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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 1934FOR THE QUARTERLY PERIOD ENDED March 31, 2005o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15
(D) OF THE SECURITIES EXCHANGE ACT OF 1934FOR 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)
 Registrants Telephone Number, Including Area Code (530) 283-7305 Indicated by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act).
Yes o No þ Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
May 5, 2005; 3,298,060 shares




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1. 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 31.3EXHIBIT 32.1EXHIBIT 32.2EXHIBIT 32.3    Table of Contents  
 PART I  FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS PLUMAS BANCORP
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data) Unaudited
    
    
    AuditedMarch 31,
    
    
    December 31,2005
    
    
    2004AssetsCash and due from banks
    
    $
    13,300
    
    
    $
    11,444Investment securities (fair value of $102,936 at March
31, 2005 and $113,390 at December 31, 2004)
    
    
    103,037
    
    
    
    113,252Loans, less allowance for loan losses of $2,964 at March
31, 2005 and $2,762 at December 31, 2004 (Notes 3 and 4)
    
    
    285,594
    
    
    
    263,891Premises and equipment, net
    
    
    10,169
    
    
    
    9,793Intangible assets, net
    
    
    1,864
    
    
    
    1,939Company owned life insurance
    
    
    8,436
    
    
    
    8,362Accrued interest receivable and other assets
    
    
    8,924
    
    
    
    8,665Total assets
    
    $
    431,324
    
    
    $
    417,346Liabilities and Shareholders EquityDeposits:Non-interest bearing
    
    $
    111,464
    
    
    $
    108,556Interest bearing
    
    
    271,632
    
    
    
    270,011Total deposits
    
    
    383,096
    
    
    
    378,567Federal funds purchased
    
    
    10,000
    
    
    
    1,035Accrued interest payable and other liabilities
    
    
    3,874
    
    
    
    3,667Junior subordinated deferrable interest debentures
    
    
    6,186
    
    
    
    6,186Total liabilities
    
    
    403,156
    
    
    
    389,455Commitments and contingencies (Note 4)
    
    
    
    
    
    
    Shareholders equity (Notes 5 and 8):Serial preferred stock, no par value; 10,000,000
shares authorized, none issued
    
    
    
    
    
    
    Common stock, no par value; 15,000,000 shares
authorized; issued and outstanding  3,288,329 shares
at March 31, 2005 and 3,267,465 shares at December 31,
2004
    
    
    4,111
    
    
    
    4,013Retained earnings
    
    
    25,267
    
    
    
    24,370Accumulated other comprehensive loss (Note 6)
    
    
    (1,210
    )
    
    
    (492
    )Total shareholders equity
    
    
    28,168
    
    
    
    27,891Total liabilities and shareholders equity
    
    $
    431,324
    
    
    $
    417,346
 See notes to condensed consolidated financial statements. 2




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PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data) UnauditedFor the Three MonthsEnded March 31,2005
    
    
    2004Interest Income:Interest and fees on loans
    
    $
    4,809
    
    
    $
    3,887Interest on investment securities:Taxable
    
    
    710
    
    
    
    745Exempt from Federal income taxes
    
    
    140
    
    
    
    71Interest on Federal funds sold
    
    
    1
    
    
    
    33Total interest income
    
    
    5,660
    
    
    
    4,736Interest Expense:Interest on deposits
    
    
    796
    
    
    
    634Interest on Federal funds purchased
    
    
    35
    
    
    
    Interest on junior subordinated deferrable interest debentures
    
    
    90
    
    
    
    70Other
    
    
    2
    
    
    
    3Total interest expense
    
    
    923
    
    
    
    707Net interest income before provision for loan losses
    
    
    4,737
    
    
    
    4,029Provision for Loan Losses
    
    
    300
    
    
    
    150Net interest income after provision for loan losses
    
    
    4,437
    
    
    
    3,879Non-Interest Income:Service charges
    
    
    727
    
    
    
    611Gain on sale of loans
    
    
    
    
    
    
    49(Loss) gain on sale of available-for-sale investment securities, net
    
    
    (8
    )
    
    
    90Loss on sale of other real estate and other assets
    
    
    (15
    )
    
    
    (53
    )Earnings on company owned life insurance policies
    
    
    92
    
    
    
    107Other
    
    
    313
    
    
    
    216Total non-interest income
    
    
    1,109
    
    
    
    1,020Non-Interest Expenses:Salaries and employee benefits
    
    
    2,403
    
    
    
    2,210Occupancy and equipment
    
    
    756
    
    
    
    674Other
    
    
    1,042
    
    
    
    877Total non-interest expenses
    
    
    4,201
    
    
    
    3,761Income before provision for income taxes
    
    
    1,345
    
    
    
    1,138Provision for Income Taxes
    
    
    448
    
    
    
    412Net income
    
    $
    897
    
    
    $
    726Basic earnings per share (Notes 5 and 8)
    
    $
    0.27
    
    
    $
    0.22Diluted earnings per share (Notes 5 and 8)
    
    $
    0.26
    
    
    $
    0.22
 See notes to condensed consolidated financial statements. 3




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PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands) UnauditedFor the Three MonthsEnded March 31,2005
    
    
    2004Cash Flows from Operating Activities:Net income
    
    $
    897
    
    
    $
    726Adjustments to reconcile net income to net cash provided by operating
activities:Provision for loan losses
    
    
    300
    
    
    
    150Decrease in deferred loan origination fees, net
    
    
    (271
    )
    
    
    (122
    )Depreciation, amortization and accretion, net
    
    
    411
    
    
    
    460Net loss (gain) on sale of available-for-sale investment securities
    
    
    8
    
    
    
    (90
    )Amortization of investment security premiums
    
    
    195
    
    
    
    271Accretion of investment security discounts
    
    
    (24
    )
    
    
    (15
    )Net loss on sale of premises and equipment
    
    
    
    
    
    
    2Net loss on sale of other real estate and other vehicles owned
    
    
    15
    
    
    
    53Net decrease in loans held for sale
    
    
    
    
    
    
    276Increase in cash surrender value of life insurance
    
    
    (74
    )
    
    
    (90
    )Decrease in accrued interest receivable and other assets
    
    
    231
    
    
    
