##### 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 June 30, 2010
 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
(State or Other Jurisdiction of Incorporation or 
Organization)
    
    75-2987096
(I.R.S. Employer Identification No.)35 S. Lindan Avenue, Quincy, California
(Address of Principal Executive Offices)
    
    95971
(Zip Code)
 (530) 283-7305
 þ o
 Yes o No 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 OPERATIONSCONDENSED 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 4T. 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. EXHIBITSSIGNATURESExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 PLUMAS BANCORP
 
 CONDENSED CONSOLIDATED BALANCE SHEET
 (Unaudited)
 June 30,
    
    
    December 31,2010
    
    
    2009AssetsCash and cash equivalents
    
    $
    62,480
    
    
    $
    59,493Investment securities
    
    
    70,156
    
    
    
    87,950Loans, less allowance for loan losses of $6,146 at June 30, 2010
and $9,568 at December 31, 2009
    
    
    318,326
    
    
    
    323,408Premises and equipment, net
    
    
    15,037
    
    
    
    14,544Intangible assets, net
    
    
    561
    
    
    
    648Bank owned life insurance
    
    
    10,288
    
    
    
    10,111Real estate and vehicles acquired through foreclosure
    
    
    9,769
    
    
    
    11,269Accrued interest receivable and other assets
    
    
    18,917
    
    
    
    20,694Total assets
    
    $
    505,534
    
    
    $
    528,117Liabilities and Shareholders EquityDeposits:Non-interest bearing
    
    $
    108,166
    
    
    $
    111,958Interest bearing
    
    
    316,750
    
    
    
    321,297Total deposits
    
    
    424,916
    
    
    
    433,255Short-term borrowings
    
    
    
    
    
    
    20,000Long-term debt
    
    
    20,000
    
    
    
    20,000Accrued interest payable and other liabilities
    
    
    11,569
    
    
    
    6,321Junior subordinated deferrable interest debentures
    
    
    10,310
    
    
    
    10,310Total liabilities
    
    
    466,795
    
    
    
    489,886Commitments and contingencies (Note 5)
    
    
    
    
    
    
    Shareholders equity:Serial preferred stock, no par value; 10,000,000 shares
authorized; 11,949 issued and outstanding at June 30, 2010 and
December 31, 2009
    
    
    11,639
    
    
    
    11,595Common stock, no par value; 22,500,000 shares authorized; issued
and outstanding   4,776,339 shares at June 30, 2010 and
December 31, 2009
    
    
    5,942
    
    
    
    5,970Retained earnings
    
    
    20,412
    
    
    
    20,044Accumulated other comprehensive income
    
    
    746
    
    
    
    622Total shareholders equity
    
    
    38,739
    
    
    
    38,231Total liabilities and shareholders equity
    
    $
    505,534
    
    
    $
    528,117
   2




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##### Table of Contents



PLUMAS BANCORP
 
 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 (Unaudited)
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest Income:Interest and fees on loans
    
    $
    4,733
    
    
    $
    5,364
    
    
    $
    9,502
    
    
    $
    10,466Interest on investment securities:Taxable
    
    
    426
    
    
    
    411
    
    
    
    933
    
    
    
    744Exempt from Federal income taxes
    
    
    8
    
    
    
    118
    
    
    
    115
    
    
    
    237Other
    
    
    14
    
    
    
    
    
    
    
    19
    
    
    
    Total interest income
    
    
    5,181
    
    
    
    5,893
    
    
    
    10,569
    
    
    
    11,447Interest Expense:Interest on deposits
    
    
    711
    
    
    
    776
    
    
    
    1,498
    
    
    
    1,539Interest borrowings
    
    
    65
    
    
    
    18
    
    
    
    134
    
    
    
    35Interest on junior subordinated deferrable interest
debentures
    
    
    76
    
    
    
    99
    
    
    
    151
    
    
    
    209Other
    
    
    1
    
    
    
    2
    
    
    
    2
    
    
    
    5Total interest expense
    
    
    853
    
    
    
    895
    
    
    
    1,785
    
    
    
    1,788Net interest income before provision for loan
losses
    
    
    4,328
    
    
    
    4,998
    
    
    
    8,784
    
    
    
    9,659Provision for Loan Losses
    
    
    900
    
    
    
    5,850
    
    
    
    2,400
    
    
    
    8,750Net interest income (loss) after provision for
loan losses
    
    
    3,428
    
    
    
    (852
    )
    
    
    6,384
    
    
    
    909Non-Interest Income:Service charges
    
    
    932
    
    
    
    947
    
    
    
    1,830
    
    
    
    1,853Sale of merchant processing portfolio
    
    
    1,435
    
    
    
    
    
    
    
    1,435
    
    
    
    Gain on sale of investments
    
    
    10
    
    
    
    
    
    
    
    580
    
    
    
    Gain on sale of loans
    
    
    239
    
    
    
    
    
    
    
    240
    
    
    
    10Earnings on Bank owned life insurance policies
    
    
    113
    
    
    
    108
    
    
    
    222
    
    
    
    215Other
    
    
    236
    
    
    
    221
    
    
    
    445
    
    
    
    428Total non-interest income
    
    
    2,965
    
    
    
    1,276
    
    
    
    4,752
    
    
    
    2,506Non-Interest Expenses:Salaries and employee benefits
    
    
    2,563
    
    
    
    2,710
    
    
    
    5,112
    
    
    
    5,590Occupancy and equipment
    
    
    822
    
    
    
    936
    
    
    
    1,535
    
    
    
    1,933Other
    
    
    2,067
    
    
    
    2,348
    
    
    
    3,515
    
    
    
    3,775Total non-interest expenses
    
    
    5,452
    
    
    
    5,994
    
    
    
    10,162
    
    
    
    11,298Income (loss) before provision for income taxes
    
    
    941
    
    
    
