Equity | $193,079 | $165,155 | +$27,924 | Condensed Consolidated Statements of Income Q2 2025 net income decreased to $6.3 million, while six-month net income increased to $13.5 million, driven by higher non-interest income and lower credit loss provisions For the Three Months Ended June 30 | (In thousands) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Net interest income | $18,183 | $18,405 | -1.2% | | Provision for credit losses | $860 | $925 | -7.0% | | Non-interest income | $2,361 | $2,202 | +7.2% | | Non-interest expense | $11,012 | $10,396 | +5.9% | | Net income | $6,321 | $6,786 | -6.9% | For the Six Months Ended June 30 | (In thousands) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Net interest income | $36,722 | $35,862 | +2.4% | | Provision for credit losses | $1,110 | $1,746 | -36.4% | | Non-interest income | $5,574 | $4,342 | +28.4% | | Non-interest expense | $22,477 | $20,793 | +8.1% | | Net income | $13,501 | $13,040 | +3.5% | Selected Financial Information This section details performance, credit quality, and capital ratios, highlighting deteriorating asset quality, strong capital, and a shift in loan composition towards commercial real estate Performance Ratios (Annualized) | Ratio | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Return on average assets | 1.56% | 1.67% | 1.67% | 1.61% | | Return on average equity | 13.4% | 17.1% | 14.7% | 16.7% | | Net interest margin | 4.83% | 4.89% | 4.89% | 4.76% | | Efficiency ratio | 53.6% | 50.4% | 53.1% | 51.7% | Credit Quality Ratios | Ratio (as of) | 6/30/2025 | 6/30/2024 | | :--- | :--- | :--- | | Allowance for credit losses / total loans | 1.39% | 1.41% | | Nonperforming assets / total assets | 0.84% | 0.56% | Plumas Bank Regulatory Capital Ratios | Ratio (as of) | 6/30/2025 | 6/30/2024 | | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 12.7% | 11.3% | | Common Equity Tier 1 Ratio | 17.9% | 16.4% | | Total Risk-Based Capital Ratio | 19.2% | 17.6% | Loan Distribution | Loan Type | % of Total (6/30/2025) | % of Total (6/30/2024) | | :--- | :--- | :--- | | Commercial Real Estate | 66.1% | 59.0% | | Agricultural | 11.2% | 12.4% | | Commercial | 8.0% | 8.1% | | Auto | 5.1% | 8.1% | Deposit Distribution | Deposit Type | % of Total (6/30/2025) | % of Total (6/30/2024) | | :--- | :--- | :--- | | Non-interest bearing | 48.9% | 51.4% | | Savings | 21.2% | 24.7% | | Money Market | 20.6% | 16.4% | | Time | 9.3% | 7.5% |