    1,819Decrease in accrued interest payable and other liabilities
    
    
    207
    
    
    
    607Benefit for deferred taxes
    
    
    (8
    )
    
    
    Net cash provided by operating activities
    
    
    1,887
    
    
    
    4,047Cash Flows from Investing Activities:Proceeds from matured and called available-for-sale investment securities
    
    
    5,500
    
    
    
    5,500Proceeds from matured and called held-to-maturity investment securities
    
    
    507
    
    
    
    775Proceeds from sales of available-for-sale investment securities
    
    
    1,992
    
    
    
    9,293Purchases of available-for-sale investment securities
    
    
    
    
    
    
    (13,827
    )Purchases of held-to-maturity investment securities
    
    
    
    
    
    
    (1,197
    )Proceeds from principal repayments from available-for-sale
government-guaranteed mortgage-backed securities
    
    
    769
    
    
    
    338Proceeds from principal repayments from held-to-maturity
government-guaranteed mortgage-backed securities
    
    
    47
    
    
    
    28Net (increase) decrease in loans
    
    
    (21,746
    )
    
    
    3,135Proceeds from sale of other real estate and other vehicles owned
    
    
    20
    
    
    
    Purchase of premises and equipment
    
    
    (712
    )
    
    
    (273
    )Net cash (used in) provided by investing activities
    
    
    (13,623
    )
    
    
    3,772
 Continued on next page. 4




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PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Continued) UnauditedFor the Three MonthsEnded March 31,2005
    
    
    2004Cash Flows from Financing Activities:Net increase in demand, interest bearing and savings deposits
    
    $
    3,048
    
    
    $
    3,700Net increase in time deposits
    
    
    1,481
    
    
    
    998Proceeds from Federal funds purchased
    
    
    8,965Proceeds from exercise of stock options
    
    
    98
    
    
    
    44Net cash provided by financing activities
    
    
    13,592
    
    
    
    4,742Increase in cash and cash equivalents
    
    
    1,856
    
    
    
    12,561Cash and Cash Equivalents at Beginning of Year
    
    
    11,444
    
    
    
    30,012Cash and Cash Equivalents at End of Period
    
    $
    13,300
    
    
    $
    42,573Supplemental Disclosure of Cash Flow Information:Cash paid during the period for:Interest expense
    
    $
    840
    
    
    $
    707Income taxes
    
    $
    
    
    
    $
    Non-Cash Investing Activities:Real estate and vehicles acquired through foreclosure
    
    $
    14
    
    
    $
    Net change in unrealized gain on available-for-sale securities
    
    $
    (718
    )
    
    $
    (985
    )Non-Cash Financing Activities:Common stock retired in connection with the exercise of stock options
    
    $
    60
    
    
    $
    122
 See notes to condensed consolidated financial statements. 5




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PLUMAS BANCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 1. GENERAL Plumas Bancorp (the Company) was incorporated on January 17, 2002 and subsequently obtained
approval from various state and federal agencies to be a bank holding company in connection with
the merger of Plumas Bank (the Bank). The Company became the sole shareholder of the Bank on
June 21, 2002 pursuant to a Plan of Reorganization and Merger Agreement dated April 3, 2002.
Pursuant to that plan, on June 21, 2002 each outstanding share of the Banks common stock was
exchanged for one share of common stock of the Company. The Company formed Plumas Statutory Trust I
for the sole purpose of issuing trust preferred securities on September 26, 2002. The Bank operates twelve branches in California, including branches in Alturas, Chester, Fall River
Mills, Greenville, Kings Beach, Loyalton, Portola, Quincy, Susanville, Tahoe City, Truckee and
Westwood. The Banks deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up
to applicable legal limits. The Banks primary source of revenue is generated from providing loans
to customers who are predominately small and middle market businesses and individuals residing in
the surrounding areas. 2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated financial statements include the accounts of the Company and the
accounts of its wholly-owned subsidiary, Plumas Bank. Plumas Statutory Trust I is not consolidated
into the Companys consolidated financial statements and, accordingly, is accounted for under the
equity method. In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the Companys financial position at March 31, 2005 and December 31, 2004 and the
results of operations and cash flows for the three month ended March 31, 2005 and 2004. Certain
reclassifications have been made to prior periods balances to conform to classifications used in
2005. The unaudited condensed consolidated financial statements of the Company have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim
reporting on Form 10-Q. Accordingly, certain disclosures normally presented in the notes to the
consolidated financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted. These interim financial statements
should be read in conjunction with the consolidated financial statements and notes thereto included
in the Companys 2004 Annual Report to Shareholders on Form 10-K. The results of operations for
the three-month period ended March 31, 2005 and 2004 may not necessarily be indicative of future
operating results. In preparing such financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and liabilities as of the date
of the balance sheet and revenues and expenses for the periods reported. Actual results could
differ significantly from those estimates. Management has determined that since all of the commercial banking products and services offered by
the Company are available in each branch of the Bank, all branches are located within the same
economic environment and management does not allocate resources based on the performance of
different lending or transaction activities, it is appropriate to aggregate the Bank branches and
report them as a single operating segment. 6




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3. LOANS Outstanding loans are summarized below, in thousands: March 31,
    
    
    December 31,2005
    
    
    2004Commercial
    
    $
    46,205
    
    
    $
    42,689Agricultural
    
    
    30,976
    
    
    
    31,067Real estate  mortgage
    
    
    109,741
    
    
    
    102,125Real estate  construction and land development
    
    
    37,174
    
    
    
    31,964Consumer
    
    
    64,451
    
    
    
    59,068288,547
    
    
    
    266,913Deferred loans fees, net
    
    
    11
    
    
    
    (260
    )Allowance for loan losses
    
    
    (2,964
    )
    