    (5,570
    )
    
    
    974
    
    
    
    (7,883
    )Provision (Benefit) for Income Taxes
    
    
    365
    
    
    
    (2,339
    )
    
    
    264
    
    
    
    (3,376
    )Net income (loss)
    
    $
    576
    
    
    $
    (3,231
    )
    
    $
    710
    
    
    $
    (4,507
    )Preferred Stock Dividends and Discount Accretion
    
    
    (171
    )
    
    
    (171
    )
    
    
    (342
    )
    
    
    (287
    )Net income (loss) available to common
shareholders
    
    $
    405
    
    
    $
    (3,402
    )
    
    $
    368
    
    
    $
    (4,794
    )Basic earnings (loss) per share
    
    $
    0.08
    
    
    $
    (0.71
    )
    
    $
    0.08
    
    
    $
    (1.00
    )Diluted earnings (loss) per share
    
    $
    0.08
    
    
    $
    (0.71
    )
    
    $
    0.08
    
    
    $
    (1.00
    )
   3




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PLUMAS BANCORP
 
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 (Unaudited)
  For the Six MonthsEnded June 30,2010
    
    
    2009Cash Flows from Operating Activities:Net income (loss)
    
    $
    710
    
    
    $
    (4,507
    )Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:Provision for loan losses
    
    
    2,400
    
    
    
    8,750Change in deferred loan origination costs/fees, net
    
    
    (95
    )
    
    
    (9
    )Depreciation and amortization
    
    
    875
    
    
    
    1,000Stock-based compensation expense
    
    
    (28
    )
    
    
    129Amortization of investment security premiums
    
    
    232
    
    
    
    85Accretion of investment security discounts
    
    
    (38
    )
    
    
    (30
    )Net loss on sale of other real estate
    
    
    37
    
    
    
    104Net (gain) loss on sale of vehicles owned
    
    
    (4
    )
    
    
    37Gain on sale of investments
    
    
    (580
    )
    
    
    Gain on sale of loans held for sale
    
    
    (240
    )
    
    
    (10
    )Loans originated for sale
    
    
    (8,249
    )
    
    
    (3,796
    )Proceeds from secured borrowing
    
    
    4,885
    
    
    
    Proceeds from loan sales
    
    
    3,743
    
    
    
    438Earnings on Bank owned life insurance policies
    
    
    (177
    )
    
    
    (172
    )Provision for losses on other real estate
    
    
    346
    
    
    
    356Decrease (increase) in accrued interest receivable and other assets
    
    
    1,568
    
    
    
    (3,340
    )Increase in accrued interest payable and other liabilities
    
    
    169
    
    
    
    119Net cash provided by (used in) operating activities
    
    
    5,554
    
    
    
    (846
    )Cash Flows from Investing Activities:Proceeds from matured and called available-for-sale investment securities
    
    
    17,720
    
    
    
    7,000Proceeds from matured and called held-to-maturity investment securities
    
    
    
    
    
    
    250Purchases of available-for-sale investment securities
    
    
    (18,179
    )
    
    
    (27,212
    )Proceeds from principal repayments from available-for-sale
government-guaranteed mortgage-backed securities
    
    
    3,710
    
    
    
    3,618Proceeds from sale of available-for-sale securities
    
    
    15,140
    
    
    
    Net decrease (increase) in loans
    
    
    6,260
    
    
    
    (1,287
    )Proceeds from sale of other vehicles
    
    
    89
    
    
    
    180Proceeds from sale of other real estate
    
    
    2,342
    
    
    
    855Purchase of premises and equipment
    
    
    (1,160
    )
    
    
    (201
    )Net cash provided by (used in) investing activities
    
    
    25,922
    
    
    
    (16,797
    )
   4




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##### Table of Contents



PLUMAS BANCORP
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 (Unaudited)
 
 For the Six MonthsEnded June 30,2010
    
    
    2009Cash Flows from Financing Activities:Net (decrease) increase in demand, interest bearing and savings deposits
    
    $
    (11,684
    )
    
    $
    23,078Net increase in time deposits
    
    
    3,345
    
    
    
    4,226Net decrease in short-term borrowings
    
    
    (20,000
    )
    
    
    (29,000
    )Net proceeds from exercise of stock options
    
    
    
    
    
    
    5Payment of cash dividends on preferred stock
    
    
    (150
    )
    
    
    (174
    )Issuance of preferred stock, net of discount
    
    
    
    
    
    
    11,517Issuance of common stock warrant
    
    
    
    
    
    
    407Net cash (used in) provided by financing activities
    
    
    (28,489
    )
    
    
    10,059Increase (decrease) in cash and cash equivalents
    
    
    2,987
    
    
    
    (7,584
    )Cash and Cash Equivalents at Beginning of Year
    
    
    59,493
    
    
    
    18,791Cash and Cash Equivalents at End of Period
    
    $
    62,480
    
    
    $
    11,207Supplemental Disclosure of Cash Flow Information:Cash paid during the period for:Interest expense
    
    $
    1,609
    
    
    $
    1,820Income taxes
    
    $
    
    
    
    $
    65Non-Cash Investing Activities:Real estate and vehicles acquired through foreclosure
    
    $
    1,264
    
    
    $
    1,072Net change in unrealized income on available-for-sale securities
    
    $
    124
    
    
    $
    45
   5




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##### Table of Contents



PLUMAS BANCORP
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. GENERAL
    2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     6




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3. INVESTMENT SECURITIES
  June 30, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:U.S. Treasury securities
    
    $
    1,043,000
    
    
    
    
    
    
    $
    (3,000
    )
    
    $
    1,040,000U.S. Government agencies
    
    
    43,381,000
    
    
    $
    423,000
    
    
    
    
    
    
    
    43,804,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    23,871,000
    
    
    
    817,000
    
    
    
    
    
    
    
