Plumas Bancorp(PLBC) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents Plumas Bancorp's unaudited condensed consolidated financial statements and management's analysis ITEM 1. FINANCIAL STATEMENTS Plumas Bancorp's unaudited condensed consolidated financial statements, covering balance sheets, income, comprehensive income, equity, and cash flows Condensed Consolidated Balance Sheets 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] - 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] Condensed Consolidated Statements of Income 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] - 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] Condensed Consolidated Statements of Comprehensive Income 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] - 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] Consolidated Statements of Changes in Shareholders' Equity 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] - 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] Condensed Consolidated Statements of Cash Flows 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] - 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] - 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] NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 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][22] - 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] 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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] - 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][27][28] Consolidation and Basis of Presentation 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][25] Segment Information 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][27][28] 3. INVESTMENT SECURITIES AVAILABLE FOR SALE 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][30] - 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] - 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][33][34] 4. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES 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] - 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] Outstanding Loans Summary 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) 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][40][41][42] - 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] Other Real Estate Owned 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] - 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] Amortized Cost Basis by Origination Year and Risk Grades 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] - 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] Non-Performing Loans 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] - 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] Loan Modifications 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] - 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] Allowance for Credit Losses Activity 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] - 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] Aging Analysis of Loan Portfolio 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] Collateral Dependent Loans 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] 5. COMMITMENTS AND CONTINGENCIES 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] - Of the outstanding loan commitments, $18.5 million are real estate construction loan commitments expected to fund within the next twelve months[63] - The reserve for unfunded commitments decreased to $580 thousand at June 30, 2025, from $620 thousand at December 31, 2024[63] 6. EARNINGS PER SHARE 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] - 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] 7. STOCK-BASED COMPENSATION 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][68] - 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] 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] 8. INCOME TAXES 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][77] - 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] 9. FAIR VALUE MEASUREMENT 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][83][84] - 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] Fair Value Hierarchy 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][84] Fair Value of Financial Instruments 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] - 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] Assets and Liabilities Measured at Fair Value on a Recurring Basis 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][98] Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis 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][101] - 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][100] Quantitative Information about Level 3 Fair Value Measurements 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] 10. OTHER COMPREHENSIVE LOSS 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] - 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] 11. SUBSEQUENT EVENTS 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][106] - Cornerstone had total assets of $658 million, net loans of $472 million, and deposits of $580 million as of June 30, 2025[106] - 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] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses Plumas Bancorp's financial condition, operations, accounting policies, and asset quality for periods ended June 30, 2025 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] - The Company's stock trades on The NASDAQ Capital Market under the ticker symbol 'PLBC'[111] Critical Accounting Policies and Estimates 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] Sales/Leaseback and Investment Restructuring - February 2024 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] - 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] - 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] Results of Operations for the Six Months Ended June 30, 2025 For the six months ended June 30, 2025, net income increased to $13.5 million, up from $13.0 million in the prior year, driven by an increase in net interest income and a decline in provision for credit losses, partially offset by higher non-interest expenses, including merger-related costs Net Income This section analyzes Plumas Bancorp's net income performance and key profitability ratios for the six-month period Net Income Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | 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 $13.5 million for the six months ended June 30, 2025, compared to the same period in 2024[116] - The annualized return on average assets improved to 1.67% in 2025 from 1.61% in 2024, while the annualized return on average equity decreased to 14.7% from 16.7%[116] Net Interest Income before Provision for Credit Losses This section details the components of net interest income and margin, including interest income and expense trends Net Interest Income Components (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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] - Interest and fees on loans increased by $1.0 million due to a $44 million increase in average loan balance, despite a 6 basis point decline in average yield[123] - Net interest margin increased by 13 basis points to 4.89% for the six months ended June 30, 2025[128] Provision for Credit Losses This section analyzes the provision for credit losses, including