Plumas Bancorp(PLBC) - 2022 Q4 - Annual Report

Dividend Distribution and Shareholder Returns - As of December 31, 2022, the maximum amount available for dividend distribution was approximately $49.1 million, subject to California Financial Code restrictions[64] - The Company is subject to certain covenants that restrict its ability to pay dividends and repurchase shares of common stock[65] - Future cash dividends by the Bank will depend on management's assessment of capital requirements and other factors[63] - The company's ability to pay dividends is primarily dependent on the operations of the Bank, which is subject to legal limitations on extending credit and paying dividends[115] - The company paid cash dividends of $3,737,000 in 2022, up from $3,081,000 in 2021[300] Financial Performance - The net income for 2022 was $26.44 million, a 25.8% increase from $21.01 million in 2021[289] - Basic earnings per common share increased to $4.53 in 2022 from $3.82 in 2021, reflecting a growth of 18.6%[289] - Net interest income after provision for loan losses rose to $57.2 million in 2022, up from $45.8 million in 2021, representing a year-over-year increase of 24.9%[289] - Non-interest income increased to $11.05 million in 2022, compared to $8.72 million in 2021, marking a growth of 26.9%[288] - Total non-interest expenses were $32.59 million in 2022, up from $26.04 million in 2021, indicating an increase of 25.3%[289] - The company reported a comprehensive loss income of $11.91 million in 2022, compared to a comprehensive income of $17.86 million in 2021[292] - Total assets increased slightly to $1.621 billion in 2022 from $1.614 billion in 2021, reflecting a growth of approximately 0.43%[285] - The total deposits increased to $1.458 billion in 2022 from $1.439 billion in 2021, showing a growth of approximately 1.3%[285] Loan Portfolio and Credit Risk - The Bank's limit on aggregate secured loans-to-one-borrower was $34.3 million and unsecured loans-to-one-borrower was $20.6 million as of December 31, 2022[66] - Approximately 90% of the loans in the company's portfolio were made to borrowers primarily located in Northern California or Northern Nevada, indicating significant geographic concentration risk[87] - Approximately 77% of the total loan portfolio is secured by real estate, predominantly commercial real estate, which exposes the company to fluctuations in real estate market values[89] - The company estimates that the total allowance for loan losses will increase by between $500,000 and $800,000 due to the implementation of the current Expected Credit Loss (CECL) model[107] - A significant downturn in the national or local economy could adversely affect the company's profitability, particularly due to its concentration in Northern California and Northern Nevada[87] - The provision for loan losses increased to $1,300,000 in 2022 from $1,125,000 in 2021, indicating a cautious approach to potential credit risks[298] - The allowance for loan losses is based on historical loss rates and qualitative loss factors, requiring significant management judgment[280] - The total allowance for loan losses is estimated to increase by between $500,000 and $800,000, with a corresponding decline in equity of $350,000 to $550,000[386] Economic and Market Conditions - The ongoing COVID-19 pandemic has caused significant disruption, impacting demand for products and services, potentially leading to increased loan delinquencies[82] - The company faces substantial competition from larger banks and financial institutions, which may impact its ability to grow its loan portfolio and deposit base[102] - Changes in interest rates could lead to larger payment requirements for borrowers, increasing the potential for defaults and affecting the marketability of secured properties[96] - Trends in economic indicators such as unemployment rates are closely correlated to the credit quality of the loan portfolio, indicating potential risks[350] - Climate change concerns may lead to increased costs and changes in consumer behavior, potentially affecting demand for the company's products and services[128] Regulatory and Compliance Risks - The Bank is required to comply with numerous consumer protection laws, which may lead to additional compliance costs[74] - The company may face regulatory enforcement actions and penalties due to extensive regulations governing its operations[120] - The implementation of the CECL model is underway, with a dedicated team and software purchased to support the calculation of the allowance for loan losses[385] Operational Risks - The company may face increased operating costs and cybersecurity risks due to remote work arrangements[83] - Security breaches and technological disruptions pose risks to the company's reputation and profitability, potentially leading to costly litigation and loss of customer relationships[110] - The company faces risks related to reliance on third-party vendors for data processing, which could significantly affect transaction processing capabilities[112] Asset Management - A decline in the value of investment securities could adversely impact the company's earnings and shareholders' equity, with potential material effects on net income[116] - The Company’s investment securities are classified as available-for-sale, with unrealized gains and losses excluded from earnings[317] - The Company maintains a separate allowance for each portfolio segment, including commercial, agricultural, and residential mortgage loans[336] Strategic Growth and Acquisitions - The Bank's most recent Community Reinvestment Act rating was "Satisfactory," which is crucial for growth through acquisitions or new branches[67] - The company funded 2,256 PPP loans totaling $197 million and an additional 562 loans amounting to $60 million through December 31, 2022[121] - The Company recognized $204,960,000 in assets acquired through acquisition in 2021, highlighting strategic growth through mergers[302] Stock and Equity Management - The trading price of the company's common stock may be volatile, influenced by factors such as quarterly fluctuations in operating results and analyst recommendations[122] - The total amount of common stock issued in 2021 was $18,657,000, reflecting ongoing capital raising efforts[298] - The Company granted options to purchase 117,000 shares of common stock in 2022, with a fair value of $31 per share for restricted stock granted[381]