    
    (2,762
    )$
    285,594
    
    
    $
    263,891
 4. COMMITMENTS AND CONTINGENCIES The Company is party to claims and legal proceedings arising in the ordinary course of business.
In the opinion of the Companys management, the amount of ultimate liability with respect to such
proceedings will not have a material adverse effect on the financial condition or result of
operations of the Company taken as a whole. In the normal course of business, there are various outstanding commitments to extend credit which
are not reflected in the financial statements, including loan commitments of $95,516,000 and
$90,084,000 and letters of credit of $1,775,000 and $1,777,000 at March 31, 2005 and December 31,
2004, respectively. Of the loan commitments outstanding at March 31, 2005, $28,896,000 are real estate construction
loan commitments that are expected to fund within the next twelve months. The remaining
commitments primarily relate to revolving lines of credit or other commercial loans, and many of
these are expected to expire without being drawn upon. Therefore, the total commitments do not
necessarily represent future cash requirements. Each loan commitment and the amount and type of
collateral obtained, if any, are evaluated on an individual basis. Collateral held varies, but may
include real property, bank deposits, debt or equity securities or business assets. Stand-by letters of credit are conditional commitments written to guarantee the performance of a
customer to a third party. These guarantees are primarily related to the purchases of inventory by
commercial customers and are typically short-term in nature. Credit risk is similar to that
involved in extending loan commitments to customers and accordingly, evaluation and collateral
requirements similar to those for loan commitments are used. The deferred liability related to the
Companys stand-by letters of credit was not significant at of March 31, 2005 or December 31, 2004. 7




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5. EARNINGS PER SHARE Basic earnings per share is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution that could occur if securities or other contracts to issue common
stock, such as stock options, result in the issuance of common stock which shares in the earnings
of the Company. The treasury stock method has been applied to determine the dilutive effect of the
stock options in computing diluted earnings per share. For the Three MonthsEnded March 31,2005
    
    
    2004Earnings Per Share:Basic earnings per share
    
    $
    0.27
    
    
    $
    0.22Diluted earnings per share
    
    $
    0.26
    
    
    $
    0.22Weighted Average Number of Shares Outstanding:Basic shares
    
    
    3,280,394
    
    
    
    3,250,087Diluted shares
    
    
    3,573,383
    
    
    
    3,357,326
 There were 56,925 stock options in the three-month period ended March 31, 2004, considered to be
antidilutive and therefore omitted from the above calculation of diluted earnings per share. There
were no stock options in the three-month period ended March 31, 2005 considered antidilutive. 6. COMPREHENSIVE INCOME Total comprehensive income for the three months ended March 31, 2005 and 2004 totaled $179,000 and
$1,305,000, respectively. Comprehensive income is comprised of net unrealized (losses) gains, net
of taxes, on available-for-sale investment securities, which were $(718,000) and $579,000 for the
three months ended March 31, 2005 and 2004, respectively, together with net income. At March 31, 2005 and December 31, 2004, accumulated other comprehensive loss totaled $1,210,000
and $492,000, respectively, and is reflected as a component of shareholders equity. 7. ACCOUNTING PRONOUNCEMENTS In December 2004 the
FASB issued Statement Number 123 (revised 2004) (FAS 123 (R)), Share-Based
Payments. FAS 123 (R) requires all entities to recognize compensation expense in an amount equal
to the fair value of share-based payments such as stock options granted to employees. In April
2005, the Securities and Exchange Commission adopted a rule amending the effective date of FAS
123(R) from the first reporting period beginning after June 15, 2005 to the first fiscal year
beginning after June 15, 2005, January 1 2006 for the Company. Management has not completed its
evaluation of the effect that FAS 123 (R) will have, but believes that the effect will be
consistent with its previous pro forma disclosures. 8. STOCK-BASED COMPENSATION At March 31, 2005, the Company had two stock-based compensation plans, the Plumas Bank 2001 and
1991 Stock Option Plans. The Company accounts for these plans under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. No stock-based compensation cost is reflected in net income, as all options
granted under these plans had an exercise price equal to the market value of the underlying common
stock on the date of grant. 8




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Pro forma adjustments to the Companys consolidated net earnings and earnings per share are
disclosed during the years in which the options become vested. The following table illustrates the
effect on net income and earnings per share if the Company had applied the fair value recognition
provisions of FASB Statements No. 123, Accounting for Stock-Based Compensation, to stock-based
compensation, dollars in thousands except per share amounts: For the Three MonthsEnded March 31,2005
    
    
    2004Net income as reported
    
    $
    897
    
    
    $
    726Deduct: Total stock-based compensation expense
determined under the fair value based method
for all awards, net of related tax effects
    
    
    43
    
    
    
    32Pro forma net income
    
    $
    854
    
    
    $
    694Basic earnings per share  as reported
    
    $
    0.27
    
    
    $
    0.22Basic earnings per share  pro forma
    
    $
    0.26
    
    
    $
    0.21Diluted earnings per share  as reported
    
    $
    0.26
    
    
    $
    0.22Diluted earnings per share  pro forma
    
    $
    0.25
    
    
    $
    0.21
 There were no option grants made during the three-month periods ending March 31, 2005 and 2004. 9




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PART I  FINANCIAL INFORMATION 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain matters discussed in this Quarterly Report are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ materially from those
projected in the forward-looking statements. Such risks and uncertainties include, among others,
(1) significant increases in competitive pressures in the financial services industry; (2) changes
in the interest rate environment resulting in reduced margins; (3) general economic conditions,
either nationally or regionally, maybe less favorable than expected, resulting in, among other
things, a deterioration in credit quality; (4) changes in regulatory environment; (5) loss of key
personnel; (6) fluctuations in the real estate market; (7) changes in business conditions and
inflation; (8) operational risks including data processing systems failures or fraud; and (9)
changes in securities markets. Therefore, the information set forth herein should be carefully
considered when evaluating the business prospects of Plumas Bancorp. When the Company uses in this Quarterly Report the words anticipate, estimate, expect,
project, intend, commit, believe and similar expressions, the Company intends to identify
forward-looking statements. Such statements are not guarantees of performance and are subject to
certain risks, uncertainties and assumptions, including those described in this Quarterly Report.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated, estimated, expected,
projected, intended, committed or believed. The future results and stockholder values of the
Company may differ materially from those expressed in these forward-looking statements. Many of
the factors that will determine these results and values are beyond the Companys ability to
control or predict. For those statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. INTRODUCTION During the three month period ended March 31, 2005, Plumas Bancorp (the Company) was traded on
the OTC Bulletin Board (OTC BB) under the ticker symbol PLBC. The Company will continue to be
traded on the OTC BB until May 18, 2005, at which time the Company expects to begin trading on the
NASDAQ small cap market. The Companys ticker symbol will remain PLBC. The following discussion and analysis sets forth certain statistical information relating to the
Company as of March 31, 2005 and December 31, 2004 and for the three-month period ended March 31,
2005 and 2004. This discussion should be read in conjunction with the condensed consolidated
financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and
the consolidated financial statements and notes thereto included in Plumas Bancorps Annual Report
filed on Form 10-K for the year ended December 31, 2004. OVERVIEW The Companys net income increased $171 thousand, or 24%, to $897 thousand for the three months
ended March 31, 2005 from $726 thousand for the same period in 2004. The primary contributor to
the increase in net income for the first three months of 2005 was the $708 thousand increase in net
interest income. This increase was largely offset by a $193 thousand increase in salaries and
benefits, an increase in other non-interest expenses of $165 thousand and increase in the provision
for loan losses of $150 thousand. Total assets at March 31, 2005 were $431 million, an increase of $14 million, or 3%, from the $417
million at December 31, 2004. The growth in assets was funded by growth in the Companys deposits
and increases in Federal funds purchased. Deposits grew $5 million, or 1%, to $383 million at
March 31, 2005 10