    24,688,000Obligations of states and
political subdivisions
    
    
    591,000
    
    
    
    33,000
    
    
    
    
    
    
    
    624,000$
    68,886,000
    
    
    $
    1,273,000
    
    
    $
    (3,000
    )
    
    $
    70,156,000
  December 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:U.S. Treasury securities
    
    $
    1,059,000
    
    
    
    
    
    
    $
    (7,000
    )
    
    $
    1,052,000U.S. Government agencies
    
    
    55,520,000
    
    
    $
    420,000
    
    
    
    (51,000
    )
    
    
    55,889,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    18,925,000
    
    
    
    362,000
    
    
    
    
    
    
    
    19,287,000Obligations of states and
political subdivisions
    
    
    11,387,000
    
    
    
    360,000
    
    
    
    (25,000
    )
    
    
    11,722,000$
    86,891,000
    
    
    $
    1,142,000
    
    
    $
    (83,000
    )
    
    $
    87,950,000
   More than 12 MonthsFair
    
    
    UnrealizedValue
    
    
    LossesDebt securities:U.S. Treasury securities
    
    $
    1,040,000
    
    
    $
    3,000
  7




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Less than 12 MonthsFair
    
    
    UnrealizedValue
    
    
    LossesDebt securities:U.S. Treasury securities
    
    $
    1,052,000
    
    
    $
    7,000U.S. Government agencies
    
    
    10,787,000
    
    
    
    51,000Obligations of states and political subdivisions
    
    
    1,208,000
    
    
    
    25,000$
    13,047,000
    
    
    $
    83,000
   EstimatedAmortized
    
    
    FairCost
    
    
    ValueOne year or less
    
    $
    1,020,000
    
    
    $
    1,025,000After one year through five years
    
    
    43,404,000
    
    
    
    43,819,000After five years through ten years
    
    
    591,000
    
    
    
    624,00045,015,000
    
    
    
    45,468,000Investment securities not due at a single maturity date:Government-guaranteed mortgage-backed securities
    
    
    23,871,000
    
    
    
    24,688,000$
    68,886,000
    
    
    $
    70,156,000
   8




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4. LOANS
  June 30,
    
    
    December 31,2010
    
    
    2009Commercial
    
    $
    42,692
    
    
    $
    37,056Agricultural
    
    
    40,675
    
    
    
    41,722Real estate  mortgage
    
    
    155,799
    
    
    
    161,397Real estate  construction and land development
    
    
    34,141
    
    
    
    38,061Consumer
    
    
    50,828
    
    
    
    54,442324,135
    
    
    
    332,678Deferred loan costs, net
    
    
    337
    
    
    
    298Allowance for loan losses
    
    
    (6,146
    )
    
    
    (9,568
    )$
    318,326
    
    
    $
    323,408
    June 30,
    
    
    December 31,2010
    
    
    2009Balance, beginning of year
    
    $
    9,568
    
    
    $
    7,224Provision charged to operations
    
    
    2,400
    
    
    
    14,500Losses charged to allowance
    
    
    (5,945
    )
    
    
    (12,500
    )Recoveries
    
    
    123
    
    
    
    344Balance, end of period
    
    $
    6,146
    
    
    $
    9,568
  June 30,
    
    
    December 31,2010
    
    
    2009Balance of impaired loans carried at cost
    
    $
    8,086
    
    
    $
    5,512Balance of impaired loans carried at fair value
    
    
    8,860
    
    
    
    9,435Total recorded investment in impaired loans
(net of allocated allowance of $1,172 at June 30,
2010 and $4,281 at December 31, 2009)
    
    $
    16,946
    
    
    $
    14,947
  5. COMMITMENTS AND CONTINGENCIES
   9




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6. PREFERRED STOCK AND JUNIOR SUBORDINATED DEBENTURES
   7. EARNINGS (LOSS) PER SHARE
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,(In thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net Income (loss):Net income (loss)
    
    $
    576
    
    
    $
    (3,231
    )
    
    $
    710
    
    
    $
    (4,507
    )Dividends accrued and discount accreted on
preferred shares
    
    
    (171
    )
    
    
    (171
    )
    
    
    (342
    )
    
    
    (287
    )Net income (loss) available to common shareholders
    
    $
    405
    
    
    $
    (3,402
    )
    
    $
    368
    
    
    $
    (4,794
    )Earnings Per Share:Basic earnings (loss) per share
    
    $
    0.08
    
    
    $
    (0.71
    )
    
    $
    0.08
    
    
    $
    (1.00
    )Diluted earnings (loss) per share
    
    $
    0.08
    
    
    $
    (0.71
    )
    
    $
    0.08
    
    
    $
    (1.00
    )Weighted Average Number of Shares Outstanding:Basic shares
    
    
    4,776
    
    
    
    4,776
    
    
    
    4,776
    
    
    
    4,776Diluted shares
    
    
    4,776
    
    
    
    4,776
    
    
    
    4,776
    
    
    
    4,776
  10




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8. COMPREHENSIVE INCOME (LOSS)
    9. STOCK-BASED COMPENSATION
     WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualExercise
    
    
    Term
    
    
    Intrinsic ValueShares
    
    
    Price
    
    
    (in years)
    
    
    (in thousands)Options outstanding at December 31, 2009
    
    
    403,966
    
    
    $
    13.56Options granted
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    Options cancelled
    
    
    (65,984
    )
    
    $
    14.13Options outstanding at June 30, 2010
    
    
    337,982
    
    
    $
    13.44
    
    
    
    4.2
    
    
    $
    Options exercisable at June 30, 2010
    
    
    278,989
    
    
    $
    13.28
    
    
    
    3.9
    
    
    $
    Expected to vest after June 30, 2010
    
    
    51,278
    
    
    $
    14.24
    
    
    
