##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED March 31, 2011
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 COMMISSION FILE NUMBER: 000-49883
 PLUMAS BANCORP
  California
    
    75-2987096(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)35 S. Lindan Avenue, Quincy, California
    
    95971(Address of Principal Executive Offices)
    
    (Zip Code)
 (530) 283-7305
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCONDENSED CONSOLIDATED BALANCE SHEETCONDENSED CONSOLIDATED STATEMENT OF INCOMECONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSPART I  FINANCIAL INFORMATIONITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A RISK FACTORSITEM 2. UNREGISTERD SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. (REMOVED AND RESERVED)ITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 PLUMAS BANCORP
 
 CONDENSED CONSOLIDATED BALANCE SHEET
 (Unaudited)
  March 31,
    
    
    December 31,2011
    
    
    2010AssetsCash and cash equivalents
    
    $
    59,720
    
    
    $
    64,628Investment securities
    
    
    64,355
    
    
    
    63,017Loans, less allowance for loan losses of $8,759 at
March 31, 2011 and $7,324 at December 31, 2010
    
    
    295,902
    
    
    
    307,151Premises and equipment, net
    
    
    14,183
    
    
    
    14,431Bank owned life insurance
    
    
    10,555
    
    
    
    10,463Real estate and vehicles acquired through foreclosure
    
    
    9,095
    
    
    
    8,884Accrued interest receivable and other assets
    
    
    15,893
    
    
    
    15,906Total assets
    
    $
    469,703
    
    
    $
    484,480Liabilities and Shareholders EquityDeposits:Non-interest bearing
    
    $
    110,791
    
    
    $
    111,802Interest bearing
    
    
    304,134
    
    
    
    313,085Total deposits
    
    
    414,925
    
    
    
    424,887Accrued interest payable and other liabilities
    
    
    5,897
    
    
    
    11,295Junior subordinated deferrable interest debentures
    
    
    10,310
    
    
    
    10,310Total liabilities
    
    
    431,132
    
    
    
    446,492Commitments and contingencies (Note 6)
    
    
    
    
    
    
    Shareholders equity:Serial preferred stock, no par value; 10,000,000
shares authorized; 11,949 issued and outstanding at
March 31, 2011 and December 31, 2010
    
    
    11,703
    
    
    
    11,682Common stock, no par value; 22,500,000 shares
authorized; issued and outstanding  4,776,339
shares at March 31, 2011 and December 31, 2010
    
    
    5,944
    
    
    
    6,027Retained earnings
    
    
    21,057
    
    
    
    20,331Accumulated other comprehensive loss
    
    
    (133
    )
    
    
    (52
    )Total shareholders equity
    
    
    38,571
    
    
    
    37,988Total liabilities and shareholders equity
    
    $
    469,703
    
    
    $
    484,480
   2




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##### Table of Contents



PLUMAS BANCORP
 
 CONDENSED CONSOLIDATED STATEMENT OF INCOME
 (Unaudited)
  For the Three MonthsEnded March 31,2011
    
    
    2010Interest Income:Interest and fees on loans
    
    $
    4,382
    
    
    $
    4,769Interest on investment securities:Taxable
    
    
    351
    
    
    
    507Exempt from Federal income taxes
    
    
    4
    
    
    
    107Other
    
    
    29
    
    
    
    5Total interest income
    
    
    4,766
    
    
    
    5,388Interest Expense:Interest on deposits
    
    
    500
    
    
    
    788Interest on borrowings
    
    
    
    
    
    
    69Interest on junior subordinated deferrable interest debentures
    
    
    76
    
    
    
    74Other
    
    
    10
    
    
    
    1Total interest expense
    
    
    586
    
    
    
    932Net interest income before provision for loan losses
    
    
    4,180
    
    
    
    4,456Provision for Loan Losses
    
    
    1,700
    
    
    
    1,500Net interest income after provision for loan losses
    
    
    2,480
    
    
    
    2,956Non-Interest Income:Service charges
    
    
    828
    
    
    
    898Gain on sale of loans
    
    
    722
    
    
    
    Earnings on Bank owned life insurance policies
    
    
    117
    
    
    
    109Gain on sale of investments
    
    
    165
    
    
    
    570Other
    
    
    195
    
    
    
    210Total non-interest income
    
    
    2,027
    
    
    
    1,787Non-Interest Expenses:Salaries and employee benefits
    
    
    2,371
    
    
    
    2,549Occupancy and equipment
    
    
    805
    
    
    
    713Other
    
    
    1,072
    
    
    
    1,448Total non-interest expenses
    
    
    4,248
    
    
    
    4,710Income before provision (benefit) for income taxes
    
    
    259
    
    
    
    33Provision (Benefit) for Income Taxes
    
    
    36
    
    
    
    (101
    )Net income
    
    $
    223
    
    
    $
    134Preferred Stock Dividends and Discount Accretion
    
    
    (171
    )
    
    
    (171
    )Net income (loss) available to common shareholders
    
    $
    52
    
    
    $
    (37
    )Basic income (loss) per common share
    
    $
    0.01
    
    
    $
    (0.01
    )Diluted income (loss) per common share
    
    $
    0.01
    
    
    $
    (0.01
    )
   3




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##### Table of Contents



PLUMAS BANCORP
 
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 (Unaudited)
  For the Three MonthsEnded March 31,2011
    
    
    2010Cash Flows from Operating Activities:Net income
    
    $
    223
    
    
    $
    134Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    1,700
    
    
    
    1,500Change in deferred loan origination costs/fees, net
    
    
    (89
    )
    
    
    (45
    )Depreciation and amortization
    
    
    371
    
    
    
    442Stock-based compensation expense
    
    
    (83
    )
    
    
    (72
    )Amortization of investment security premiums
    
    
    113
    
    
    
    159Accretion of investment security discounts
    
    
    (5
    )
    
    
    (58
    )Net loss on sale of other real estate
    
    
    
    
    
    
    19Gain on sale of investments
    
    
    (165
    )
    
    
    (570
    )Gain on sale of loans held for sale
    
    
    (722
    )
    
    
    Loans originated for sale
    
    
    (4,915
    )
    
    
    (3,271
    )Proceeds from secured borrowing
    
    
    
    
    
    
    3,446Proceeds from loan sales
    
    
    5,238
    
    
    
    Net gain on sale of other vehicles owned
    
    
    
    
    
    
    (3
    )Benefit from change in OREO valuation
    
    
    (400
    )
    
    
    Earnings on bank-owned life insurance policies
    
    
    (92
    )
    
    
    (86
    )Decrease in accrued interest receivable and other assets
    
    
    140
    
    
    
    945Decrease in accrued interest payable and other liabilities
    
    
    (590
    )
    
    
    (423
    )Net cash provided by operating activities
    
    
    724
    
    
    
    2,117Cash Flows from Investing Activities:Proceeds from matured and called available-for-sale investment securities
    
    
    7,000
    
    
    
    7,245Proceeds from principal repayments from available-for-sale
government-guaranteed mortgage-backed securities
    
    
    1,845
    
    
    
    1,897Purchases of available-for-sale securities
    
    
    (14,185
    )
    
    
    (1,100
    )Proceeds from sale of available-for-sale securities
    
    
    3,921
    
    
    
    14,540Net decrease in loans
    
    
    5,463
    
    
    
    5,716Proceeds from sale of other real estate
    
    
    334
    
    
    
    1,436Proceeds from sale of other vehicles
    
    
    7
    
    
    
    34Purchase of premises and equipment
    
    
    (55
    )
    
    
    (1,053
    )Net cash provided by investing activities
    
    
    4,330
    
    
    
    28,715
   4




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PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 For the Three MonthsEnded March 31,2011
    
    
    2010Cash Flows from Financing Activities:Net decrease in demand, interest bearing and savings deposits
    
