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                                                                   EXHIBIT 10.40

                                   PLUMAS BANK

                             1991 STOCK OPTION PLAN

1. Purpose

       The purpose of the 1991 Stock Option Plan is to strengthen Plumas Bank
(the "Bank") and those corporations which are or hereafter become subsidiary
corporations of the Bank by providing an additional means of attracting and
retaining competent managerial personnel and by providing to participating
officers and management level employees added incentive for high levels of
performance. The Plan seeks to accomplish these purposes and achieve these
results by providing a means whereby such officers and key employees may
purchase shares of the common stock of the Bank pursuant to options granted in
accordance with this Plan.

      Options granted pursuant to this Plan are intended to be "Incentive Stock
Options" within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended from time to time (the "Code"), or "non-qualified" stock
options, as shall be determined and designated upon the grant of each option
hereunder.

2. Administration

      This Plan shall be administered by a committee (the "Stock Option
Committee") consisting of certain members of the Board of Directors who from
time to time shall be selected by the Board. Any action of the Stock Option
Committee with respect to the administration of the Plan shall be taken pursuant
to a majority vote, or to the unanimous written consent, of its members. If no
Stock Option Committee is selected, the Board of Directors as a whole shall act
as such Committee. Vacancies occurring in the membership of the Committee shall
be filled by appointment by the Board of Directors. With regard to the granting
of a stock



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option to a member of the Board of Directors or to a member of a Stock Option
Committee, such member must abstain from voting.

      Subject to the express provisions of the Plan, the Stock Option Committee
(or Board of Directors if applicable) shall have the authority to construe and
interpret the Plan, define the terms used therein, prescribe, amend, rescind
rules and regulations relating to administration of the Plan, and make all other
determinations necessary or advisable for administration of the Plan.
Determinations of the Stock Option Committee (or Board of Directors if
applicable) on matters referred to in this section shall be final and
conclusive.

3. Incentive Stock Options

      (a) Incentive Stock Options granted under this Plan are intended to be
qualified under Section 422A of the Internal Revenue Code, as amended from time
to time (the "Code"). Each Incentive Stock Option Agreement shall contain such
terms and provisions as the Stock Option Committee may determine to be necessary
in order to qualify options granted thereunder as incentive stock options within
the meaning of Section 422A of the Code.

      (b) Full-time salaried officers and key employees of the Bank or of
subsidiary corporations (as that term is defined in Section 425 of the Code).
shall be eligible for selection to participate in the incentive stock option
portion of the Plan. No director of the Bank who is not also a full-time
salaried officer or key employee of the Bank or a subsidiary corporation, may be
granted an incentive stock option hereunder. Subject to the express provisions
of the Plan, the Stock Option Committee shall select from the eligible class of
employees and make recommendations to the Board of Directors concerning the
individuals to whom incentive stock options shall be granted, the terms and
provisions of the respective incentive stock option agreements, the times at
which such incentive stock options shall be granted, and the number of shares
subject to



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each incentive option. An individual who has been granted an incentive stock
option hereunder may, if he or she is otherwise eligible, be granted additional
incentive stock options if the Board of Directors shall so determine.

      (c) The Board of Directors shall determine the individuals who shall
receive incentive stock options and the terms and provisions of the incentive
stock options, and shall grant such incentive stock options to such individuals.
Notwithstanding the above, however, the Board of Directors may delegate to the
Stock Option Committee the power to determine the individuals who shall receive
options, the terms and provisions of such incentive stock options to such
individuals.

      (d) Except as described in subsection (f) below, the Board of Directors or
the Stock Option Committee, if authorized, shall not grant an incentive stock
option to purchase shares of the Bank's common stock to any individual who, at
the time of the grant, owns stock possessing more than 10% of the total combined
voting power or value of all classes of stock of the Bank or its parent or
subsidiary corporation, The attribution rules of Section 425(d) of the Code
shall apply in the determination of ownership of stock for these purposes.

      (e) The aggregate fair market value (determined as of the time the
incentive stock option is granted) of stock with respect to which incentive
stock options are exercisable for the first time by an employee during any
calendar year (under any other incentive stock option plan of the Bank and its
subsidiary corporations, if any) shall not exceed $100,000, plus any greater
amount as may be permitted under subsequent amendments to the Internal Revenue
Code of 1986.