    5.3
    
    
    $
    
  11




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10. INCOME TAXES
      12




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11. FAIR VALUE MEASUREMENT
 Fair Value of Financial Instruments
  June 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    62,480,000
    
    
    $
    62,480,000
    
    
    $
    59,493,000
    
    
    $
    59,493,000Investment securities
    
    
    70,156,000
    
    
    
    70,156,000
    
    
    
    87,950,000
    
    
    
    87,950,000Loans
    
    
    318,326,000
    
    
    
    316,790,000
    
    
    
    323,408,000
    
    
    
    325,589,000Bank owned life insurance
    
    
    10,288,000
    
    
    
    10,288,000
    
    
    
    10,111,000
    
    
    
    10,111,000Accrued interest receivable
    
    
    1,938,000
    
    
    
    1,938,000
    
    
    
    2,487,000
    
    
    
    2,487,000Financial liabilities:Deposits
    
    $
    424,916,000
    
    
    $
    424,969,000
    
    
    $
    433,255,000
    
    
    $
    433,311,000Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    20,000,000
    
    
    
    20,000,000Long-term debt
    
    
    20,000,000
    
    
    
    20,228,000
    
    
    
    20,000,000
    
    
    
    19,817,000Junior subordinated deferrable
interest debentures
    
    
    10,310,000
    
    
    
    2,989,000
    
    
    
    10,310,000
    
    
    
    2,909,000Accrued interest payable
    
    
    652,000
    
    
    
    652,000
    
    
    
    476,000
    
    
    
    476,000
   Cash and cash equivalents:
 Investment securities:
 Loans:
  Bank owned life insurance:
 Deposits:
  13




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Short-term borrowings:
 Long-term borrowings:
 Junior subordinated deferrable interest debentures:
 Commitments to extend credit and letters of credit:
        Fair Value Measurements at June 30, 2010 UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantTotal Fair
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    UnobservableValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:Available-for-
sale
securities
    
    $
    70,156,000
    
    
    $
    45,468,000
    
    
    $
    24,688,000
  14




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Fair Value Measurements at December 31, 2009 UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantTotal Fair
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    UnobservableValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:Available-for-
sale
securities
    
    $
    87,950,000
    
    
    $
    68,663,000
    
    
    $
    19,287,000
   Fair Value Measurements at June 30, 2010 UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Impaired
loans
    
    $
    8,860,000
    
    
    
    
    
    
    $
    8,860,000Other real estate
    
    
    9,719,000
    
    
    
    
    
    
    
    9,719,000$
    18,579,000
    
    
    
    
    
    
    $
    18,579,000
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Impaired
loans
    
    $
    9,435,000
    
    
    
    
    
    
    $
    9,435,000Other real estate
    
    
    11,204,000
    
    
    
    
    
    
    
    11,204,000$
    20,639,000
    
    
    
    
    
    
    $
    20,639,000
     15




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##### Table of Contents



12. BORROWING ARRANGEMENTS
  13. ADOPTION OF NEW FINANCIAL ACCOUNTING STANDARDS
 Accounting for Transfers of Financial Assets
  Transfers and Servicing
   16




---



##### Table of Contents



Fair Value Measurements and Disclosures
  Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit
Losses
   17




---



##### 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
   IMPACT OF RECENT LEGISLATION.
   18




---



##### Table of Contents



OVERVIEW
        19




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##### Table of Contents



RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2010
 Net interest income before provision for loan losses.
     20




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21




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##### Table of Contents



For the Six Months Ended June 30, 2010
    
    
    For the Six Months Ended June 30, 2009Average Balance
    
    
    Interest
    
    
    Yield/
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/(in thousands)
    
    
    (in thousands)
    
    
    Rate
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    RateInterest-earning assets:Loans (1) (2)
    
    $
    326,884
    
    
    $
    9,502
    
    
    
    5.86
    %
    
    $
    362,547
    
    
    $
    10,466
    
    
    
    5.82
    %Investment securities (1)
    
    
    74,855
    
    
    
    1,048
    
    
    
    2.82
    %
    
    
    51,809
    
    
    
    981
    
    
    
    3.82
    %Other
    
    
    16,388
    
    
    
    19
    
    
    
    0.23
    %
    
    
    25
    
    
    
    
    
    
    
    2.05
    %Total interest-earning assets
    
    
    418,127
    
    
    
    10,569
    
    
    
    5.10
    %
    
    
    414,381
    
    
    
    11,447
    
    
    
    5.57
    %Cash and due from banks
    
    
    40,966
    
    
    
    
    
    
    
    
    
    
    
    21,870Other assets
    
    
    50,053
    
    
    
    
    
    
    
    
    
    
    
    33,094Total assets
    
    $
    509,146
    
    
    
    
    
    
    
    
    
    
    $
    469,345Interest-bearing liabilities:NOW deposits
    
    $
    103,955
    
    
    
    267
    
    
    
    0.52
    %
    
    $
    84,927
    
    
    
    269
    
    
    
    0.64
    %Money market deposits
    
    
    42,946
    
    
    
    134
    
    
    
    0.63
    %
    
    
    41,219
    
    
    
    177
    
    
    
    0.87
    %Savings deposits
    
    
    50,032
    
    
    
    41
    
    
    
    0.17
    %
    
    
    50,101
    
    
    
    46
    
    
    
    0.19
    %Time deposits
    
    
    127,446
    
    
    
    1,056
    
    
    
    1.67
    %
    
    
    99,606
    
    
    
    1,047
    
    
    
    2.12
    %Total deposits
    
    
    324,379
    
    
    
    1,498
    
    
    
    0.93
    %
    
    
    275,853
    
    
    
    1,539
    
    
    
    1.13
    %Short-term borrowings
    
    
    1,989
    
    
    
    5
    
    
    
    0.51
    %
    
    
    27,609
    
    
    
    35
    
    
    
    0.26
    %Long-term borrowings
    
    
    20,000
    
    
    