    $
    (1,428
    )
    
    $
    (8,042
    )Net (decrease) increase in time deposits
    
    
    (8,534
    )
    
    
    6,778Net decrease in short-term borrowings
    
    
    
    
    
    
    (20,000
    )Payment of cash dividends on preferred stock
    
    
    
    
    
    
    (150
    )Net cash used in financing activities
    
    
    (9,962
    )
    
    
    (21,414
    )(Decrease) increase in cash and cash equivalents
    
    
    (4,908
    )
    
    
    9,418Cash and Cash Equivalents at Beginning of Year
    
    
    64,628
    
    
    
    59,493Cash and Cash Equivalents at End of Period
    
    $
    59,720
    
    
    $
    68,911Supplemental Disclosure of Cash Flow Information:Cash paid during the period for:Interest expense
    
    $
    586
    
    
    $
    897Income taxes
    
    $
    
    
    
    $
    Non-Cash Investing Activities:Real estate and vehicles acquired through foreclosure
    
    $
    152
    
    
    $
    1,148Net change in unrealized gain/loss on available-for-sale securities
    
    $
    (81
    )
    
    $
    (190
    )
   5




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##### Table of Contents



PLUMAS BANCORP
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. GENERAL
    2. REGULATORY MATTERS
  
    
    Within 240 days of the date of the Order, increase and maintain the Banks leverage
ratio to at least 10% and within 120 days of the date of the Order, maintain its total
risk-based capital ratio at 13% or more;
 
    
    Reduce or eliminate certain classified assets to a level not exceeding sixty percent of
Tier I Capital and allowance for loan and lease losses (ALLL) or by approximately $19.4
million within 180 days of the date of the Order and reducing them to fifty percent of Tier
I Capital and ALLL or by an additional $4.9 million within 240 days of the Order;
 
    
    Obtain an independent study of the management and personnel structure of the Bank within
150 days of the date of the Order to determine whether the Bank is staffed by qualified
individuals commensurate with its size and risk profile to ensure the safe and profitable
operation of the Bank;
 
    
    Not pay cash dividends to Plumas Bancorp without the prior written consent of the FDIC
and DFI.
   6




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##### Table of Contents



3. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    4. INVESTMENT SECURITIES
  March 31, 2011Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:U.S. Treasury securities
    
    $
    1,017,000
    
    
    $
    5,000
    
    
    
    
    
    
    $
    1,022,000U.S. Government agencies
    
    
    42,422,000
    
    
    
    33,000
    
    
    $
    (245,000
    )
    
    
    42,210,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    20,831,000
    
    
    
    97,000
    
    
    
    (95,000
    )
    
    
    20,833,000Obligations of states and
political subdivisions
    
    
    312,000
    
    
    
    
    
    
    
    (22,000
    )
    
    
    290,000$
    64,582,000
    
    
    $
    135,000
    
    
    $
    (362,000
    )
    
    $
    64,355,000
   7




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December 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:U.S. Treasury securities
    
    $
    1,025,000
    
    
    $
    7,000
    
    
    
    
    
    
    $
    1,032,000U.S. Government agencies
    
    
    40,662,000
    
    
    
    58,000
    
    
    $
    (290,000
    )
    
    
    40,430,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    21,110,000
    
    
    
    270,000
    
    
    
    (107,000
    )
    
    
    21,273,000Obligations of states and
political subdivisions
    
    
    308,000
    
    
    
    
    
    
    
    (26,000
    )
    
    
    282,000$
    63,105,000
    
    
    $
    335,000
    
    
    $
    (423,000
    )
    
    $
    63,017,000
   Less than 12 MonthsFair
    
    
    UnrealizedValue
    
    
    LossesDebt securities:U.S. Government agencies
    
    $
    28,379,000
    
    
    $
    245,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    11,614,000
    
    
    
    95,000Obligations of states and political subdivisions
    
    
    290,000
    
    
    
    22,000$
    40,283,000
    
    
    $
    362,000
  Less than 12 MonthsFair
    
    
    UnrealizedValue
    
    
    LossesDebt securities:U.S. Government agencies
    
    $
    14,763,000
    
    
    $
    290,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    13,205,000
    
    
    
    107,000Obligations of states and political subdivisions
    
    
    282,000
    
    
    
    26,000$
    28,250,000
    
    
    $
    423,000
   8




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Estimated
    
    
    EstimatedAmortized
    
    
    FairCost
    
    
    ValueWithin one year
    
    $
    2,019,000
    
    
    $
    2,025,000After one year through five years
    
    
    41,420,000
    
    
    
    41,207,000After five years through ten years
    
    
    312,000
    
    
    
    290,00043,751,000
    
    
    
    43,522,000Investment securities not due at a single maturity date:Government-guaranteed mortgage- backed securities
    
    
    20,831,000
    
    
    
    20,833,000$
    64,582,000
    
    
    $
    64,355,000
  5. LOANS
  March 31,
    
    
    December 31,2011
    
    
    2010Commercial
    
    $
    28,417
    
    
    $
    33,433Agricultural
    
    
    37,721
    
    
    
    38,469Real estate  residential
    
    
    43,355
    
    
    
    43,291Real estate  commercial
    
    
    119,722
    
    
    
    119,222Real estate  construction and land development
    
    
    28,699
    
    
    
    31,199Equity lines of credit
    
    
    36,271
    
    
    
    36,946Installment
    
    
    2,919
    
    
    
    2,879Other
    
    
    7,287
    
    
    
    8,761304,391
    
    
    
    314,200Deferred loan costs, net
    
    
    270
    
    
    
    275Allowance for loan losses
    
    
    (8,759
    )
    
    
    (7,324
    )$
    295,902
    
    
    $
    307,151
   Three Months Ended March 31,2011
    
    
    2010Balance, beginning of period
    
    $
    7,324
    
    
    $
    9,568Provision charged to operations
    
    
    1,700
    
    
    
    1,500Losses charged to allowance
    
    
    (401
    )
    
    
    (2,850
    )Recoveries
    
    
    136
    
    
    
    48Balance, end of period
    
    $
    8,759
    
    
    $
    8,266
  9




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March 31,
2011
 Commercial Credit ExposureCredit Risk Profile by Internally Assigned GradeReal Estate-
    
    
    Real Estate-
    
    
    Real Estate-Commercial
    
    
    Agricultural
    
    
    Residential
    
    
    Commercial
    
    
    Construction
    
    
    Equity LOC
    
    
    TotalGrade:Pass
    
    $
    23,473
    
    
    $
    32,678
    
    
    $
    39,898
    
    
    $
    97,017
    
    
    $
    13,883
    
    
    $
    33,697
    
    
    $
    240,646Watch
    
    
    1,121
    
    
    
    426
    
    
    
    870
    
    
    
    5,463
    
    
    
    2,363
    
    
    
    617
    
    
    
    10,860Substandard
    
    
    3,692
    
    
    
    4,617
    
    
    
    2,587
    
    
    
    17,242
    
    
    
    12,253
    
    
    
    1,910
    
    
    
    42,301Doubtful
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200
    
    
    
    47
    
    
    
    378Total
    
    $
    28,417
    
    
    $
    37,721
    
    
    $
    43,355
    
    
    $
    119,722
    
    
    $
    28,699
    
    
    $
    36,271
    
    
    $
    294,185
 December 31,
2010
 Commercial Credit ExposureCredit Risk Profile by Internally Assigned GradeReal Estate-
    
    
    Real Estate-
    
    
    Real Estate-Commercial
    
    
    Agricultural
    
    
    Residential
    
    
    Commercial
    
    
    Construction
    
    
    Equity LOC
    
    
    TotalGrade:Pass
    
    $
    28,923
    
    
    $
    34,081
    
    
    $
    39,194
    
    
    $
    96,527
    
    
    $
    15,987
    
    
    $
    34,787
    
    
    $
    249,499Watch
    
    
    904
    
    
    