      (f) The purchase price of stock subject to each incentive stock option
shall be determined by the Board of Directors (or the Stock Option Committee if
authorized), but shall not be less than one hundred percent (100%) of the fair
market value of such stock at the time such option is granted, except for
officers and key employees who at the time of the grant own more than 10 percent
of the



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total combined voting power of all classes of stock of the Bank or its parent or
subsidiary corporation (as defined in Section 422A of the Code), in which case
the purchase price of the stock shall not be less than 110 percent of the fair
market value of such stock at the time such option is granted and the term of
such option shall be for no more than 5 years. The fair market value of such
stock shall be determined in accordance with any reasonable valuation method,
including the valuation methods described in Treasury Regulation Section
20.2031-2. The purchase price of any shares purchased shall be paid in full in
cash at the time of each said purchase.

      (g) The number of shares subject to outstanding stock options (including
both incentive and non-qualified stock options) held by any single optionee may
not exceed ten percent (10%) of the total outstanding shares of the Bank's
common stock.

4. Non-Qualified Stock Options

      (a) All options granted which are (i) in excess of the fair market value
limitations set forth in Section 3(e) hereof, (ii) designated at the time of the
grant as "non-qualified", or (iii) intended to be incentive stock options but do
not meet the requirements of incentive stock options, shall be deemed non-
qualified stock options. Non-qualified stock options granted hereunder shall be
so designated in the Stock Option Agreement entered into between the Bank and
the Participant.

      (b) Directors, full-time salaried officers and key employees of the Bank
or of a subsidiary corporation shall be eligible for selection to participate in
the non-qualified stock option portion of the Plan. Subject to the express
provisions of the Plan, the Stock Option Committee shall (i) select from the
eligible class of individuals to whom non-qualified stock options shall be
granted, (ii) determine the discretionary terms and provisions of the respective



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non-qualified stock option agreements (which need not be identical), (iii)
determine the times at which such non-qualified stock options shall be granted,
and (iv) determine the number of shares subject to each non-qualified stock
option. An individual who has been granted a non-qualified stock option may, if
he or she is otherwise eligible, be granted additional non-qualified stock
options if the Board of Directors shall so determine.

      (c) The Board of Directors shall determine the individuals who shall
receive non-qualified stock options and the terms and provisions of the
non-qualified stock options, and shall grant such non-qualified stock options to
such individuals. Notwithstanding the above, however, the Board of Directors may
delegate to the Stock Option Committee the power to determine the individuals
who shall receive non-qualified stock options, the terms and provisions of such
non qualified stock options, and to grant non-qualified stock options to such
individuals.

      (d) The purchase price of stock subject to each non-qualified stock option
shall be determined by the Board of Directors (or the Stock Option Committee, if
authorized), but shall not be less than one hundred percent (100%) of the fair
market value of such stock at the time such option is granted. The fair market
value of such stock shall be determined in accordance with any reasonable
valuation method, including the valuation methods described in Treasury
Regulation 20.2031-2. The purchase price of any shares purchased shall be paid
in full in cash at the time of each purchase.

      (e) The number of shares subject to outstanding stock options (including
both incentive and non-qualified and stock options) held by the single optionee
may not exceed ten percent (10%) of the total outstanding shares of the Bank's
common stock.


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      Notwithstanding anything to the contrary contained herein, any option
grant to a director of the Bank pursuant to this Plan shall be made subject to
the following terms and conditions:

            (i)   Each non-employee director may be granted non-qualified stock
                  options pursuant to this Plan to purchase a maximum of 3,000
                  shares of the Bank's common stock for all such options, and
                  each employee director may be granted incentive stock options
                  and non-qualified stock options pursuant to this Plan to
                  purchase a maximum of 15,000 shares of the Bank's common stock
                  for all such options, subject to adjustments provided in
                  Section 12 of this Plan;

            (ii)  Options granted shall vest and become exercisable as to 1/5 of
                  the total number of option shares granted on the first
                  anniversary date of the option grant, as to an additional 1/5
                  of the total number of option shares granted on the second
                  anniversary date of the option grant, as to an additional 1/5
                  of the total number of option shares granted on the third
                  anniversary date of the date of the option grant. as to an
                  additional 1/5 of the total number of option shares granted on
                  the fourth anniversary date of the date of the option grant
                  and the remaining 1/5 of the total number of option shares on
                  the fifth anniversary of the date of the option grant. Vesting
                  of such options may accelerate in accordance with Section 13.
                  If a director shall not on any anniversary purchase all the
                  shares which such optionee is entitled to purchase, such
                  optionee's right to purchase any shares not purchased on such
                  anniversary shall continue until expiration or termination of
                  such option;

            (iii) The term of any option shall be 10 years from the time of the
                  option grant, and

            (iv)  The maximum aggregate number of shares which may be granted
                  to, (i) non-employee directors pursuant to this Plan is
                  33,000, and (ii) to employee directors is 30,000. In the event
                  that options granted under this paragraph to directors shall
                  for any reason terminate, lapse, be forfeited or expire
                  without being exercised, the shares subject to such
                  unexercised options may be granted to directors subject to the
                  limitations in this paragraph.