    129
    
    
    
    1.30
    %
    
    
    
    
    
    
    
    
    
    
    
    %Other interest-bearing liabilities
    
    
    128
    
    
    
    2
    
    
    
    3.15
    %
    
    
    218
    
    
    
    5
    
    
    
    4.62
    %Junior subordinated debentures
    
    
    10,310
    
    
    
    151
    
    
    
    2.95
    %
    
    
    10,310
    
    
    
    209
    
    
    
    4.09
    %Total interest-bearing liabilities
    
    
    356,806
    
    
    
    1,785
    
    
    
    1.01
    %
    
    
    313,990
    
    
    
    1,788
    
    
    
    1.15
    %Non-interest bearing deposits
    
    
    105,444
    
    
    
    
    
    
    
    
    
    
    
    104,811Other liabilities
    
    
    8,256
    
    
    
    
    
    
    
    
    
    
    
    5,427Shareholders equity
    
    
    38,640
    
    
    
    
    
    
    
    
    
    
    
    45,117Total liabilities & equity
    
    $
    509,146
    
    
    
    
    
    
    
    
    
    
    $
    469,345Cost of funding interest-earning assets (3)
    
    
    
    
    
    
    
    
    
    
    0.86
    %
    
    
    
    
    
    
    
    
    
    
    0.87
    %Net interest income and margin (4)
    
    
    
    
    
    $
    8,784
    
    
    
    4.24
    %
    
    
    
    
    
    $
    9,659
    
    
    
    4.70
    %
 
 (1)
    
    Not computed on a tax-equivalent basis.(2)
    
    Net loan costs included in loan interest income for the six-month periods ended June 30, 2010
and 2009 were $21 thousand and $85 thousand, 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.  22




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2010 over 2009 change in net interest incomefor the six months ended June 30(in thousands)Volume (1)
    
    
    Rate (2)
    
    
    Mix (3)
    
    
    TotalInterest-earning assets:Loans
    
    $
    (1,030
    )
    
    $
    73
    
    
    $
    (7
    )
    
    $
    (964
    )Investment securities
    
    
    436
    
    
    
    (256
    )
    
    
    (113
    )
    
    
    67Other
    
    
    166
    
    
    
    
    
    
    
    (147
    )
    
    
    19Total interest income
    
    
    (428
    )
    
    
    (183
    )
    
    
    (267
    )
    
    
    (878
    )Interest-bearing liabilities:NOW deposits
    
    
    60
    
    
    
    (51
    )
    
    
    (11
    )
    
    
    (2
    )Money market deposits
    
    
    7
    
    
    
    (48
    )
    
    
    (2
    )
    
    
    (43
    )Savings deposits
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Time deposits
    
    
    293
    
    
    
    (222
    )
    
    
    (62
    )
    
    
    9Short-term borrowings
    
    
    (32
    )
    
    
    34
    
    
    
    (32
    )
    
    
    (30
    )Long-term borrowings
    
    
    
    
    
    
    
    
    
    
    129
    
    
    
    129Other interest-bearing liabilities
    
    
    (2
    )
    
    
    (1
    )
    
    
    
    
    
    
    (3
    )Junior subordinated debentures
    
    
    
    
    
    
    (58
    )
    
    
    
    
    
    
    (58
    )Total interest expense
    
    
    326
    
    
    
    (351
    )
    
    
    22
    
    
    
    (3
    )Net interest income
    
    $
    (754
    )
    
    $
    168
    
    
    $
    (289
    )
    
    $
    (875
    )
 
 (1)
    
    The volume change in net interest income represents the change in average balance divided 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.
    23




---



##### Table of Contents



Non-interest income.
   For the Six MonthsEnded June 30,
    
    
    Dollar
    
    
    Percentage2010
    
    
    2009
    
    
    Change
    
    
    ChangeService charges on deposit accounts
    
    $
    1,830
    
    
    $
    1,853
    
    
    $
    (23
    )
    
    
    -1.2
    %Sale of merchant processing portfolio
    
    
    1,435
    
    
    
    
    
    
    
    1,435
    
    
    
    100
    %Gain on sale of securities
    
    
    580
    
    
    
    
    
    
    
    580
    
    
    
    100
    %Gain on sale of loans
    
    
    240
    
    
    
    10
    
    
    
    230
    
    
    
    2,300
    %Earnings on life insurance policies
    
    
    222
    
    
    
    215
    
    
    
    7
    
    
    
    3.3
    %Merchant processing income
    
    
    114
    
    
    
    112
    
    
    
    2
    
    
    
    1.8
    %Loan service fees
    
    
    78
    
    
    
    54
    
    
    
    24
    
    
    
    44.4
    %Customer service fees
    
    
    65
    
    
    
    59
    
    
    
    6
    
    
    
    10.2
    %Investment services income
    
    
    36
    
    
    
    47
    
    
    
    (11
    )
    
    
    -23.4
    %Safe deposit box and night depository income
    
    
    33
    
    
    
    34
    
    
    
    (1
    )
    
    
    -2.9
    %Other
    
    
    119
    
    
    
    122
    
    
    
    (3
    )
    
    
    -2.5
    %Total non-interest income
    
    $
    4,752
    
    
    $
    2,506
    
    
    $
    2,246
    
    
    
    89.6
    %
 Non-interest expenses.
  24




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25




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##### Table of Contents



For the Six MonthsEnded June 30,
    
    
    Dollar
    
    
    Percentage2010
    
    
    2009
    
    
    Change
    
    
    ChangeSalaries and employee benefits
    
    $
    5,112
    
    
    $
    5,590
    
    
    $
    (478
    )
    
    
    -8.6
    %Occupancy and equipment
    
    
    1,535
    
    
    
    1,933
    
    
    
    (398
    )
    
    
    -20.6
    %Outside service fees
    
    
    602
    
    
    