    646
    
    
    
    1,738
    
    
    
    8,192
    
    
    
    2,165
    
    
    
    585
    
    
    
    14,230Substandard
    
    
    3,606
    
    
    
    3,742
    
    
    
    2,295
    
    
    
    14,503
    
    
    
    12,982
    
    
    
    1,502
    
    
    
    38,630Doubtful
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    65
    
    
    
    72
    
    
    
    201Total
    
    $
    33,433
    
    
    $
    38,469
    
    
    $
    43,291
    
    
    $
    119,222
    
    
    $
    31,199
    
    
    $
    36,946
    
    
    $
    302,560
 Consumer Credit Exposure
    
    
    Consumer Credit ExposureCredit Risk Profile Based on Payment Activity
    
    
    Credit Risk Profile Based on Payment ActivityMarch 31, 2011
    
    
    December 31, 2010Installment
    
    
    Other
    
    
    Total
    
    
    Installment
    
    
    Other
    
    
    TotalGrade:Performing
    
    $
    2,864
    
    
    $
    7,054
    
    
    $
    9,918
    
    
    $
    2,830
    
    
    $
    8,643
    
    
    $
    11,473Non-performing
    
    
    55
    
    
    
    233
    
    
    
    288
    
    
    
    49
    
    
    
    118
    
    
    
    167Total
    
    $
    2,919
    
    
    $
    7,287
    
    
    $
    10,206
    
    
    $
    2,879
    
    
    $
    8,761
    
    
    $
    11,640
  10




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##### Table of Contents



Real Estate-
    
    
    Real Estate-
    
    
    Real Estate-Commercial
    
    
    Agricultural
    
    
    Residential
    
    
    Commercial
    
    
    Construction
    
    
    Equity LOC
    
    
    Installment
    
    
    Other
    
    
    TotalMarch 31, 2011:Allowance for Loan LossesBeginning balance
    
    $
    760
    
    
    $
    184
    
    
    $
    632
    
    
    $
    1,819
    
    
    $
    3,011
    
    
    $
    652
    
    
    $
    66
    
    
    $
    200
    
    
    $
    7,324Charge-offs
    
    
    (79
    )
    
    
    (94
    )
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    (71
    )
    
    
    (52
    )
    
    
    (57
    )
    
    
    (401
    )Recoveries
    
    
    6
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    24
    
    
    
    136Provision
    
    
    257
    
    
    
    (22
    )
    
    
    107
    
    
    
    221
    
    
    
    983
    
    
    
    67
    
    
    
    81
    
    
    
    6
    
    
    
    1,700Ending balance
    
    $
    944
    
    
    $
    170
    
    
    $
    691
    
    
    $
    2,040
    
    
    $
    3,994
    
    
    $
    648
    
    
    $
    99
    
    
    $
    173
    
    
    $
    8,759Ending balance: individually
evaluated for impairment
    
    $
    211
    
    
    $
    
    
    
    $
    133
    
    
    $
    388
    
    
    $
    2,425
    
    
    $
    
    
    
    $
    8
    
    
    $
    
    
    
    $
    3,165Ending balance: collectively
evaluated for impairment
    
    $
    733
    
    
    $
    170
    
    
    $
    558
    
    
    $
    1,652
    
    
    $
    1,569
    
    
    $
    648
    
    
    $
    91
    
    
    $
    173
    
    
    $
    5,594LoansEnding balance
    
    $
    28,417
    
    
    $
    37,721
    
    
    $
    43,355
    
    
    $
    119,722
    
    
    $
    28,699
    
    
    $
    36,271
    
    
    $
    2,919
    
    
    $
    7,287
    
    
    $
    304,391Ending balance: individually
evaluated for impairment
    
    $
    2,988
    
    
    $
    1,041
    
    
    $
    3,596
    
    
    $
    7,510
    
    
    $
    11,280
    
    
    $
    1,332
    
    
    $
    116
    
    
    $
    116
    
    
    $
    27,979Ending balance: collectively
evaluated for impairment
    
    $
    25,429
    
    
    $
    36,680
    
    
    $
    39,759
    
    
    $
    112,212
    
    
    $
    17,419
    
    
    $
    34,939
    
    
    $
    2,803
    
    
    $
    7,171
    
    
    $
    276,412December 31, 2010:Allowance for Loan LossesEnding balance
    
    $
    760
    
    
    $
    184
    
    
    $
    632
    
    
    $
    1,819
    
    
    $
    3,011
    
    
    $
    652
    
    
    $
    66
    
    
    $
    200
    
    
    $
    7,324Ending balance: individually
evaluated for impairment
    
    $
    22
    
    
    $
    
    
    
    $
    121
    
    
    $
    201
    
    
    $
    1,479
    
    
    $
    72
    
    
    $
    8
    
    
    $
    
    
    
    $
    1,903Ending balance: collectively
evaluated for impairment
    
    $
    738
    
    
    $
    184
    
    
    $
    511
    
    
    $
    1,618
    
    
    $
    1,532
    
    
    $
    580
    
    
    $
    58
    
    
    $
    200
    
    
    $
    5,421LoansEnding balance
    
    $
    33,433
    
    
    $
    38,469
    
    
    $
    43,291
    
    
    $
    119,222
    
    
    $
    31,199
    
    
    $
    36,946
    
    
    $
    2,879
    
    
    $
    8,761
    
    
    $
    314,200Ending balance: individually
evaluated for impairment
    
    $
    2,706
    
    
    $
    868
    
    
    $
    3,870
    
    
    $
    8,204
    
    
    $
    11,501
    
    
    $
    1,382
    
    
    $
    106
    
    
    $
    118
    
    
    $
    28,755Ending balance: collectively
evaluated for impairment
    
    $
    30,727
    
    
    $
    37,601
    
    
    $
    39,421
    
    
    $
    111,018
    
    
    $
    19,698
    
    
    $
    35,564
    
    
    $
    2,773
    
    
    $
    8,643
    
    
    $
    285,445
  11




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##### Table of Contents



90 Days30-89 Days
    
    
    and Still
    
    
    
    
    
    
    TotalPast Due
    
    
    Accruing
    
    
    Nonaccrual
    
    
    Past Due
    
    
    Current
    
    
    TotalAs of March 31, 2011:Commercial:Commercial
    
    $
    311
    
    
    $
    
    
    
    $
    2,988
    
    
    $
    3,299
    
    
    $
    25,118
    
    
    $
    28,417Agricultural
    
    
    697
    
    
    
    
    
    
    
    1,041
    
    
    
    1,738
    
    
    
    35,983
    
    
    
    37,721Real estate  construction
    
    
    2,258
    
    
    
    
    
    
    
    9,428
    
    
    
    11,686
    
    
    
    17,013
    
    
    
    28,699Real estate  commercial
    
    
    3,579
    
    
    
    
    
    
    
    7,510
    
    
    
    11,089
    
    
    
    108,633
    
    
    
    119,722Residential:Real estate  residential
    
    
    3
    
    
    
    
    
    
    
    1,919
    
    
    
    1,922
    
    
    
    41,433
    
    
    
    43,355Equity LOC
    
    
    559
    
    
    
    
    
    
    
    1,332
    
    
    
    1,891
    
    
    
    34,380
    
    
    
    36,271Consumer:Installment
    
    
    20
    
    
    
    
    
    
    
    55
    
    
    
    75
    
    
    
    2,844
    
    
    
    2,919Other
    
    
    270
    
    
    
    113
    
    
    
    120
    
    
    
    503
    
    
    
    6,784
    
    
    