changes in loan loss provisions and unfunded commitments Provision for Credit Losses (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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 $1.746 million in the prior year[133] Non-Interest Income This section reviews Plumas Bancorp's non-interest income sources, including gains/losses on securities and other revenue streams Non-Interest Income (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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][134] - The Company recorded a $3 thousand net gain on sale of investment securities in 2025, a significant improvement from a $19,826 thousand loss in 2024[134] Non-Interest Expense This section details Plumas Bancorp's non-interest expenses, including salaries, occupancy, and merger-related costs Non-Interest Expense (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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][135] - Salaries and employee benefits increased by $784 thousand, mainly due to merit and promotional salary increases, while occupancy and equipment expenses rose by $425 thousand, largely from increased rent post-sales/leaseback[135] Provision for Income Taxes This section analyzes Plumas Bancorp's income tax provision and effective tax rate for the six-month period Provision for Income Taxes (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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][136] Results of Operations for the Three Months Ended June 30, 2025 For the three months ended June 30, 2025, net income decreased to $6.3 million from $6.8 million in the prior year, primarily due to a decline in net interest income and an increase in non-interest expenses, including merger-related costs, partially offset by lower provision for income taxes and credit losses Net Income This section analyzes Plumas Bancorp's net income performance and key profitability ratios for the three-month period Net Income Performance (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | 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 $6.3 million for the three months ended June 30, 2025, compared to the same period in 2024[138] - The annualized return on average assets decreased to 1.56% in 2025 from 1.67% in 2024, and the annualized return on average equity decreased to 13.4% from 17.1%[138] Net Interest Income before Provision for Credit Losses This section details the components of net interest income and margin, including interest income and expense trends Net Interest Income Components (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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] - 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 $344 thousand in interest reversal from nonaccrual loans[143][144] - Net interest margin decreased by 6 basis points to 4.83%, but would have been 4.93% excluding the interest reversal on nonaccrual loans[150] Provision for Credit Losses This section analyzes the provision for credit losses, including changes in loan loss provisions and unfunded commitments Provision for Credit Losses (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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 $925 thousand in the prior year[155] Non-Interest Income This section reviews Plumas Bancorp's non-interest income sources, including gains/losses on securities and other revenue streams Non-Interest Income (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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 $184 thousand adjustment to the value of stock holdings in a correspondent bank, included in 'Other' non-interest income[156] Non-Interest Expense This section details Plumas Bancorp's non-interest expenses, including salaries, occupancy, and merger-related costs Non-Interest Expense (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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] - Salaries and employee benefits increased by $270 thousand, mainly from merit and promotional salary increases, while professional fees decreased by $110 thousand[157] Provision for Income Taxes This section analyzes Plumas Bancorp's income tax provision and effective tax rate for the three-month period Provision for Income Taxes (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | 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][158] Financial Condition Plumas Bancorp's assets grew to $1.6 billion, driven by loans and investments; nonperforming loans increased, but capital ratios remained strong Loan Portfolio 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] - 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][165] - 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] Analysis of Asset Quality and Allowance for Credit Losses 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] - 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] - 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] Investment Portfolio and Federal Reserve Balances 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] - 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] - The investment portfolio consists primarily of U.S. Government-sponsored agencies and municipal securities, with all securities classified as available-for-sale[184][186] - The Bank maintained interest-earning balances at the Federal Reserve Bank totaling $41.1 million at June 30, 2025, earning 4.40% interest[185] 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] - Non-interest-bearing deposits comprised 48.9% of total deposits at June 30, 2025, down from 51.0% at December 31, 2024[190] - The Company estimates approximately $516 million in uninsured deposits, of which $206 million are collateralized[191] Short-term Borrowing Arrangements 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] - All $105 million in BTFP borrowings outstanding at June 30, 2024, were paid off during 2024[194] Note Payable 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] - The Company was in compliance with all covenants related to the Term Note at June 30, 2025[195] Repurchase Agreements 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] - These agreements serve as an alternative to interest-bearing deposits for larger customers and are not FDIC insured[196] Shareholders' Equity 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] - 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] Capital Standards 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][203] - 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] Off-Balance Sheet Arrangements 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] - 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] - 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] 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] - 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][210] - Deposits are the primary source of funds, with approximately $516 million estimated as uninsured, of which $206 million are collateralized[209] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 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] ITEM 4. CONTROLS AND PROCEDURES 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 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] Changes in Internal Control over Financial Reporting This section reports no material changes in Plumas Bancorp's internal control over financial reporting during the quarter - There wer