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from the $378 million at December 31, 2004. Short-term advances from the Federal Home Loan Bank
stood at $10 million at March 31, 2005 up from $1 million at December 31, 2004. The annualized return on average assets was 0.86% for the three months ended March 31, 2005 up from
0.74% for the same period in 2004. The annualized return on average equity was 12.7% for the three
months ended March 31, 2005 up from 10.7% for the same period in 2004. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 Net interest income before provision for loan losses.Net interest income, on a nontax-equivalent
basis, was $4.7 million for the three months ended March 31, 2005, an increase of $708 thousand, or
18%, from $4.0 million for the same period in 2004. The increase in net interest income was
primarily attributed to volume increases in the Companys average loan balances offset by increases
in rates paid primarily on money market accounts and time deposits. Interest income increased $924 thousand, or 20%, to $5.7 million for the three months ended March
31, 2005. The increase in interest income was primarily attributed to volume increases in loan
balances. The Companys average loan balances were $274 million for the three months ended March
31, 2005, up $57 million, or 26%, from the $217 million for the same period in 2004. Interest expense increased $216 thousand, or 31%, to $923 thousand for the three months ended March
31, 2005, up from $707 thousand for the same period in 2004. The increase in interest expense was
primarily attributed to rate increases on money market accounts and time deposits. For the three
months ended March 31, 2005 compared to the same period in 2004, the Companys average rate on
money market accounts increased 23 basis points to 0.99% from 0.76% while time deposit accounts
increased 43 basis points to 2.27% for the three months ended March 31, 2005 from 1.84%. As a result of the changes noted above, the net interest margin for the three months ended March
31, 2005 increased 29 basis points, or 6%, to 5.02%, up from 4.73% for the same period in 2004. 11




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The following table presents for the three-month periods indicated the distribution of consolidated
average assets, liabilities and shareholders equity. It also presents the amounts of interest
income from interest-earning assets and the resultant yields expressed in both dollars and yield
percentages, as well as, the amounts of interest expense on interest-bearing liabilities and the
resultant cost expressed in both dollars and rate percentages. Average balances are based on daily
averages. Nonaccrual loans are included in the calculation of average loans while nonaccrued
interest thereon is excluded from the computation of yields earned: For the Three Months Ended March 31, 2005
    
    
    For the Three Months Ended March 31, 2004Average Balance
    
    
    Interest
    
    
    Yield /
    
    
    Average Balance
    
    
    Interest
    
    
    Yield /(in thousands)
    
    
    (in thousands)
    
    
    Rate
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    RateInterest-earning assets:Loans (1)(2)
    
    $
    274,435
    
    
    $
    4,809
    
    
    
    7.11
    %
    
    $
    217,201
    
    
    $
    3,887
    
    
    
    7.20
    %Investment securities (1)
    
    
    108,117
    
    
    
    850
    
    
    
    3.19
    %
    
    
    110,,677
    
    
    
    816
    
    
    
    2.97
    %Federal funds sold
    
    
    238
    
    
    
    1
    
    
    
    1.70
    %
    
    
    14,653
    
    
    
    33
    
    
    
    0.91
    %Total earning assets
    
    
    382,790
    
    
    
    5,660
    
    
    
    6.00
    %
    
    
    342,531
    
    
    
    4,736
    
    
    
    5.61
    %Cash and due from banks
    
    
    14,724
    
    
    
    
    
    
    
    
    
    
    
    24,691Other assets
    
    
    25,979
    
    
    
    
    
    
    
    
    
    
    
    24,716Total assets
    
    $
    423,493
    
    
    
    
    
    
    
    
    
    
    $
    391,938Interest-bearing liabilities:NOW deposits
    
    $
    44,342
    
    
    
    15
    
    
    
    0.14
    %
    
    $
    42,874
    
    
    
    16
    
    
    
    0.15
    %Money market deposits
    
    
    63,793
    
    
    
    155
    
    
    
    0.99
    %
    
    
    65,997
    
    
    
    124
    
    
    
    0.76
    %Savings deposits
    
    
    67,218
    
    
    
    92
    
    
    
    0.56
    %
    
    
    60,969
    
    
    
    68
    
    
    
    0.45
    %Time deposits
    
    
    95,367
    
    
    
    534
    
    
    
    2.27
    %
    
    
    92,939
    
    
    
    426
    
    
    
    1.84
    %Short-term borrowings
    
    
    5,436
    
    
    
    35
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    Other interest-bearing liabilities
    
    
    227
    
    
    
    2
    
    
    
    3.57
    %
    
    
    205
    
    
    
    3
    
    
    
    5.89
    %Junior subordinated debentures
    
    
    6,186
    
    
    
    90
    
    
    
    5.90
    %
    
    
    6,186
    
    
    
    70
    
    
    
    4.55
    %Total interest-bearing liabilities
    
    
    282,569
    
    
    
    923
    
    
    
    1.32
    %
    
    
    269,170
    
    
    
    707
    
    
    