    7,287Total
    
    $
    7,697
    
    
    $
    113
    
    
    $
    24,393
    
    
    $
    32,203
    
    
    $
    272,188
    
    
    $
    304,391As of December 31, 2010:Commercial:Commercial
    
    $
    352
    
    
    $
    
    
    
    $
    2,706
    
    
    $
    3,058
    
    
    $
    30,375
    
    
    $
    33,433Agricultural
    
    
    272
    
    
    
    
    
    
    
    868
    
    
    
    1,140
    
    
    
    37,329
    
    
    
    38,469Real estate  construction
    
    
    136
    
    
    
    
    
    
    
    9,797
    
    
    
    9,933
    
    
    
    21,266
    
    
    
    31,199Real estate  commercial
    
    
    802
    
    
    
    
    
    
    
    8,204
    
    
    
    9,006
    
    
    
    110,216
    
    
    
    119,222Residential:Real estate  residential
    
    
    400
    
    
    
    
    
    
    
    2,189
    
    
    
    2,589
    
    
    
    40,702
    
    
    
    43,291Equity LOC
    
    
    494
    
    
    
    
    
    
    
    1,382
    
    
    
    1,876
    
    
    
    35,070
    
    
    
    36,946Consumer:Installment
    
    
    56
    
    
    
    
    
    
    
    49
    
    
    
    105
    
    
    
    2,774
    
    
    
    2,879Other
    
    
    348
    
    
    
    45
    
    
    
    118
    
    
    
    511
    
    
    
    8,250
    
    
    
    8,761Total
    
    $
    2,860
    
    
    $
    45
    
    
    $
    25,313
    
    
    $
    28,218
    
    
    $
    285,982
    
    
    $
    314,200
  12




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##### Table of Contents



Unpaid
    
    
    
    
    
    
    Average
    
    
    InterestRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedAs of March 31, 2011:With no related allowance
recorded:Commercial
    
    $
    2,747
    
    
    $
    3,085Agricultural
    
    
    1,041
    
    
    
    1,271Real estate  construction
    
    
    1,325
    
    
    
    1,400Real estate  commercial
    
    
    5,029
    
    
    
    5,029Real estate  residential
    
    
    1,818
    
    
    
    1,818Equity Lines of Credit
    
    
    1,332
    
    
    
    1,332Installment
    
    
    107
    
    
    
    107Other
    
    
    116
    
    
    
    116With an allowance recorded:Commercial
    
    
    241
    
    
    
    241
    
    
    $
    211Agricultural
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    9,955
    
    
    
    11,825
    
    
    
    2,425Real estate  commercial
    
    
    2,481
    
    
    
    2,481
    
    
    
    388Real estate  residential
    
    
    1,778
    
    
    
    1,789
    
    
    
    133Equity Lines of Credit
    
    
    
    
    
    
    
    
    
    
    Installment
    
    
    9
    
    
    
    9
    
    
    
    8Other
    
    
    
    
    
    
    
    
    
    
    Total:Commercial
    
    
    2,988
    
    
    
    3,326
    
    
    
    211
    
    
    $
    2,818
    
    
    $
    2Agricultural
    
    
    1,041
    
    
    
    1,271
    
    
    
    
    
    
    
    1,028
    
    
    
    4Real estate  construction
    
    
    11,280
    
    
    
    13,225
    
    
    
    2,425
    
    
    
    11,529
    
    
    
    37Real estate  commercial
    
    
    7,510
    
    
    
    7,510
    
    
    
    388
    
    
    
    7,590
    
    
    
    54Real estate  residential
    
    
    3,596
    
    
    
    3,607
    
    
    
    133
    
    
    
    3,725
    
    
    
    49Equity Lines of Credit
    
    
    1,332
    
    
    
    1,332
    
    
    
    
    
    
    
    1,333
    
    
    
    2Installment
    
    
    116
    
    
    
    116
    
    
    
    8
    
    
    
    117
    
    
    
    2Other
    
    
    116
    
    
    
    116
    
    
    
    
    
    
    
    129
    
    
    
    4Total
    
    $
    27,979
    
    
    $
    30,503
    
    
    $
    3,165
    
    
    $
    28,269
    
    
    $
    154As of December 31, 2010:With no related allowance
recorded:Commercial
    
    $
    2,680
    
    
    $
    3,018Agricultural
    
    
    868
    
    
    
    1,109Real estate  construction
    
    
    4,151
    
    
    
    5,169Real estate  commercial
    
    
    5,994
    
    
    
    5,994Real estate  residential
    
    
    2,244
    
    
    
    2,245Equity Lines of Credit
    
    
    1,310
    
    
    
    1,310Installment
    
    
    98
    
    
    
    98Other
    
    
    118
    
    
    
    118With an allowance recorded:Commercial
    
    
    26
    
    
    
    26
    
    
    $
    22Agricultural
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    7,350
    
    
    
    8,770
    
    
    
    1,479Real estate  commercial
    
    
    2,210
    
    
    
    2,210
    
    
    
    201Real estate  residential
    
    
    1,626
    
    
    
    1,743
    
    
    
    121Equity Lines of Credit
    
    
    72
    
    
    
    72
    
    
    
    72Installment
    
    
    8
    
    
    
    8
    
    
    
    8Other
    
    
    
    
    
    
    
    
    
    
    Total:Commercial
    
    
    2,706
    
    
    
    3,044
    
    
    
    22
    
    
    $
    1,924
    
    
    $
    11Agricultural
    
    
    868
    
    
    
    1,109
    
    
    
    
    
    
    
    1,454
    
    
    
    102Real estate  construction
    
    
    11,501
    
    
    
    13,939
    
    
    
    1,479
    
    
    
    8,440
    
    
    
    100Real estate  commercial
    
    
    8,204
    
    
    
    8,204
    
    
    
    201
    
    
    
    7,516
    
    
    
    261Real estate  residential
    
    
    3,870
    
    
    
    3,988
    
    
    
    121
    
    
    
    750
    
    
    
    121Equity Lines of Credit
    
    
    1,382
    
    
    
    1,382
    
    
    
    72
    
    
    
    565
    
    
    
    Installment
    
    
    106
    
    
    
    106
    
    
    
    8
    
    
    
    44
    
    
    
    2Other
    
    
    118
    
    
    
    118
    
    
    
    
    
    
    
    140
    
    
    
    11Total
    
    $
    28,755
    
    
    $
    31,890
    
    
    $
    1,903
    
    
    $
    20,833
    
    
    $
    608
  13




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##### Table of Contents



6. COMMITMENTS AND CONTINGENCIES
     7. EARNINGS PER SHARE
  For the Three MonthsEnded March 31,(In thousands, except per share data)
    
    2011
    
    
    2010Net Income (loss):Net income
    
    $
    223
    
    
    $
    134Dividends on preferred shares
    
    
    (171
    )
    
    
    (171
    )Net income (loss) available to common shareholders
    
    $
    52
    
    
    $
    (37
    )Earnings (Loss) Per Share:Earnings (loss) per share
    
    $
    0.01
    
    
    $
    (0.01
    )Weighted Average Number of Shares Outstanding:
    
    
    4,776
    
    
    
    4,776
   14




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##### Table of Contents



8. COMPREHENSIVE INCOME (LOSS)
   9. STOCK-BASED COMPENSATION
    Three Months EndedMarch 31, 2011Expected life of stock options
    
    
    5.3 yearsInterest ratestock options
    
    
    2.26
    %Volatilitystock options
    
    
    46.1
    %Dividend yields
    
    
    3.05
    %Weighted-average fair value of options granted during the period
    
    $
    0.99
    15




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##### Table of Contents



WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualExercise
    
    
    Term
    
    
    Intrinsic ValueShares
    
    
    Price
    
    
    (in years)
    
    
    (in thousands)Options outstanding at December 31, 2010
    
    
    312,030
    
    
    $
    13.41Options granted
    
    
    248,000
    
    
    