    396
    
    
    
    206
    
    
    
    52.0
    %FDIC insurance and assessments
    
    
    506
    
    
    
    669
    
    
    
    (163
    )
    
    
    -24.4
    %OREO Expense
    
    
    405
    
    
    
    125
    
    
    
    280
    
    
    
    224.0
    %Professional fees
    
    
    366
    
    
    
    424
    
    
    
    (58
    )
    
    
    -13.7
    %Provision for OREO losses
    
    
    346
    
    
    
    356
    
    
    
    (10
    )
    
    
    -2.8
    %Telephone and data communication
    
    
    176
    
    
    
    201
    
    
    
    (25
    )
    
    
    -12.4
    %Loan and collection expenses
    
    
    147
    
    
    
    162
    
    
    
    (15
    )
    
    
    -9.3
    %Business development
    
    
    132
    
    
    
    170
    
    
    
    (38
    )
    
    
    -22.4
    %Advertising and shareholder relations
    
    
    117
    
    
    
    173
    
    
    
    (56
    )
    
    
    -32.4
    %Armored car and courier
    
    
    117
    
    
    
    137
    
    
    
    (20
    )
    
    
    -14.6
    %Director compensation
    
    
    114
    
    
    
    148
    
    
    
    (34
    )
    
    
    -23.0
    %Postage
    
    
    109
    
    
    
    107
    
    
    
    2
    
    
    
    1.9
    %Deposit premium amortization
    
    
    87
    
    
    
    87
    
    
    
    
    
    
    
    
    %Stationery and supplies
    
    
    64
    
    
    
    101
    
    
    
    (37
    )
    
    
    -36.6
    %Loss on sale of OREO and OVO
    
    
    33
    
    
    
    141
    
    
    
    (108
    )
    
    
    -76.6
    %Other
    
    
    194
    
    
    
    378
    
    
    
    (184
    )
    
    
    -48.7
    %Total non-interest expense
    
    $
    10,162
    
    
    $
    11,298
    
    
    $
    (1,136
    )
    
    
    -10.1
    %
 Provision for income taxes.
  RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2010
 Net Income (loss).
  26




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##### Table of Contents



Net interest income before provision for loan losses.
      27




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##### Table of Contents



For the Three Months Ended June 30, 2010
    
    
    For the Three Months Ended June 30, 2009Average Balance
    
    
    Interest
    
    
    Yield/
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/(in thousands)
    
    
    (in thousands)
    
    
    Rate
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    RateInterest-earning assets:Loans (1) (2)
    
    $
    325,982
    
    
    $
    4,733
    
    
    
    5.82
    %
    
    $
    362,655
    
    
    $
    5,364
    
    
    
    5.93
    %Investment securities (1)
    
    
    65,671
    
    
    
    434
    
    
    
    2.65
    %
    
    
    57,715
    
    
    
    529
    
    
    
    3.68
    %Other
    
    
    24,419
    
    
    
    14
    
    
    
    0.23
    %
    
    
    6
    
    
    
    
    
    
    
    0.80
    %Total interest-earning assets
    
    
    416,072
    
    
    
    5,181
    
    
    
    4.99
    %
    
    
    420,376
    
    
    
    5,893
    
    
    
    5.62
    %Cash and due from banks
    
    
    40,691
    
    
    
    
    
    
    
    
    
    
    
    26,128Other assets
    
    
    50,542
    
    
    
    
    
    
    
    
    
    
    
    32,440Total assets
    
    $
    507,305
    
    
    
    
    
    
    
    
    
    
    $
    478,944Interest-bearing liabilities:NOW deposits
    
    $
    104,183
    
    
    
    110
    
    
    
    0.42
    %
    
    $
    91,424
    
    
    
    160
    
    
    
    0.70
    %Money market deposits
    
    
    41,377
    
    
    
    60
    
    
    
    0.58
    %
    
    
    41,562
    
    
    
    91
    
    
    
    0.88
    %Savings deposits
    
    
    50,373
    
    
    
    21
    
    
    
    0.17
    %
    
    
    50,473
    
    
    
    24
    
    
    
    0.19
    %Time deposits
    
    
    127,594
    
    
    
    520
    
    
    
    1.63
    %
    
    
    100,711
    
    
    
    501
    
    
    
    2.00
    %Total deposits
    
    
    323,527
    
    
    
    711
    
    
    
    0.88
    %
    
    
    284,170
    
    
    
    776
    
    
    
    1.10
    %Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    %                              28,743
    
    
    
    18
    
    
    
    0.25
    %Long-term borrowings
    
    
    20,000
    
    
    
    65
    
    
    
    1.30
    %
    
    
    
    
    
    
    
    
    
    
    
    %Other interest-bearing liabilities
    
    
    122
    
    
    
    1
    
    
    
    3.29
    %
    
    
    214
    
    
    
    2
    
    
    
    3.74
    %Junior subordinated debentures
    
    
    10,310
    
    
    
    76
    
    
    
    2.96
    %
    
    
    10,310
    
    
    
    99
    
    
    
    3.85
    %Total interest-bearing liabilities
    
    
    353,959
    
    
    
    853
    
    
    
    0.97
    %
    
    
    323,437
    
    
    
    895
    
    
    
    1.11
    %Non-interest bearing deposits
    
    
    104,808
    
    
    
    
    
    
    
    
    
    
    
    103,727Other liabilities
    
    
    10,123
    
    
    
    
    
    
    
    
    
    
    
    5,474Shareholders equity
    
    
    38,415
    
    
    
    
    
    
    
    
    
    
    
    46,306Total liabilities & equity
    
    $
    507,305
    
    
    
    
    
    
    
    
    
    
    $
    478,944Cost of funding interest-earning assets (3)
    
    
    
    
    
    
    
    
    
    
    0.82
    %
    
    
    
    
    