5. Stock Subject to the Plan

      Subject to adjustments as provided in Section 12, hereof, the stock to be
offered under the Plan shall be shares of the Bank's authorized but unissued
common stock (hereinafter called "stock") and the aggregate amount of stock to
be



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delivered upon exercise of all options granted under this Plan shall not exceed
97,950 shares (which amount may not exceed 30 percent of the total outstanding
shares of the same class and series of the Bank). If any option shall be
cancelled, surrendered or expire for any reason without having been exercised in
full, the underlying shares subject thereto shall again be available for
purposes of this Plan.

6. Continuation of Employment

      Nothing contained in the Plan (or in any option agreement) shall obligate
the Bank or any subsidiary corporation to employ any option holder ("Optionee")
for any period or interfere in any way with the right of the Bank or a
subsidiary corporation to reduce the Optionee's compensation. However, the Bank
may not change the terms of any option which would lessen the value of such
option without the approval of the Optionee.

7. Exercise of Options

      No option shall be exercisable until all necessary regulatory and
shareholder approvals are obtained. Except as otherwise provided in this
section, each option shall be exercisable in such installments, which need not
be equal, and upon such contingencies as the Board of Directors (or the Stock
Option Committee, if authorized) shall determine; provided, however, that if an
Optionee shall not in any given installment period purchase all of the shares
which the Optionee is entitled to purchase in such installment period, the
Optionee's right to purchase any shares not purchased in such installment period
shall continue until expiration or termination of such option. Fractional share
interests shall be disregarded, except that they may be accumulated. Not less
than ten (10) shares may be purchased under the option. Options may be exercised
by written notice




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delivered to the Bank stating the number of shares with respect to which the
option is being exercised, together with the full purchase price for such
shares. Payment of the option price in full, for the number of shares to be
delivered, must be made in cash. If the option is being exercised by any person
other than the Optionee, said notice shall be accompanied by proof, satisfactory
to counsel for the Bank, of the right of such person to exercise the option.
Optionees will have no rights as stockholders with respect to stock of the Bank
subject to their Stock Option Agreements until the date of issuance of stock
certificates to them.

8. Nontransferab1lity of Options

      Each option shall, by its terms, be nontransferable by the Optionee other
than by Will or the laws of descent and distribution, and shall be exercisable
during his or her lifetime only by the Optionee.

9. Cessation of Directorship or Employment

      Except as provided in Section 10 and 20 hereof, if an Optionee ceases to
be a director of the Bank (with respect to an option granted to non-employee
director) or an employee (with respect to an option other than a non-employee
director option) of the Bank or a subsidiary corporation for any reason other
than his disability (as defined in Section 105(d)(4) of the Code) or death, the
Optionee's option shall expire 90 days after the date of termination of
directorship or employment. During the period after cessation of directorship or
employment, such option shall be exercisable only as to those installments, if
any, which have accrued and/or vested as of the date on which the Optionee
ceased to be a director or employed by the Bank or a subsidiary corporation.



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10. Termination of Employment for Cause

      If the Stock Option Agreement so provides and if an Optionee's
directorship or employment by the Bank or a subsidiary corporation is terminated
for cause, the Optionee's option shall expire immediately, provided, however,
the Board of Directors may, in its sole discretion, within thirty (30) days of
such termination, reinstate the option by giving written notice of such
reinstatement to the Optionee at the Optionee's last known address. In the event
of reinstatement, the Optionee may exercise the option only to such extent, for
such time, and upon such terms and conditions as if he had ceased to be a
director or ceased to be employed by the Bank or a subsidiary corporation upon
the date of such termination for a reason other than cause or death. Termination
for cause shall include, but not be limited to, termination for malfeasance or
gross misfeasance in the performance of duties or conviction of illegal activity
in connection therewith.

11. Disability or Death of Optionee

      If any Optionee dies while being a director or employee of the Bank or a
subsidiary corporation, the option shall expire one (1) year after the date of
such death, except as provided in Section 20 hereof. After such death but before
such expiration, the persons to whom the Optionee's rights under the option
shall have passed by Will or by the applicable laws of descent and distribution
or the executor or administrator of Optionee's estate shall have the right to
exercise such option to the extent that installments, if any, had accrued and/or
vested as of the date on which the Optionee ceased to be a director or employed
by the Bank or a subsidiary corporation.