    2.95Options exercised
    
    
    
    
    
    
    Options cancelled
    
    
    (750
    )
    
    $
    12.40Options outstanding at March 31, 2011
    
    
    559,280
    
    
    $
    8.77
    
    
    
    5.4
    
    
    $
    Options exercisable at March 31, 2011
    
    
    294,887
    
    
    $
    13.45
    
    
    
    3.3
    
    
    $
    Expected to vest after March 31, 2011
    
    
    217,040
    
    
    $
    3.55
    
    
    
    7.8
    
    
    $
    
  10. INCOME TAXES
     16




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##### Table of Contents



11. FAIR VALUE MEASUREMENT
 Fair Value of Financial Instruments
  March 31, 2011
    
    
    December 31, 2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    59,720,000
    
    
    $
    59,720,000
    
    
    $
    64,628,000
    
    
    $
    64,628,000Investment securities
    
    
    64,355,000
    
    
    
    64,355,000
    
    
    
    63,017,000
    
    
    
    63,017,000Loans
    
    
    295,902,000
    
    
    
    300,236,000
    
    
    
    307,151,000
    
    
    
    304,045,000FHLB stock
    
    
    2,188,000
    
    
    
    2,188,000
    
    
    
    2,188,000
    
    
    
    2,188,000Bank owned life insurance
    
    
    10,555,000
    
    
    
    10,555,000
    
    
    
    10,463,000
    
    
    
    10,463,000Accrued interest receivable
    
    
    1,828,000
    
    
    
    1,828,000
    
    
    
    1,784,000
    
    
    
    1,784,000Financial liabilities:Deposits
    
    $
    414,925,000
    
    
    $
    415,192,000
    
    
    $
    424,887,000
    
    
    $
    425,009,000Junior subordinated deferrable
interest debentures
    
    
    10,310,000
    
    
    
    3,012,000
    
    
    
    10,310,000
    
    
    
    2,992,000Accrued interest payable
    
    
    623,000
    
    
    
    623,000
    
    
    
    623,000
    
    
    
    623,000
   Cash and cash equivalents:
 Investment securities:
 Loans:
  FHLB stock:
 Bank owned life insurance:
  17




---



##### Table of Contents



Deposits:
 Junior subordinated deferrable interest debentures:
 Commitments to extend credit and letters of credit:
            18




---



##### Table of Contents



Fair Value Measurements at March 31, 2011 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable Inputs
    
    
    Unobservable InputsTotal Fair Value
    
    
    Identical Assets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:U.S. Treasury
securities
    
    $
    1,022,000
    
    
    $
    1,022,000U.S. Government
agencies
    
    
    42,210,000
    
    
    
    42,210,000U.S. Government
agencies
collateralized
by mortgage
obligations
    
    
    20,833,000
    
    
    
    
    
    
    $
    20,833,000Obligations of
states and
political
subdivisions
    
    
    290,000
    
    
    
    290,000$
    64,355,000
    
    
    $
    43,522,000
    
    
    $
    20,833,000
    
    
    $
    0
  Fair Value Measurements at December 31, 2010 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable Inputs
    
    
    Unobservable InputsTotal Fair Value
    
    
    Identical Assets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:U.S. Treasury
securities
    
    $
    1,032,000
    
    
    $
    1,032,000U.S. Government
agencies
    
    
    40,430,000
    
    
    
    40,430,000U.S. Government
agencies
collateralized
by mortgage
obligations
    
    
    21,273,000
    
    
    
    
    
    
    $
    21,273,000Obligations of
states and
political
subdivisions
    
    
    282,000
    
    
    
    282,000$
    63,017,000
    
    
    $
    41,744,000
    
    
    $
    21,273,000
    
    
    $
    0
   19




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##### Table of Contents



Fair Value Measurements at March 31, 2011 UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Total GainsTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Assets:Impaired loans:Commercial
    
    $
    961,000
    
    
    
    
    
    
    $
    961,000
    
    
    
    
    
    
    $
    (179,000
    )Agricultural
    
    
    150,000
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    Real estate 
residential
    
    
    1,645,000
    
    
    
    
    
    
    
    1,645,000
    
    
    
    
    
    
    
    (28,000
    )Real estate 
commercial
    
    
    2,093,000
    
    
    
    
    
    
    
    2,093,000
    
    
    
    
    
    
    
    (222,000
    )Real estate 
construction and
land development
    
    
    7,679,000
    
    
    
    
    
    
    
    7,679,000
    
    
    
    
    
    
    
    (946,000
    )Installment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,000
    )Total impaired loans
    
    
    12,528,000
    
    
    
    
    
    
    
    12,528,000
    
    
    
    
    
    
    
    (1,383,000
    )Other real estate
    
    
    9,070,000
    
    
    
    
    
    
    
    9,070,000
    
    
    
    
    
    
    
    400,000$
    21,598,000
    
    
    $
    
    
    
    $
    21,598,000
    
    
    $
    
    
    
    $
    (983,000
    )
  Fair Value Measurements at December 31, 2010 UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Total GainsTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Assets:Impaired loansCommercial
    
    $
    914,000
    
    
    
    
    
    
    $
    914,000
    
    
    
    
    
    
    $
    (259,000
    )Agricultural
    
    
    243,000
    
    
    
    
    
    
    
    243,000
    
    
    
    
    
    
    
    (117,000
    )Real estate 
residential
    
    
    1,505,000
    
    
    
    
    
    
    
    1,505,000
    
    
    
    
    
    
    
    (213,000
    )Real estate 
commercial
    
    
    2,009,000
    
    
    
    
    
    
    
    2,009,000
    
    
    
    
    
    
    
    (201,000
    )Real estate 
construction and
land development
    
    
    8,850,000
    
    
    
    
    
    
    
    8,850,000
    
    
    
    
    
    
    
    (559,000
    )Equity lines of
credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Installment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,000
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,000Total impaired loans
    
    
    13,521,000
    
    
    
    
    
    
    
    13,521,000
    
    
    
    
    
    
    
    (1,356,000
    )Other real estate
    
    
    8,867,000
    
    
    
    
    
    
    
    8,867,000
    
    
    
    
    
    
    
    (235,000
    )$
    22,388,000
    
    
    $
    
    
    
    $
    22,388,000
    
    
    $
    
    
    
    $
    (1,591,000
    )
   20




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##### Table of Contents



Impaired Loans:
 Other Real Estate:
 12. Financial Accounting Standards
 Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses
 Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses
 Creditors Determination of Whether a Restructuring is a Troubled Debt Restructuring
 Receivables (Topic 310): Deferral of the Effective
Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. Receivables (Topic 310): A Creditors Determination of Whether a Restructuring is a
Troubled Debt Restructuring.
  21




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   INTRODUCTION
   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    22




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##### Table of Contents



OVERVIEW
      RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011
 Net interest income before provision for loan losses.
   23




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##### Table of Contents



24




---



##### Table of Contents



For the Three Months Ended March 31, 2011
    
    
    For the Three Months Ended March 31, 2010Average Balance
    
    
    Interest
    
    
    Yield/
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/(in thousands)
    
    
    (in thousands)
    
    
    Rate
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    RateInterest-earning assets:Loans (1) (2)
    
    $
    309,402
    
    
    $
    4,382
    
    
    
    5.74
    %
    
    $
    327,796
    
    
    $
    4,769
    
    
    
    5.90
    %Investment securities (1)
    
    
    67,855
    
    
    
    355
    
    
    
    2.12
    %
    
    
    84,142
    
    
    
    614
    
    
    
    2.96
    %Interest-bearing deposits
    
    
    47,849
    
    
    
    29
    
    
    
    0.25
    %
    
    
    8,300
    
    
    
    5
    
    
    