    1.07
    %Non-interest bearing deposits
    
    
    108,648
    
    
    
    
    
    
    
    
    
    
    
    93,210Other liabilities
    
    
    3,650
    
    
    
    
    
    
    
    
    
    
    
    2,500Shareholders equity
    
    
    28,626
    
    
    
    
    
    
    
    
    
    
    
    27,058Total liabilities & equity
    
    $
    423,493
    
    
    
    
    
    
    
    
    
    
    $
    391,938Cost of funding interest-earning assets (3)
    
    
    
    
    
    
    
    
    
    
    0.98
    %
    
    
    
    
    
    
    
    
    
    
    0.83
    %Net interest income and margin (4)
    
    
    
    
    
    $
    4,737
    
    
    
    5.02
    %
    
    
    
    
    
    $
    4,029
    
    
    
    4.73
    %
   (1)
    
    Not computed on a tax-equivalent basis.(2)
    
    Loan fees included in loan interest income for the three-month periods ended March 31, 2005
and 2004 amounted to $49 and $136, 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. 12




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##### Table of Contents



The following table sets forth changes in interest income and interest expense, for the
three-month periods indicated and the amount of change attributable to variances in volume, rates
and the combination of volume and rates based on the relative changes of volume and rates: 2005 over 2004 change in net interest income(in thousands)Volume (1)
    
    
    Rate (2)
    
    
    Mix (3)
    
    
    TotalInterest-earning assets:Loans
    
    $
    1,016
    
    
    $
    (81
    )
    
    $
    (13
    )
    
    $
    922Investment securities
    
    
    (19
    )
    
    
    54
    
    
    
    (1
    )
    
    
    34Federal funds sold
    
    
    (32
    )
    
    
    28
    
    
    
    (28
    )
    
    
    (32
    )Total interest income
    
    
    965
    
    
    
    1
    
    
    
    (42
    )
    
    
    924Interest-bearing liabilities:NOW deposits
    
    
    1
    
    
    
    (2
    )
    
    
    
    
    
    
    (1
    )Money market deposits
    
    
    (4
    )
    
    
    36
    
    
    
    (1
    )
    
    
    31Savings deposits
    
    
    7
    
    
    
    15
    
    
    
    2
    
    
    
    24Time deposits
    
    
    11
    
    
    
    94
    
    
    
    3
    
    
    
    108Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    35Other interest-bearing liabilities
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Junior subordinated debentures
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    20Total interest expense
    
    
    15
    
    
    
    162
    
    
    
    39
    
    
    
    216Net interest income
    
    $
    950
    
    
    $
    (161
    )
    
    $
    (81
    )
    
    $
    708
   (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.The Company recorded $300,000 in provision for loan losses for the
three months ended March 31, 2005, up $150,000, or 100%, from the $150,000 provision for the same
period in 2004. Management assesses its loan quality monthly to maintain an adequate allowance for
loan losses. Based on information currently available, management believes that the allowance for
loan losses is adequate to absorb potential risks in the portfolio. However, no assurance can be
given that the Company may not sustain charge-offs which are in excess of the allowance in any
given period. The Companys loan portfolio composition and non-performing assets are further
discussed under the financial condition section below. Non-interest income.During the three months ended March 31, 2005, total non-interest income
increased $89 thousand, or 9%, to $1.1 million, up from $1.0 million for the comparable period in
2004. The increase in non-interest income was primarily the result of increases in service charge
revenue of $116 thousand, tax refunds of $58 thousand and other income of $94 thousand offset by
declines in gains on sales of loans of $49 thousand and gains on available-for-sale investment
securities of $98 thousand. A large portion of the growth in service charge revenue resulted from an increase of $108 thousand
in customer overdraft charges. During April of 2004 the Bank implemented a new overdraft privilege
program for select deposit relationships thereby increasing service charge revenue when comparing
the first three months of 2005 to the first three months of 2004. Non-interest expenses.Non-interest expenses consist of salaries and related employee benefits,
occupancy and equipment expenses, professional fees, business development expenses, telephone
expense, stationery and supplies expense, armored car and courier expense, advertising and
promotion expense, loan expenses, directors fees, and other operating expenses. For the three
months ended March 31, 2005, non- 13




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##### Table of Contents



interest expense increased $440 thousand, or 12%, to $4.2 million,
up from $3.8 million for the comparable period in 2004. Salaries and employee benefits increased $193 thousand, or 9%, over the same three-month period
last year. This increase was due primarily to the staffing additions related to the expansion of
the Companys centralized lending function and to manage the overall growth of the Company. Occupancy and equipment increased $82 thousand, or 12%, over the same three-month period last year.
This increase was due primarily to additional software expense associated with upgraded software
systems, including the Companys core data system, credit services systems, regulatory compliance
systems, teller systems, communication systems and security systems. Professional fees increased $61 thousand, or 59%, over the same three-month period last year. This
increase was primarily the result of consulting projects related to the Companys overdraft
privilege program and an evaluation of the Companys risk management environment. Advertising and promotion expense increased $51 thousand, or 91%, over the same three-month period
last year as a result of a general expansion of marketing efforts related to the Companys expanded
service area. In November 2003 the Company began operating three new branches in the communities
of Tahoe City, Kings Beach and Loyalton. The following table describes the components of non-interest expense for the three-month periods
ending March 31, 2005 and 2004. For the Three MonthsEnded March 31,(in thousands)2005
    
    
    2004Salaries and employee benefits
    
    $
    2,403
    
    
    $
    2,210Occupancy and equipment
    
    
    756
    
    
    
    674Professional and other fees
    
    
    165
    
    
    
    104Advertising and promotion
    
    
    107
    
    
    
    56Business development
    
    
    100
    
    
    
    93Armored car and courier
    
    
    92
    
    
    
    89Director compensation
    
    
    78
    
    
    
    72Outside service fees
    
    
    77
    
    
    
    56Telephone and data communication
    
    
    75
    
    
    
    76Deposit premium amortization
    
    
    75
    
    
    
    71Stationery and supplies
    
    
    74
    
    
    
    73Postage
    
    
    61
    
    
    
    65Insurance
    
    
    53
    
    
    
    56Loan and collection expenses
    
    
    37
    
    
    