      If the Optionee shall terminate his or her directorship or employment
because of disability (as defined in Section 105(d)(4) of the Internal Revenue
Code of



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1986, as amended from time to time), the Optionee may exercise this option to
the extent he or she is entitled to do so at the date of termination, at any
time within one year of the date of termination, except as provided in Section
20.

       If any Optionee dies or becomes disabled during the 90 day period
referred to in Section 9 hereof, the option shall expire one (1) year after the
date of such death or disability, except as provided in Section 20.

12. Adjustment Upon Changes in Capitalization

       If the outstanding shares of the stock of the Bank are increased,
decreased, or changed into, or exchanged for a different number or kind of
shares or securities Bank through of the reorganization, merger,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation, or otherwise, without consideration to the Bank, an appropriate
and proportionate adjustment shall be made in the number and kind of shares as
to which options may be granted. A corresponding adjustment changing the number
or kind of shares and the exercise price per share allocated to unexercised
options, or portions thereof, which shall have been granted prior to any such
change shall likewise be made. Any adjustment under the Section shall be made by
the Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final and conclusive. No fractional
shares of stock shall be issued or made available under the Plan on account of
any such adjustment, and fractional share-interests shall be disregarded, except
that they may be accumulated.

13. Terminating Events

      A Terminating Event shall be defined as anyone of the following events;
(i) dissolution or liquidation of the Bank, (ii) a reorganization, merger or
consolidation of the Bank with one or more corporations, the result of which (A)



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the Bank is not the surviving corporation or (B) the Bank becomes a subsidiary
of another corporation (which shall be deemed to have occurred if another
corporation shall own directly or indirectly, over 80% of the aggregate voting
power of all outstanding equity securities of the Bank), (iii) a sale of
substantially all the assets of the Bank to another corporation, or (iv) a sale
of the equity securities of the Bank representing more than 80% of the aggregate
voting power of all outstanding equity securities of the Bank to any person or
entity, or any group of persons and/or entities acting in concert. Upon a
Terminating Event (i) the Bank shall deliver to each Optionee no less than 30
days prior to the Terminating Event, written notification of the Terminating
Event and the Optionee's right to exercise all options granted pursuant to this
Plan, whether or not vested under this Plan or applicable Stock Option
Agreement, and (ii) all outstanding options granted pursuant to this Plan shall
completely vest and become immediately exercisable as to all shares granted
pursuant to the option immediately prior to such Terminating Event. This right
of exercise shall be conditional upon the execution of a final plan of
dissolution or liquidation or a definitive agreement of consolidation or merger,
as appropriate. Upon the occurrence of the Terminating Event all outstanding
options and the Plan shall terminate; provided however that any outstanding
options not exercised as of the occurrence of the Terminating Event shall not
terminate if there is a successor corporation which assumes the outstanding
options or substitutes for such options, new options covering the stock of the
successor corporation with appropriate adjustments as to the number and kind of
shares and prices.

14. Amendment and Termination

      The Board of Directors of the Bank may at any time suspend, amend, or
terminate the Plan and may, with the consent of the Optionee, make such



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modification of the terms and conditions of the option as it shall deem
advisable; provided that, except as permitted under the provisions of Sections
7, 12 and 13 hereof, no amendment or modification which would:

       (a)   increase the maximum number of shares which may be purchased
             pursuant to options granted under the Plan either in the aggregate
             or by an individual;

       (b)   change the minimum option price;


       (c)   increase the maximum term of options provided for herein;

       (d)   permit options to be granted to anyone other than a director,
             fulltime salaried officer (including a full-time salaried
             officer director) or key employee of the Bank or a subsidiary
             corporation; or

       (e)   change the conditions of an option grant to a director


may be adopted without the Bank having first obtained any necessary regulatory
approvals and shareholder approvals required by law.

       No option may be granted during any suspension or after termination of
the Plan. Amendment, suspension, or termination of the Plan shall not (except as
otherwise provided in Section 12 hereof), without the consent of the Optionee,
alter or impair any rights or obligation under any option theretofore granted.

15. Time of Granting Options

       The time an option is granted, sometimes referred to as the date of
grant, shall be the day of the action of the Board of Directors (or action of
the Stock Option Committee, if authorized) described in Sections 3(c) and 4(c)
hereof; provided, however, that if appropriate resolutions of the Board of
Directors (or the Stock Option Committee, if authorized) indicate that an option
is granted as of and on some future date, the time such option is granted shall
be such future date. If action by the Board of Directors (or the Stock Option
Committee, if



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authorized) is taken by unanimous written consent of its members, the action of
the Board of Directors (or the Stock Option Committee) shall be deemed to be at
the time the last Board (or Stock Option Committee) member signs the consent.