    0.24
    %Total interest-earning assets
    
    
    425,106
    
    
    
    4,766
    
    
    
    4.55
    %
    
    
    420,238
    
    
    
    5,388
    
    
    
    5.20
    %Cash and due from banks
    
    
    12,782
    
    
    
    
    
    
    
    
    
    
    
    41,211Other assets
    
    
    42,806
    
    
    
    
    
    
    
    
    
    
    
    49,559Total assets
    
    $
    480,694
    
    
    
    
    
    
    
    
    
    
    $
    511,008Interest-bearing liabilities:NOW deposits
    
    $
    100,057
    
    
    
    54
    
    
    
    0.22
    %
    
    $
    103,724
    
    
    
    156
    
    
    
    0.61
    %Money market deposits
    
    
    42,101
    
    
    
    35
    
    
    
    0.34
    %
    
    
    44,534
    
    
    
    75
    
    
    
    0.68
    %Savings deposits
    
    
    55,390
    
    
    
    24
    
    
    
    0.18
    %
    
    
    49,687
    
    
    
    20
    
    
    
    0.16
    %Time deposits
    
    
    114,106
    
    
    
    387
    
    
    
    1.38
    %
    
    
    127,296
    
    
    
    537
    
    
    
    1.71
    %Total deposits
    
    
    311,654
    
    
    
    500
    
    
    
    0.65
    %
    
    
    325,241
    
    
    
    788
    
    
    
    0.98
    %Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    %
    
    
    4,000
    
    
    
    5
    
    
    
    0.51
    %Long-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    %
    
    
    20,000
    
    
    
    64
    
    
    
    1.30
    %Other interest-bearing liabilities
    
    
    656
    
    
    
    10
    
    
    
    6.18
    %
    
    
    138
    
    
    
    1
    
    
    
    2.94
    %Junior subordinated debentures
    
    
    10,310
    
    
    
    76
    
    
    
    2.99
    %
    
    
    10,310
    
    
    
    74
    
    
    
    2.91
    %Total interest-bearing liabilities
    
    
    322,620
    
    
    
    586
    
    
    
    0.74
    %
    
    
    359,689
    
    
    
    932
    
    
    
    1.05
    %Non-interest bearing deposits
    
    
    111,385
    
    
    
    
    
    
    
    
    
    
    
    106,087Other liabilities
    
    
    8,290
    
    
    
    
    
    
    
    
    
    
    
    6,365Shareholders equity
    
    
    38,399
    
    
    
    
    
    
    
    
    
    
    
    38,867Total liabilities & equity
    
    $
    480,694
    
    
    
    
    
    
    
    
    
    
    $
    511,008Cost of funding interest-earning assets (3)
    
    
    
    
    
    
    
    
    
    
    0.56
    %
    
    
    
    
    
    
    
    
    
    
    0.90
    %Net interest income and margin (4)
    
    
    
    
    
    $
    4,180
    
    
    
    3.99
    %
    
    
    
    
    
    $
    4,456
    
    
    
    4.30
    %
 
 (1)
    
    Not computed on a tax-equivalent basis.(2)
    
    Net loan fees included in loan interest income for the three-month periods ended March 31,
2011 and 2010 were $4,000 and $11,000, respectively.(3)
    
    Total annualized interest expense divided by the average balance of total earning assets.(4)
    
    Annualized net interest income divided by the average balance of total earning assets.  25




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##### Table of Contents



2011 over 2010 change in net interest incomefor the three months ended March 31(in thousands)Volume (1)
    
    
    Rate (2)
    
    
    Mix (3)
    
    
    TotalInterest-earning assets:Loans
    
    $
    (268
    )
    
    $
    (126
    )
    
    $
    7
    
    
    $
    (387
    )Investment securities
    
    
    (119
    )
    
    
    (174
    )
    
    
    34
    
    
    
    (259
    )Interest bearing deposits
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    24Total interest income
    
    
    (363
    )
    
    
    (300
    )
    
    
    41
    
    
    
    (622
    )Interest-bearing liabilities:NOW deposits
    
    
    (6
    )
    
    
    (100
    )
    
    
    4
    
    
    
    (102
    )Money market deposits
    
    
    (4
    )
    
    
    (38
    )
    
    
    2
    
    
    
    (40
    )Savings deposits
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    4Time deposits
    
    
    (56
    )
    
    
    (105
    )
    
    
    11
    
    
    
    (150
    )Short-term borrowings
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )Long-term borrowings
    
    
    (64
    )
    
    
    
    
    
    
    
    
    
    
    (64
    )Other
    
    
    4
    
    
    
    1
    
    
    
    4
    
    
    
    9Junior subordinated debentures
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Total interest expense
    
    
    (129
    )
    
    
    (238
    )
    
    
    21
    
    
    
    (346
    )Net interest income
    
    $
    (234
    )
    
    $
    (62
    )
    
    $
    20
    
    
    $
    (276
    )
 
 (1)
    
    The volume change in net interest income represents the change in average balance multiplied by
the previous years rate.(2)
    
    The rate change in net interest income represents the change in rate multiplied by the previous
years average balance.(3)
    
    The mix change in net interest income represents the change in average balance multiplied by
the change in rate. Provision for loan losses.
   Non-interest income.
  26




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##### Table of Contents



For the Three MonthsEnded March 31
    
    
    Dollar
    
    
    Percentage2011
    
    
    2010
    
    
    Change
    
    
    ChangeService charges on deposit accounts
    
    $
    828
    
    
    $
    898
    
    
    $
    (70
    )
    
    
    -7.8
    %Gain on sale of loans
    
    
    722
    
    
    
    
    
    
    
    722
    
    
    
    100
    %Gain on sale of securities
    
    
    165
    
    
    
    570
    
    
    
    (405
    )
    
    
    -71.1
    %Earnings on life insurance policies
    
    
    117
    
    
    
    109
    
    
    
    8
    
    
    
    7.3
    %Loan servicing income
    
    
    54
    
    
    
    35
    
    
    
    19
    
    
    
    54.3
    %Customer service fees
    
    
    34
    
    
    
    39
    
    
    
    (5
    )
    
    
    -12.8
    %Safe deposit box and night depository income
    
    
    17
    
    
    
    17
    
    
    
    
    
    
    
    0.0
    %Merchant processing income
    
    
    1
    
    
    
    53
    
    
    
    (52
    )
    
    
    -98.1
    %Other
    
    
    89
    
    
    
    66
    
    
    
    23
    
    
    
    34.8
    %Total non-interest income
    
    $
    2,027
    
    
    $
    1,787
    
    
    $
    240
    
    
    
    13.4
    %
 Non-interest expense.
   27




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##### Table of Contents



For the Three MonthsEnded March 31
    
    
    Dollar
    
    
    Percentage2011
    
    
    2010
    
    
    Change
    
    
    ChangeSalaries and employee benefits
    
    $
    2,371
    
    
    $
    2,549
    
    
    $
    (178
    )
    
    
    -7.0
    %Occupancy and equipment
    
    
    805
    
    
    
    713
    
    
    
    92
    
    
    
    12.9
    %Outside service fees
    
    
    325
    
    
    
    304
    
    
    
    21
    
    
    
    6.9
    %FDIC Insurance and assessments
    
    
    276
    
    
    
    253
    
    
    
    23
    
    
    
    9.1
    %Professional fees
    
    
    216
    
    
    
    179
    
    
    
    37
    
    
    
    20.7
    %Telephone and data communication
    
    
    87
    
    
    
    90
    
    
    
    (3
    )
    
    
    -3.3
    %OREO expense
    
    
    73
    
    
    
    160
    
    
    
    (87
    )
    
    
    -54.4
    %Loan and collection expenses
    
    
    61
    
    
    
    63
    
    
    
    (2
    )
    