    51Other expense
    
    
    48
    
    
    
    15Total non-interest expense
    
    $
    4,201
    
    
    $
    3,761
 14




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##### Table of Contents



FINANCIAL CONDITION Loan portfolio composition.The Company continues to manage the mix of its loan portfolio
consistent with its identity as a community bank serving the financing needs of all sectors of
Northeastern California. Although the Company offers a broad array of financing options, it
continues to concentrate its focus on small- to medium-sized commercial businesses. These
commercial loans are diversified as to the industries and types of businesses, thus limiting
material exposure from any one industry concentration. The Company offers both fixed and floating
rate loans and obtains collateral in the form of real property, business assets and deposit
accounts, but looks to business and personal cash flows as its primary source of repayment. As of
March 31, 2005, real estate construction and land development loan balances as a percentage of
total loans increased to 12.9% from 12.0% at December 31, 2004. Also during the first three months
of 2005, consumer loan balances increased slightly to 22.3% of total loans from 22.1% at December
31, 2004. The increased percentages in real estate construction and land development and consumer
loan balances were offset with declines in the relative percentage of agricultural and real estate
mortgage loan balances which were 10.8% and 38.0%, respectively at March 31, 2005, versus 11.6% and
38.3%, respectively at December 31, 2004. Commercial loan balances as a percentage of total loans
remained unchanged at 16.0% at both March 31, 2005 and December 31, 2004. Nonperforming assets.Nonperforming loans at March 31, 2005 were $1,429,000, an increase of
$258,000, or 22%, over the $1,171,000 balance at December 31, 2004. The increase in nonperforming loans from December 31, 2004 is primarily due to the Bank, in March
2005, classifying as nonaccrual, several agricultural loans to one borrower with an outstanding
balance $341 thousand at March 31, 2005. These agricultural loans are collateralized by various
livestock and real estate holdings. At March 31, 2005, nonperforming loans to this one borrower
represented 24% of the Banks total nonperforming loans outstanding. Management believes that
these nonperforming loan balances will be satisfactory resolved without significant loss to the
Company. As a result of the above, nonperforming loans as a percent of total loans increased to 0.50% at
March 31, 2005 up from the 0.44% at December 31, 2004. In addition, nonperforming assets (which is
comprised of nonperforming loans plus foreclosed real estate and vehicle holdings) as a percent of
total assets were 0.33% at March 31, 2005 up from 0.29% at December 31, 2004. Analysis of allowance for loan losses.Net charge-offs during the three months ended March 31,
2005 totaled $98 thousand, or 0.03% of total loans, compared to $71 thousand, or 0.03% of total
loans, for the comparable period in 2004. Net charge-offs during the first three months of 2005
were comprised of $132 thousand of charge-offs less $34 thousand in recoveries, compared to $115
thousand of charge-offs less $44 thousand in recoveries for the same period in 2004. The allowance
for loan losses stood at 1.03% of total loans as of March 31, 2005 and December 31, 2004. Based on
an evaluation of the credit quality of the loan portfolio and delinquency trends and charge-offs,
management believes the allowance for loan losses to be adequate. 15




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##### Table of Contents



The following table provides certain information for the three-month period indicated with respect
to the Companys allowance for loan losses as well as charge-off and recovery activity. For the Three MonthsEnded March 31,(in thousands)2005
    
    
    2004Balance at January 1,
    
    $
    2,762
    
    
    $
    2,564Charge-offs:Commercial and agricultural
    
    
    
    
    
    
    Real estate mortgage
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    Consumer
    
    
    (132
    )
    
    
    (115
    )Total charge-offs
    
    
    (132
    )
    
    
    (115
    )Recoveries:Commercial and agricultural
    
    
    2
    
    
    
    2Real estate mortgage
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    Consumer
    
    
    32
    
    
    
    42Total recoveries
    
    
    34
    
    
    
    44Net charge-offs
    
    
    (98
    )
    
    
    (71
    )Provision for loan losses
    
    
    300
    
    
    
    150Balance at March 31,
    
    $
    2,964
    
    
    $
    2,643Net charge-offs during the three-month period to average loans
    
    
    0.04
    %
    
    
    0.03
    %Allowance for loan losses to total Loans
    
    
    1.03
    %
    
    
    1.23
    %
 Investment securities.Investment securities decreased $10.2 million to $103 million at March
31, 2005, from $113 million at December 31, 2004. The Companys investment in U.S. Treasury
securities and obligations of U.S. agencies decreased to 76.1% of the investment portfolio at March
31, 2005, versus 78.0% at December 31, 2004. The Companys investment in corporate bonds increased
to 9.5% of the investment portfolio at March 31, 2005, versus 8.8% at December 31, 2004.
Tax-exempt municipal obligation bonds increased to 14.4% of the investment portfolio at March 31,
2005, up from 13.2% at December 31, 2004. Premises and equipment.Premises and equipment increased $376 thousand, or 4%, to $10.2 million at
March 31, 2005, from $9.8 million at December 31, 2004. The increase was the result of the
purchase of $533 thousand of vacant land in February 2005 offset by ongoing depreciation on
existing premises and equipment. The land was purchase for the purpose of building a branch office
in the community of Truckee. Accrued interest receivable and other assets.Accrued interest receivable and other assets
increased $259 thousand, or 3%, to $8.9 million at March 31, 2005, from $8.7 million at December
31, 2004. The
increase was the result of recording additional deferred tax benefits in the first three months of
2005 related to the available-for-sale investment securities portfolio. Deposits.Total deposits were $383 million as of March 31, 2005, an increase of $4.5 million, or
1.2%, from the December 31, 2004 balance of $379 million. The Company continues to manage the mix
of its deposits consistent with its identity as a community bank serving the financial needs of its
customers. Non- 16