    
    
    
    
    
    0.85
    %Net interest income and margin (4)
    
    
    
    
    
    $
    4,328
    
    
    
    4.17
    %
    
    
    
    
    
    $
    4,998
    
    
    
    4.77
    %
 
 (1)
    
    Not computed on a tax-equivalent basis.(2)
    
    Net loan costs included in loan interest income for the three-month periods ended June 30,
2010 and 2009 were $32 thousand and $20 thousand, respectively.(3)
    
    Total interest expense divided by the average balance of total earning assets.(4)
    
    Net interest income divided by the average balance of total earning assets.  28




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##### Table of Contents



2010 over 2009 change in net interest incomefor the three months ended June 30(in thousands)Volume (1)
    
    
    Rate (2)
    
    
    Mix (3)
    
    
    TotalInterest-earning assets:Loans
    
    $
    (542
    )
    
    $
    (99
    )
    
    $
    10
    
    
    $
    (631
    )Investment securities
    
    
    73
    
    
    
    (148
    )
    
    
    (20
    )
    
    
    (95
    )Other
    
    
    49
    
    
    
    
    
    
    
    (35
    )
    
    
    14Total interest income
    
    
    (420
    )
    
    
    (247
    )
    
    
    (45
    )
    
    
    (712
    )Interest-bearing liabilities:NOW deposits
    
    
    22
    
    
    
    (63
    )
    
    
    (9
    )
    
    
    (50
    )Money market deposits
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    (31
    )Savings deposits
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Time deposits
    
    
    134
    
    
    
    (91
    )
    
    
    (24
    )
    
    
    19Short-term borrowings
    
    
    (18
    )
    
    
    (18
    )
    
    
    18
    
    
    
    (18
    )Long-term borrowings
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    65Other interest-bearing liabilities
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Junior subordinated debentures
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    (23
    )Total interest expense
    
    
    137
    
    
    
    (229
    )
    
    
    50
    
    
    
    (42
    )Net interest income
    
    $
    (557
    )
    
    $
    (18
    )
    
    $
    (95
    )
    
    $
    (670
    )
 
 (1)
    
    The volume change in net interest income represents the change in average balance divided by
the previous years rate.(2)
    
    The rate change in net interest income represents the change in rate divided 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.
  29




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##### Table of Contents



For the ThreeMonthsEnded June 30,
    
    
    Dollar
    
    
    Percentage2010
    
    
    2009
    
    
    Change
    
    
    ChangeSale of merchant processing portfolio
    
    $
    1,435
    
    
    $
    
    
    
    $
    1,435
    
    
    
    100
    %Service charges on deposit accounts
    
    
    932
    
    
    
    947
    
    
    
    (15
    )
    
    
    -1.6
    %Gain on sale of loans
    
    
    239
    
    
    
    
    
    
    
    239
    
    
    
    100
    %Earnings on life insurance policies
    
    
    113
    
    
    
    108
    
    
    
    5
    
    
    
    4.6
    %Merchant processing income
    
    
    60
    
    
    
    61
    
    
    
    (1
    )
    
    
    -1.6
    %Loan service fees
    
    
    44
    
    
    
    32
    
    
    
    12
    
    
    
    37.5
    %Customer service fees
    
    
    25
    
    
    
    31
    
    
    
    (6
    )
    
    
    -19.4
    %Investment services income
    
    
    24
    
    
    
    17
    
    
    
    7
    
    
    
    41.2
    %Safe deposit box and night depository income
    
    
    16
    
    
    
    17
    
    
    
    (1
    )
    
    
    -5.9
    %Gain on sale of securities
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    100
    %Other
    
    
    67
    
    
    
    63
    
    
    
    4
    
    
    
    6.3
    %Total non-interest income
    
    $
    2,965
    
    
    $
    1,276
    
    
    $
    1,689
    
    
    
    132.4
    %
 Non-interest expenses.
      30




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##### Table of Contents



For the ThreeMonthsEnded June 30,
    
    
    Dollar
    
    
    Percentage2010
    
    
    2009
    
    
    Change
    
    
    ChangeSalaries and employee benefits
    
    $
    2,563
    
    
    $
    2,710
    
    
    $
    (147
    )
    
    
    -5.4
    %Occupancy and equipment
    
    
    822
    
    
    
    936
    
    
    
    (114
    )
    
    
    -12.2
    %Provision for OREO losses
    
    
    346
    
    
    
    215
    
    
    
    131
    
    
    
    60.9
    %Outside service fees
    
    
    298
    
    
    
    197
    
    
    
    101
    
    
    
    51.3
    %FDIC insurance and assessments
    
    
    253
    
    
    
    523
    
    
    
    (270
    )
    
    
    -51.6
    %OREO Expense
    
    
    245
    
    
    
    71
    
    
    
    174
    
    
    
    245.1
    %Professional fees
    
    
    187
    
    
    
    256
    
    
    
    (69
    )
    
    
    -27.0
    %Telephone and data communication
    
    
    86
    
    
    
    96
    
    
    
    (10
    )
    
    
    -10.4
    %Loan and collection expenses
    
    
    84
    
    
    
    89
    
    
    
    (5
    )
    
    
    -5.6
    %Business development
    
    
    66
    
    
    
    96
    
    
    
    (30
    )
    
    
    -31.3
    %Armored car and courier
    
    
    61
    
    
    
    70
    
    
    
    (9
    )
    
    
    -12.9
    %Advertising and shareholder relations
    
    
    59
    
    
    
    95
    
    
    
    (36
    )
    
    
    -37.9
    %Director compensation
    
    
    58
    
    
    
    73
    
    
    
    (15
    )
    
    
    -20.5
    %Postage
    
    
    50
    
    
    
    49
    
    
    
    1
    
    
    
    2.0
    %Deposit premium amortization
    
    
    44
    
    
    
    44
    
    
    