    
    -3.2
    %Director compensation and retirement
    
    
    57
    
    
    
    56
    
    
    
    1
    
    
    
    1.8
    %Business development
    
    
    56
    
    
    
    66
    
    
    
    (10
    )
    
    
    -15.2
    %Advertising and shareholder relations
    
    
    56
    
    
    
    58
    
    
    
    (2
    )
    
    
    -3.4
    %Insurance
    
    
    55
    
    
    
    22
    
    
    
    33
    
    
    
    150.0
    %Armored car and courier
    
    
    51
    
    
    
    56
    
    
    
    (5
    )
    
    
    -8.9
    %Postage
    
    
    46
    
    
    
    59
    
    
    
    (13
    )
    
    
    -22.0
    %Deposit premium amortization
    
    
    43
    
    
    
    43
    
    
    
    
    
    
    
    
    %Stationery and supplies
    
    
    33
    
    
    
    34
    
    
    
    (1
    )
    
    
    -2.9
    %Benefit from changes in valuation of OREO
    
    
    (400
    )
    
    
    
    
    
    
    (400
    )
    
    
    -100
    %Other
    
    
    37
    
    
    
    5
    
    
    
    32
    
    
    
    640.0
    %Total non-interest expense
    
    $
    4,248
    
    
    $
    4,710
    
    
    $
    (462
    )
    
    
    -9.8
    %
  28




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##### Table of Contents



Provision (benefit) for income taxes.
  FINANCIAL CONDITION
 Loan Portfolio.
    29




---



##### Table of Contents



Analysis of Asset Quality and Allowance for Loan Losses.
       30




---



##### Table of Contents



For the Three MonthsEnded March 31,2011
    
    
    2010Balance at January 1,
    
    $
    7,324
    
    
    $
    9,568Charge-offs:Commercial and agricultural
    
    
    (173
    )
    
    
    (377
    )Real estate mortgage
    
    
    (119
    )
    
    
    (781
    )Real estate construction
    
    
    
    
    
    
    (1,567
    )Consumer
    
    
    (109
    )
    
    
    (125
    )Total charge-offs
    
    
    (401
    )
    
    
    (2,850
    )Recoveries:Commercial and agricultural
    
    
    108
    
    
    
    5Real estate mortgage
    
    
    
    
    
    
    3Real estate construction
    
    
    
    
    
    
    Consumer
    
    
    28
    
    
    
    40Total recoveries
    
    
    136
    
    
    
    48Net charge-offs
    
    
    (265
    )
    
    
    (2,802
    )Provision for loan losses
    
    
    1,700
    
    
    
    1,500Balance at March 31,
    
    $
    8,759
    
    
    $
    8,266Annualized net charge-offs during the three-month period to average
loans
    
    
    0.35
    %
    
    
    3.47
    %Allowance for loan losses to total loans
    
    
    2.88
    %
    
    
    2.53
    %
    31




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##### Table of Contents



32




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##### Table of Contents



Three Months Ended March 31,2011
    
    
    2010(in thousands)Beginning Balance
    
    $
    8,867
    
    
    $
    11,204Additions
    
    
    137
    
    
    
    1,172Dispositions
    
    
    (334
    )
    
    
    (1,456
    )Benefit from
change in OREO
valuation
    
    
    400
    
    
    
    Ending Balance
    
    $
    9,070
    
    
    $
    10,920
  Investment Portfolio and Federal Funds Sold.
  Deposits.
   Borrowing Arrangements.
   33




---



##### Table of Contents



Capital Resources
      Capital Standards.
    34




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##### Table of Contents



March 31, 2011
    
    
    December 31, 2010Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTier 1 Leverage RatioPlumas Bancorp and Subsidiary
    
    $
    43,845
    
    
    
    9.2
    %
    
    $
    42,944
    
    
    
    8.9
    %Minimum regulatory requirement
    
    
    19,036
    
    
    
    4.0
    %
    
    
    19,361
    
    
    
    4.0
    %Plumas Bank
    
    
    43,521
    
    
    
    9.2
    %
    
    
    43,262
    
    
    
    8.9
    %Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan
    
    
    23,776
    
    
    
    5.0
    %
    
    
    24,190
    
    
    
    5.0
    %Minimum regulatory requirement
    
    
    19,021
    
    
    
    4.0
    %
    
    
    19,352
    
    
    
    4.0
    %Tier 1 Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    43,845
    
    
    
    13.2
    %
    
    
    42,994
    
    
    
    12.7
    %Minimum regulatory requirement
    
    
    13,323
    
    
    
    4.0
    %
    
    
    13,570
    
    
    
    4.0
    %Plumas Bank
    
    
    43,521
    
    
    
    13.1
    %
    
    
    43,262
    
    
    
    12.8
    %Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan
    
    
    19,972
    
    
    
    6.0
    %
    
    
    20,342
    
    
    
    6.0
    %Minimum regulatory requirement
    
    
    13,315
    
    
    
    4.0
    %
    
    
    13,561
    
    
    
    4.0
    %Total Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    48,067
    
    
    
    14.4
    %
    
    
    47,274
    
    
    
    13.9
    %Minimum regulatory requirement
    
    
    26,647
    
    
    
    8.0
    %
    
    
    27,140
    
    
    
    8.0
    %Plumas Bank
    
    
    47,741
    
    
    
    14.3
    %
    
    
    47,539
    
    
    
    14.0
    %Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan
    
    
    33,286
    
    
    
    10.0
    %
    
    
    33,903
    
    
    
    10.0
    %Minimum regulatory requirement
    
    
    26,629
    
    
    
    8.0
    %
    
    
    27,123
    
    
    
    8.0
    %
    Off-Balance Sheet Arrangements
 Loan Commitments.
  35




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##### Table of Contents



Operating Leases.
  Liquidity
     36




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
   
 PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A
    
    RISK FACTORS
   37




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##### Table of Contents



ITEM 2.
    
    UNREGISTERD SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    (REMOVED AND RESERVED)
  
 ITEM 5.
    
    OTHER INFORMATION
   38




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##### Table of Contents



ITEM 6.
    
    EXHIBITS
  3.1
    
    
    Articles of Incorporation as amended of Registrant included as exhibit 3.1 to the Registrants
Form S-4, File No. 333-84534, which is incorporated by reference herein.3.2
    
    
    Bylaws of Registrant as amended on March 16, 2011 included as exhibit 3.2 to the Registrants
Form 10-K for December 31, 2010, which is incorporated by this reference herein.3.3
    
    
    Amendment of the Articles of Incorporation of Registrant dated November 1, 2002, is included
as exhibit 3.3 to the Registrants 10-Q for September 30, 2005, which is incorporated by this
reference herein.3.4
    
    
    Amendment of the Articles of Incorporation of Registrant dated August 17, 2005, is included as
exhibit 3.4 to the Registrants 10-Q for September 30, 2005, which is incorporated by this
reference herein.4
    
    
    Specimen form of certificate for Plumas Bancorp included as exhibit 4 to the Registrants Form
S-4, File No. 333-84534, which is incorporated by reference herein.4.1
    
    
    Certificate of Determination of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, is
included as exhibit 4.1 to Registrants 8-K filed on January 30, 2009, which is incorporated
by this reference herein.10.1
    
    
    Executive Salary Continuation Agreement of Andrew J. Ryback dated December 17, 2008, is
included as exhibit 10.1 to the Registrants 10-K for December 31, 2008, which is incorporated
by this reference herein.10.2
    
    
    Split Dollar Agreement of Andrew J. Ryback dated August 23, 2005, is included as Exhibit 10.2
to the Registrants 8-K filed on October 17, 2005, which is incorporated by this reference
herein.10.8
    
    
    Director Retirement Agreement of John Flournoy dated March 21, 2007, is included as Exhibit
10.8 to Registrants 10-Q for March 31, 2007, which is incorporated by this reference herein.10.11
    