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##### Table of Contents



interest bearing demand deposits and interest checking deposits decreased to 40.3%
of total deposits at March 31, 2005, down from 40.7% of total deposits at December 31, 2004. Money
market and savings deposits increased to 34.7% of total deposits at March 31, 2005 compared to
34.3% as of December 31, 2004. Time deposits increased slightly to 25.1% of total deposits as of
March 31, 2005 up from 25.0% as of December 31, 2004. Federal funds purchased.Federal funds purchased were $10 million as of March 31, 2005, an
increase of $9 million from the December 31, 2004 balance
of $1 million. During the first three
months of 2005 the Company utilized an established line of credit with the Federal Home Loan Bank
to meet its short-term liquidity needs. CAPITAL RESOURCES Shareholders equity as of March 31, 2005 increased $277 thousand, or 1%, to $28.2 million up from
$27.9 million as of December 31, 2004. This increase was the result of earnings during the first
three months of $897 thousand and the exercise of stock options of $98 thousand offset by a $718
thousand increase in accumulated other comprehensive losses. The accumulated other comprehensive
losses at March 31, 2005, were the result of the adverse affects of the rising interest rate
environment on the market value of the Banks available-for-sale investment portfolio. Management
believes that these unrealized losses are not permanent and will reverse over time as these
shorter-term securities approach maturity. The Company and the Bank are subject to certain regulatory capital requirements administered by the
Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation
(FDIC). Failure to meet these minimum capital requirements can initiate certain mandatory and
possibly additional discretionary, actions by regulators that, if undertaken, could have a direct
material effect on the Companys consolidated financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Banks assets, liabilities and certain
off-balance-sheet items as calculated under regulatory accounting practices. The Companys and the
Banks capital amounts and classification are also subject to qualitative judgments by the
regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and
the Bank to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets
and of Tier 1 capital to average assets. Each of these components is defined in the regulations.
Management believes that the Company met all its capital adequacy requirements and that the Bank
met the requirements to be considered well capitalized under the regulatory framework for prompt
corrective action as of March 31, 2005. Plumas BancorpActualCapital
    
    
    
    
    
    
    Minimum Capital(in thousands)
    
    
    Ratio
    
    
    RequirementLeverage
    
    $
    33,514
    
    
    
    7.9
    %
    
    
    4.0
    %Tier 1 Risk-Based
    
    
    33,514
    
    
    
    9.8
    %
    
    
    4.0
    %Total Risk-Based
    
    
    36,478
    
    
    
    10.6
    %
    
    
    8.0
    %
 17




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##### Table of Contents



Plumas BankTo beConsideredWellCapitalizedUnderActual
    
    
    PromptCapital
    
    
    
    
    
    
    Corrective(in thousands)
    
    
    Ratio
    
    
    ActionLeverage
    
    $
    32,969
    
    
    
    7.8
    %
    
    
    5.0
    %Tier 1 Risk-Based
    
    
    32,969
    
    
    
    9.6
    %
    
    
    6.0
    %Total Risk-Based
    
    
    35,933
    
    
    
    10.5
    %
    
    
    10.0
    %
 LIQUIDITY The Company manages its liquidity to provide the ability to generate funds to support asset growth,
meet deposit withdrawals (both anticipated and unanticipated), fund customers borrowing needs,
satisfy maturity of short-term borrowings and maintain reserve requirements. The Companys
liquidity needs are managed using assets or liabilities, or both. On the asset side the Company
maintains an investment portfolio containing U.S. government securities and agency securities that
are classified as available-for-sale. On the liability side, liquidity needs are managed by
charging competitive offering rates on deposit products and the use of established lines of credit
from correspondent financial institutions and the Federal Home Loan Bank. The Company has unsecured short-term borrowing agreements with two of its correspondent banks in
the amounts of $10 million and $5 million. In addition, the Company can borrow up to $61 million
from the Federal Home Loan Bank secured by commercial and residential mortgage loans. During the
first three months of 2005, the Company outstanding advances from the Federal Home Loan Bank
increased from $1 million at December 31, 2004 to $10 million at March 31, 2005. These additional
advances were used to meet the Companys liquidity needs as loan growth exceeded deposit growth
during the first quarter of 2005. Management expects this trend to reverse with more significant
deposit growth anticipated to occur in the second and third quarter of 2005. Customer deposits are the Companys primary source of funds. Those funds are held in various types
of accounts with varying maturities. The Company does not accept brokered deposits. During the
first three months of 2005, deposits increased $4.5 million, or 1.2%, from the December 31, 2004
balance of $378 million. The Company has historically experienced a seasonal trend in regards to
deposits; whereas the majority of the Companys annual deposit growth occurs in the late spring,
summer and fall months. The Companys available-for-sale securities portfolio, cash and due from banks and short-term
borrowings from correspondent banks and the Federal Home Loan Bank serve as the primary sources of
liquidity, providing adequate funding for loans during periods of high loan demand. During periods
of decreased lending activity, proceeds from the maturity or sale of investment securities, loan
payments, and new deposits are invested in short-term earning assets, such as Federal funds sold
and investment securities, to serve as a source of funding for future loan growth. Management
believes that the Companys available sources of funds, including short-term borrowings, will
provide adequate liquidity for its operations in the foreseeable future. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the risk of loss in a financial instrument arising from adverse changes in
market rates and prices such as interest rates, commodity prices and equity prices. As a financial
institution, the Companys market risk arises primarily from interest rate risk exposure.
Fluctuation in interest rates will ultimately
impact both the level of income and expense recorded on a large portion of the Companys assets and
liabilities, and the market value of all interest earning assets and interest bearing liabilities,
dependent upon the stated or estimated maturity date. Since virtually all of the Companys
interest earning assets and all of the Companys interest bearing liabilities, with the exception
of the junior subordinated debentures, are located at the Bank level, virtually all of the
Companys interest rate risk exposure lies at the Bank level. As a result, all significant
interest rate risk management procedures are performed at the Bank level. Based upon the nature of
its operations, the Bank is not subject to foreign currency exchange or commodity price risk. The
Banks real estate loan portfolio, concentrated primarily within northeastern California, is
subject to risks associated with the local economies. 18




