Plumas Bancorp(US:PLBC)2024-05-07 16:16PART I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Plumas Bancorp as of March 31, 2024, and for the three-month period then ended, including balance sheets, income statements, and cash flows Condensed Consolidated Balance Sheets Total assets increased to $1.64 billion by March 31, 2024, driven by cash and loans, while liabilities and shareholders' equity also grew Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,640,333 | $1,610,416 | | Cash and cash equivalents | $128,231 | $85,655 | | Investment securities available for sale, net | $447,445 | $489,181 | | Loans, net | $966,141 | $948,604 | | Total Liabilities | $1,478,842 | $1,463,099 | | Total deposits | $1,299,688 | $1,333,655 | | Other borrowings | $120,000 | $90,000 | | Total Shareholders' Equity | $161,491 | $147,317 | Condensed Consolidated Statements of Income Net income for Q1 2024 was $6.3 million, a decrease from $7.6 million in Q1 2023, primarily due to a significant loss on investment securities sales offsetting a large gain on building sales Q1 Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net interest income | $17,457 | $17,149 | | Provision for Credit Losses | $821 | $1,525 | | Total non-interest income | $2,140 | $3,925 | | Gain on sale of buildings | $19,854 | $ - | | Loss on sale of investment securities | ($19,826) | $ - | | Total non-interest expenses | $10,397 | $9,224 | | Net income | $6,254 | $7,626 | | Diluted earnings per share | $1.05 | $1.28 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $9.2 million, while investing activities provided $42.3 million, and financing activities used $8.9 million, resulting in a net increase in cash of $42.6 million Q1 Cash Flow Summary (in thousands) | Cash Flow Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,162 | $14,838 | | Net cash provided by (used in) investing activities | $42,333 | ($38,178) | | Net cash used in financing activities | ($8,919) | ($54,410) | | Increase (decrease) in cash and cash equivalents | $42,576 | ($77,750) | Notes to Condensed Consolidated Financial Statements This section details accounting policies and specifics for financial statement figures, covering investment securities, loan portfolio, credit losses, commitments, and fair value measurements - During Q1 2024, the company sold 155 available-for-sale investment securities for proceeds of $114.8 million, recording a net loss of $19.8 million, as part of a balance sheet restructuring28 - Total loans increased to $976.2 million at March 31, 2024, from $958.6 million at year-end 2023, with the allowance for credit losses at $13.2 million, or 1.35% of total loans37 - As of March 31, 2024, the company had outstanding loan commitments of $165.6 million, a decrease from $174.6 million at the end of 202359 - In Q1 2024, 107,200 stock options were granted under the 2022 Equity Incentive Plan, with total unrecognized compensation cost related to non-vested stock options at $1.7 million6771 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2024 financial performance, highlighting a balance sheet restructuring involving a sale-leaseback and investment portfolio repositioning, which impacted net income Sales/Leaseback and Investment Restructuring In Q1 2024, the company completed a sale-leaseback of nine branch properties for $25.7 million, generating a $19.9 million net gain, and used proceeds to reposition its investment portfolio by selling lower-yielding securities at a loss and reinvesting in higher-yielding ones - Completed the sale of nine branch properties for $25.7 million, realizing a net gain of $19.9 million101 - The gain on the property sale was largely offset by a $19.8 million loss from the sale of $115 million in investment securities103 - The company reinvested proceeds into $120 million of new investment securities with a weighted average tax equivalent yield of 5.25%, compared to the 2.24% yield on the securities sold103 Results of Operations Net income for Q1 2024 decreased to $6.3 million from $7.6 million in Q1 2023, driven by lower non-interest income and higher non-interest expenses, while net interest income slightly increased Q1 Performance Summary | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $6.3 million | $7.6 million | | Annualized Return on Average Assets (ROA) | 1.55% | 1.93% | | Annualized Return on Average Equity (ROE) | 16.4% | 25.0% | | Net Interest Margin | 4.62% | 4.64% | - Net interest income increased slightly due to a $49 million increase in average loan balances and a 46 basis point increase in average loan yield to 6.09%107 - Interest expense rose significantly to $2.6 million from $638,000 in the prior year, driven by higher market rates and an increase in borrowings109 Financial Condition Total assets grew by $29.9 million to $1.6 billion, with gross loans increasing to $976 million, while total deposits decreased by $34.0 million to $1.3 billion, leading to increased borrowings and a rise in shareholders' equity Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Real estate – commercial | $562,870 | $544,339 | | Agricultural | $123,239 | $129,389 | | Auto | $89,399 | $98,132 | | Commercial | $82,136 | $74,271 | | Total Gross Loans | $976,212 | $958,564 | Deposit Composition (in thousands) | Deposit Category | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Non-interest bearing | $665,975 | $692,768 | | Savings | $328,781 | $335,050 | | Money Market | $214,257 | $214,185 | | Time | $90,675 | $91,652 | | Total Deposits | $1,299,688 | $1,333,655 | - The company terminated its indirect auto loan program in Q4 2023 to improve its loan loss risk profile and consumer compliance risk profile125 Analysis of Asset Quality and Allowance for Credit Losses Asset quality remained stable, with nonperforming loans slightly increasing to $5.6 million (0.57% of total loans) and the allowance for credit losses rising to $13.2 million (1.35% of total loans) Nonperforming Assets (in thousands) | Category | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Nonaccrual loans | $5,610 | $4,820 | | Other real estate owned | $357 | $357 | | Total nonperforming assets | $6,000 | $5,315 | | Nonperforming assets to total assets | 0.37% | 0.33% | - The allowance for credit losses was $13.2 million, or 1.35% of total loans, at March 31, 2024134 - Substandard loans decreased by $0.3 million to $21.4 million, while special mention loans increased by $1.3 million to $10.6 million139 Capital Resources The company maintains a strong, well-capitalized position, with shareholders' equity increasing to $161.5 million and regulatory capital ratios well above minimum requirements Bank Regulatory Capital Ratios | Ratio | March 31, 2024 | Well-Capitalized Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 Ratio | 16.1% | 6.5% | | Tier 1 Leverage Ratio | 11.0% | 5.0% | | Tier 1 Risk-Based Capital Ratio | 16.1% | 8.0% | | Total Risk-Based Capital Ratio | 17.4% | 10.0% | - A quarterly cash dividend of $0.27 per share was paid on February 15, 2024157 Liquidity The company maintains a solid liquidity position, primarily through customer deposits and significant borrowing capacity from the FHLB and correspondent banks - Total available borrowing capacity from the FHLB is $237 million, with no outstanding balance at quarter-end166 - The company had $105 million outstanding under the Bank Term Funding Program (BTFP) at March 31, 2024154 - Estimated uninsured deposits totaled $400 million, of which $94 million represents collateralized public funds149168 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024172 - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting173 PART II — OTHER INFORMATION Legal Proceedings The company is party to claims and legal proceedings arising in the ordinary course of business, but management believes the ultimate liability will not have a material adverse effect on its financial condition or results of operations - The company states that any potential liability from ordinary course legal proceedings is not expected to be material176 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - No material changes from the risk factors included within the Company's 2023 Annual Report are reported177