    
    First Amendment to Executive Salary Continuation Agreement of Robert T. Herr dated
September 15, 2004, is included as Exhibit 10.11 to the Registrants 8-K filed on September 17,
2004, which is incorporated by this reference herein.10.18
    
    
    Amended and Restated Director Retirement Agreement of Daniel E. West dated May 10, 2000, is
included as Exhibit 10.18 to the Registrants 10-QSB for June 30, 2002, which is incorporated
by this reference herein.10.19
    
    
    Consulting Agreement of Daniel E. West dated May 10, 2000, is included as Exhibit 10.19 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.20
    
    
    Split Dollar Agreements of Robert T. Herr dated September 15, 2004, is included as Exhibit
10.20 to the Registrants 8-K filed on September 17, 2004, which is incorporated by this
reference herein.10.21
    
    
    Amended and Restated Director Retirement Agreement of Alvin G. Blickenstaff dated April 19,
2000, is included as Exhibit 10.21 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein.10.22
    
    
    Consulting Agreement of Alvin G. Blickenstaff dated May 8, 2000, is included as Exhibit 10.22
to the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.24
    
    
    Amended and Restated Director Retirement Agreement of Gerald W. Fletcher dated May 10, 2000,
is included as Exhibit 10.24 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein.10.25
    
    
    Consulting Agreement of Gerald W. Fletcher dated May 10, 2000, is included as Exhibit 10.25 to
the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.
  39




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##### Table of Contents



10.27
    
    
    Amended and Restated Director Retirement Agreement of Arthur C. Grohs dated May 9, 2000, is
included as Exhibit 10.27 to the Registrants 10-QSB for June 30, 2002, which is incorporated
by this reference herein.10.28
    
    
    Consulting Agreement of Arthur C. Grohs dated May 9, 2000, is included as Exhibit 10.28 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.33
    
    
    Amended and Restated Director Retirement Agreement of Terrance J. Reeson dated April 19, 2000,
is included as Exhibit 10.33 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein.10.34
    
    
    Consulting Agreement of Terrance J. Reeson dated May 10, 2000, is included as Exhibit 10.34 to
the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.35
    
    
    Letter Agreement, dated January 30, 2009 by and between Plumas Bancorp, Inc. and the United
States Department of the Treasury and Securities Purchase Agreement  Standard Terms attached
thereto, is included as exhibit 10.1 to Registrants 8-K filed on January 30, 2009, which is
incorporated by this reference herein.10.36
    
    
    Form of Senior Executive Officer letter agreement, is included as exhibit 10.2 to Registrants
8-K filed on January 30, 2009, which is incorporated by this reference herein.10.37
    
    
    Deferred Fee Agreement of Alvin Blickenstaff is included as Exhibit 10.37 to the Registrants
10-Q for March 31, 2009, which is incorporated by this reference herein.10.40
    
    
    2001 Stock Option Plan as amended is included as exhibit 99.1 of the Form S-8 filed July 23,
2002, File No. 333-96957, which is incorporated by this reference herein.10.41
    
    
    Form of Indemnification Agreement (Plumas Bancorp) is included as Exhibit 10.41 to the
Registrants 10-Q for March 31, 2009, which is incorporated by this reference herein.10.42
    
    
    Form of Indemnification Agreement (Plumas Bank) is included as Exhibit 10.42 to the
Registrants 10-Q for March 31, 2009, which is incorporated by this reference herein.10.43
    
    
    Plumas Bank 401(k) Profit Sharing Plan as amended is included as exhibit 99.1 of the Form S-8
filed February 14, 2003, File No. 333-103229, which is incorporated by this reference herein.10.44
    
    
    Executive Salary Continuation Agreement of Robert T. Herr dated June 4, 2002, is included as
Exhibit 10.44 to the Registrants 10-Q for March 31, 2003, which is incorporated by this
reference herein.10.46
    
    
    1991 Stock Option Plan as amended is included as Exhibit 10.46 to the Registrants 10-Q for
September 30, 2004, which is incorporated by this reference herein.10.47
    
    
    Specimen form of Incentive Stock Option Agreement under the 1991 Stock Option Plan is included
as Exhibit 10.47 to the Registrants 10-Q for September 30, 2004, which is incorporated by
this reference herein.10.48
    
    
    Specimen form of Non-Qualified Stock Option Agreement under the 1991 Stock Option Plan is
included as Exhibit 10.48 to the Registrants 10-Q for September 30, 2004, which is
incorporated by this reference herein.10.49
    
    
    Amended and Restated Plumas Bancorp Stock Option Plan is included as Exhibit 10.49 to the
Registrants 10-Q for September 30, 2006, which is incorporated by this reference herein.10.50
    
    
    Executive Salary Continuation Agreement of Rose Dembosz, is included as exhibit 10.50 to the
Registrants 10-K for December 31, 2008, which is incorporated by this reference herein.10.51
    
    
    First Amendment to Split Dollar Agreement of Andrew J. Ryback, is included as exhibit 10.51 to
the Registrants 10-K for December 31, 2008, which is incorporated by this reference herein.
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##### Table of Contents



10.56
    
    
    Second Amendment to Executive Salary Continuation Agreement of Robert T. Herr dated
June 4, 2002 and Amended September 15, 2004, is included as exhibit 10.56 to the Registrants
10-K for December 31, 2008, which is incorporated by this reference herein.10.57
    
    
    First Amendment to Split Dollar Agreements of Robert T. Herr dated September 15, 2004, is
included as exhibit 10.57 to the Registrants 10-K for December 31, 2008, which is
incorporated by this reference herein.10.58
    
    
    Executive Salary Continuation Agreement of Robert T. Herr dated December 17, 2008, is included
as exhibit 10.58 to the Registrants 10-K for December 31, 2008, which is incorporated by this
reference herein.10.64
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Alvin Blickenstaff adopted on September 19, 2007, is included as Exhibit 10.64 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein.10.65
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Arthur C. Grohs adopted on September 19, 2007, is included as Exhibit 10.65 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein.10.67
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Terrance J. Reeson adopted on September 19, 2007, is included as Exhibit 10.67 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein.10.69
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Daniel E. West adopted on September 19, 2007, is included as Exhibit 10.69 to the Registrants
8-K filed on September 25, 2007, which is incorporated by this reference herein.10.70
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Gerald W. Fletcher adopted on October 9, 2007, is included as Exhibit 10.70 to the
Registrants 10-Q for September 30, 2007, which is incorporated by this reference herein.10.71
    
    
    Consent Order issued by the FDIC and CDFI to Plumas Bank on March 18, 2011, is included as
Exhibit 10.1 of the Registrants 8-K filed on March 21, 2011, which is incorporated by this
reference herein.10.72
    
    
    Stipulation and Consent to the Issuance of Consent Order among Plumas Bank and the FDIC
entered into on March 16, 2011, is included as Exhibit 10.2 of the Registrants 8-K filed on
March 21, 2011, which is incorporated by this reference herein.11
    
    
    Computation of per share earnings appears in the attached 10-Q under Plumas Bancorp and
Subsidiary Notes to Condensed Consolidated Financial Statements as
Footnote 7  Earnings
Per Share.31.1
    
    
    Rule 13a-14(a) [Section 302] Certification of Principal Financial Officer dated May 5, 2011.31.2
    
    
    Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated May 5, 2011.32.1
    
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 5, 2011.32.2
    
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 5, 2011.
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SIGNATURES
  PLUMAS BANCORP(Registrant)Date: May 5, 2011/s/ Richard L. BelstockRichard L. BelstockInterim Chief Financial Officer/s/ Andrew J. RybackAndrew J. RybackInterim President and Chief Executive Officer
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