16. Privileges of Stock Ownership; Securities Law Compliance: Notice of Sale

       No Optionee shall be entitled to the privileges of stock ownership as to
any shares of stock not actually issued. No shares shall be purchased upon the
exercise of any option unless and until all then applicable requirements of any
regulatory agencies having jurisdiction and all applicable requirements of any
exchanges upon which stock of the Bank may be listed, shall have been fully
complied with. The Optionee shall give the Bank notice of any sale or
disposition of any such shares not more than five (5) days after such sale or
disposition.

17. Effective Date of the Plan

      The Plan shall be deemed adopted by the Board of Directors as of March 20,
1991, and shall be effective immediately subject to approval by the shareholders
of the Bank by vote of a majority of the outstanding shares represented and
voting at a meeting of shareholders and by a majority of the disinterested
shares represented and voting at the meeting, and the approval of the State
Banking Department.

18. Termination

      Unless previously terminated by the Board of Directors, the Plan shall
terminate at the close of business on a date ten (10) years from the earlier of
the date of approval by the Bank's outstanding shares or the date of adoption of
this Plan by the Board of Directors. No options shall be granted under the Plan
thereafter, but such termination shall not affect any option theretofore
granted.



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19. Option Agreement

       Each option shall be evidenced by a written Stock Option Agreement
executed by the Bank and the Optionee and shall contain each of the provisions
and agreements herein specifically required to be contained therein, and such
other terms and conditions as are deemed desirable and are not inconsistent with
the Plan. Each Incentive Stock Option Agreement shall contain such terms and pro
visions as the Stock Option Committee may determine to be necessary in order to
qualify such option as any incentive stock option within the meaning of Section
422A of the Code.

20. Option Period

       Each option and all rights or obligations thereunder shall expire on such
date as the Board of Directors (or the Stock Option Committee, if authorized)
may determine, but not later than ten (10) years from the date such option is
granted, and shall be subject to earlier termination as provided elsewhere in
the Plan.

21. Exculpation and Indemnification

       To the extent permitted by applicable law in effect from time to time, no
member of the Board of Directors or Stock Option Committee shall be liable for
any action or omission of any other member of the Board of Directors or Stock
Option Committee nor for any act or omission on the member's own part, except
the member's own willful misconduct or gross negligence. The Board of Directors
of the Bank and its subsidiary corporations shall pay expenses incurred by, and
satisfy a judgment or fine rendered or levied against, a present or former
director or member of the Stock Option Committee in any action brought by a
third party against such person (whether or not the Bank is joined as a party
defendant) to impose a liability or penalty on such person while a director or
member of the



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Stock Option Committee arising with respect to the Plan or administration
thereof or out of membership on the Stock Option Committee or of the Bank, or
all or any combination of the preceding; provided, the Board of Directors
determines in good faith that such director or member was acting in good faith,
within what such director or member reasonably believed to be the scope of his
or her employment or authority, and for a purpose which he or she reasonably
believed to be in the best interests of the Bank or its shareholders. Payments
authorized hereunder include amounts paid and expenses incurred in settling any
such action or threatened action. This Section does not apply to any action
instituted or maintained in the right of the Bank by a shareholder or holder of
a voting trust certificate representing shares of the Bank or any subsidiary
corporation thereof. The provisions of this Section shall apply to the estate,
executor, administrator, heirs, legatees or devisees of a director or member of
the Stock Option Committee, and the term "person" as used in this Section shall
include the estate, executor, administrator, heirs, legatees or devisees of such
person.



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                       FIRST AMENDMENT TO THE PLUMAS BANK
                             1991 STOCK OPTION PLAN

This First Amendment to the Plumas Bank 1991 Stock Option Plan ("1991 Plan") was
approved by the Board of Directors of Plumas Bank on November 15, 2000.

The 1991 Plan is amended as follows:

1.   AMENDMENT OF SECTION 7. The third to the last sentence in Section 7 shall
     be amended in the entirety to read as follows:

               Payment of the option price in full, for the number of shares to
               be delivered, must be made in cash or subject to applicable law,
               with Bank common stock previously acquired by the optionee and
               held by the optionee for a period of at least six months.

2.   AMENDMENT OF SECTION 7. A new sentence shall be added after the sentence in
     the aforementioned amendment to read in the entirety as follows:

               The equivalent dollar value of shares used to effect a purchase
               shall be the fair market value of the shares on the date of the
               exercise.


/s/ W. E. ELLIOTT                                     Dated  November 15, 2000
----------------------------------------                     -----------------
  William E. Elliott, President & C.E.O.