    
    
    
    
    
    %Stationery and supplies
    
    
    30
    
    
    
    50
    
    
    
    (20
    )
    
    
    -40.0
    %Loss on sale of OREO and OVO
    
    
    17
    
    
    
    77
    
    
    
    (60
    )
    
    
    -77.9
    %Other
    
    
    183
    
    
    
    347
    
    
    
    (164
    )
    
    
    -47.3
    %Total non-interest expense
    
    $
    5,452
    
    
    $
    5,994
    
    
    $
    (542
    )
    
    
    -9.0
    %
 Provision for income taxes.
 FINANCIAL CONDITION
 Fair value.
 Notes to Condensed Consolidated Financial Statements
  31




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##### Table of Contents



Loan portfolio composition.
   Asset Quality.
     32




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##### Table of Contents



Nonperforming loans.
    Nonperforming assets.
  Analysis of allowance for loan losses.
   33




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##### Table of Contents



For the Six MonthsEnded June 30,(in thousands)2010
    
    
    2009Balance at January 1,
    
    $
    9,568
    
    
    $
    7,224Charge-offs:Commercial and agricultural
    
    
    (828
    )
    
    
    (362
    )Real estate mortgage
    
    
    (2,484
    )
    
    
    (774
    )Real estate construction
    
    
    (2,380
    )
    
    
    (4,780
    )Consumer
    
    
    (253
    )
    
    
    (325
    )Total charge-offs
    
    
    (5,945
    )
    
    
    (6,241
    )Recoveries:Commercial and agricultural
    
    
    7
    
    
    
    10Real estate mortgage
    
    
    3
    
    
    
    Real estate construction
    
    
    51
    
    
    
    Consumer
    
    
    62
    
    
    
    139Total recoveries
    
    
    123
    
    
    
    149Net charge-offs
    
    
    (5,822
    )
    
    
    (6,092
    )Provision for loan losses
    
    
    2,400
    
    
    
    8,750Balance at June 30,
    
    $
    6,146
    
    
    $
    9,882Annualized net charge-offs during the six-month period to average loans
    
    
    3.59
    %
    
    
    3.39
    %Allowance for loan losses to total loans
    
    
    1.90
    %
    
    
    2.72
    %
 Investment securities.
 Premises and equipment.
  34




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##### Table of Contents



Deposits.
  Borrowing arrangements.
    CAPITAL RESOURCES
     35




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##### Table of Contents



36




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##### Table of Contents



June 30, 2010
    
    
    December 31, 2009Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTier 1 Leverage RatioPlumas Bancorp and Subsidiary
    
    $
    42,258
    
    
    
    8.4
    %
    
    $
    40,564
    
    
    
    7.9
    %Minimum regulatory requirement
    
    
    20,027
    
    
    
    4.0
    %
    
    
    20,652
    
    
    
    4.0
    %Plumas Bank
    
    
    42,396
    
    
    
    8.5
    %
    
    
    38,172
    
    
    
    7.4
    %Minimum requirement for Well-Capitalized institution under the prompt corrective action plan
    
    
    25,067
    
    
    
    5.0
    %
    
    
    25,848
    
    
    
    5.0
    %Minimum regulatory requirement
    
    
    20,053
    
    
    
    4.0
    %
    
    
    20,678
    
    
    
    4.0
    %Tier 1 Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    42,258
    
    
    
    11.7
    %
    
    
    40,564
    
    
    
    10.4
    %Minimum regulatory requirement
    
    
    14,413
    
    
    
    4.0
    %
    
    
    15,641
    
    
    
    4.0
    %Plumas Bank
    
    
    42,396
    
    
    
    11.7
    %
    
    
    38,172
    
    
    
    9.8
    %Minimum requirement for Well-Capitalized institution under the prompt corrective action plan
    
    
    21,659
    
    
    
    6.0
    %
    
    
    23,433
    
    
    
    6.0
    %Minimum regulatory requirement
    
    
    14,440
    
    
    
    4.0
    %
    
    
    15,622
    
    
    
    4.0
    %Total Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    46,785
    
    
    
    13.0
    %
    
    
    45,512
    
    
    
    11.6
    %Minimum regulatory requirement
    
    
    28,826
    
    
    
    8.0
    %
    
    
    31,281
    
    
    
    8.0
    %Plumas Bank
    
    
    46,931
    
    
    
    13.0
    %
    
    
    43,113
    
    
    
    11.0
    %Minimum requirement for Well-Capitalized institution under the prompt corrective action plan
    
    
    36,099
    
    
    
    10.0
    %
    
    
    39,056
    
    
    
    10.0
    %Minimum regulatory requirement
    
    
    28,879
    
    
    
    8.0
    %
    
    
    31,244
    
    
    
    8.0
    %
 LIQUIDITY
     37




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 
 ITEM 4T. CONTROLS AND PROCEDURES
    38




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##### Table of Contents



PART II  OTHER INFORMATION
 
 
 ITEM 1. LEGAL PROCEEDINGS
  
 
 ITEM 1A RISK FACTORS
  
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 
 ITEM 4. (REMOVED AND RESERVED)
 
 
 ITEM 5. OTHER INFORMATION
  
 
 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 January 21, 2009, is included as exhibit 3.2 to the
Registrants 10-K for December 31, 2008, 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.
  39




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##### Table of Contents



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.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.
  40




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##### Table of Contents



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.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.
  41




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##### Table of Contents



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.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 July 28, 2010.31.2
    
    
    Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated July 28, 2010.32.1
    
    
    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 July 28, 2010.32.2
    
    
    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 July 28, 2010.
  42




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##### Table of Contents



PLUMAS BANCORP
  /s/ Richard L. BelstockRichard L. BelstockInterim  Chief Financial Officer/s/ Andrew J. RybackAndrew J. RybackInterim President and Chief Executive Officer  43