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##### Table of Contents



The fundamental objective of the Banks management of its assets and liabilities is to maximize the
economic value of the Company while maintaining adequate liquidity and an exposure to interest rate
risk deemed by management to be acceptable. Management believes an acceptable degree of exposure
to interest rate risk results from the management of assets and liabilities through maturities,
pricing and mix to attempt to neutralize the potential impact of changes in market interest rates.
The Banks profitability is dependent to a large extent upon its net interest income which is the
difference between its interest income on interest-earning assets, such as loans and securities,
and its interest expense on interest-bearing liabilities, such as deposits and borrowings. The
Bank, like other financial institutions, is subject to interest rate risk to the degree that its
interest-earning assets reprice differently than its interest-bearing liabilities. The Bank
manages its mix of assets and liabilities with the goals of limiting its exposure to interest rate
risk, ensuring adequate liquidity, and coordinating its sources and uses of funds. The Bank seeks to control its interest rate risk exposure in a manner that will allow for adequate
levels of earnings and capital over a range of possible interest rate environments. The Bank has
adopted formal policies and practices to monitor and manage interest rate risk exposure. As part
of this effort, the Bank measures interest rate risk utilizing both an internal asset liability
management system as well as employing independent third party reviews to confirm the
reasonableness of the assumptions used to measure and report the Banks interest rate risk,
enabling management to make any adjustments necessary. Interest rate risk is managed by the Banks Asset Liability Committee (ALCO), which includes
members of senior management. The ALCO monitors interest rate risk by analyzing the potential
impact on the net interest income from potential changes in interest rates and considers the impact
of alternative strategies or changes in balance sheet structure. The ALCO manages the Banks
balance sheet in part to maintain the potential impact on net interest income within acceptable
ranges despite changes in interest rates. The Banks exposure to interest rate risk is reviewed on
at least a quarterly basis by ALCO. In managements opinion there has not been a material change in the Companys market risk or
interest rate risk profile for the three months ended March 31, 2005 compared to December 31, 2004
as discussed in the Companys 2004 annual report on Form 10-K. 
 ITEM 4. CONTROLS AND PROCEDURES The Companys Chief Executive Officer, Chief Operating Officer and Chief Financial Officer,
based on their evaluation within 90 days prior to the date of this report of the Companys
disclosure controls and procedures (as defined in Exchange Act Rule 13a15(e), have concluded that
the Companys disclosure controls and procedures are adequate and effective for purposes of Rule
13a15(e) in timely alerting them to material information relating to the Company required to be
included in the Companys filings with the SEC under the Securities Exchange Act of 1934. There were no significant changes in the Companys internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their evaluation. 19




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##### Table of Contents



PART II  OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS From time to time, the Company and/or its subsidiaries are a party to claims and legal proceedings
arising in the ordinary course of business. In the opinion of the Companys management, the amount
of ultimate liability with respect to such proceedings will not have a material adverse effect on
the financial condition or results of operations of the Company taken as a whole. 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 
 ITEM 5. OTHER INFORMATION None. 
 ITEM 6. EXHIBITS The following documents are included or incorporated by reference in this Quarterly Report on Form
10Q: 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 included as exhibit 3.2 to the Registrants
Form S-4, File No. 333-84534, which is incorporated by 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.10.1
    
    Employment Agreement of William E. Elliott dated May 16, 2001, is
included as Exhibit 10.1 to the Registrants 10-QSB for June 30,
2002, which is incorporated by this reference herein.10.3
    
    Executive Salary Continuation Agreement as amended of William E.
Elliott dated October 13, 1993, is included as Exhibit 10.3 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this
reference herein.10.4
    
    Split Dollar Agreements of William E. Elliott dated January 23,
2002, is included as Exhibit 10.4 to the Registrants 10-QSB for
June 30, 2002, which is incorporated by this reference herein.10.6
    
    Executive Salary Continuation Agreement as amended of Douglas N.
Biddle dated June 2, 1994, is included as Exhibit 10.6 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this
reference herein.10.7
    
    Split Dollar Agreements of Douglas N. Biddle dated January 24, 2002,
is included as Exhibit 10.7 to the Registrants 10-QSB for June 30,
2002, which is incorporated by this reference herein.10.9
    
    Executive Salary Continuation Agreement as amended of Dennis C.
Irvine dated June 2, 1994, is included as Exhibit 10.9 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this
reference herein.10.10
    
    Split Dollar Agreements of Dennis C. Irvine dated January 24, 2002,
is included as Exhibit 10.10 to the Registrants 10-QSB for June 30,
2002, which is incorporated by this reference herein.
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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.10.13
    
    Deferred Fee Agreement as amended of Jerry V. Kehr dated August 19, 1998, is
included as Exhibit 10.13 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein.10.14
    
    Amended and Restated Director Retirement Agreement of Jerry V. Kehr dated April
28, 2000, is included as Exhibit 10.14 to the Registrants 10-QSB for June 30,
2002, which is incorporated by this reference herein.10.15
    
    Consulting Agreement of Jerry V. Kehr dated May 10, 2000, is included as Exhibit
10.15 to the Registrants 10-QSB for June 30, 2002, 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.10.30
    
    Amended and Restated Director Retirement Agreement of Christine McArthur dated May
12, 2000, is included as Exhibit 10.30 to the Registrants 10-QSB for June 30,
2002, which is incorporated by this reference herein.10.31
    
    Consulting Agreement of Christine McArthur dated May 12, 2000, is included as
Exhibit 10.31 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.10.36
    
    Amended and Restated Director Retirement Agreement of Walter Sphar dated April 20,
2000, is included as Exhibit 10.36 to the Registrants 10-QSB for June 30, 2002,
which is incorporated by this reference herein.
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10.37
    
    Consulting Agreement of Walter Sphar dated May 9, 2000, is included as Exhibit
10.37 to the Registrants 10-QSB for June 30, 2002, which is incorporated by this
reference herein.10.39
    
    Deferred Fee Agreement of Thomas Watson dated March 3, 2001, is included as
Exhibit 10.39 to the Registrants 10-QSB for June 30, 2002, which is incorporated
by this reference herein.10.40
    
    Form of Indemnification Agreement, is included as Exhibit 10.41 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this reference
herein.10.41
    
    2001 Stock Option Plan as amended is included as exhibit 99.1 of the Form S-8
filed July 23, 2002, File No. 333-9695710.42
    
    1991 Stock Option Plan on Form S-8 filed August 19, 2002, File No. 333-9831910.43
    
    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. 333-10322910.44
    
    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.10.45
    
    Branch Purchase and Assumption Agreement dated April 25, 2003, is included as
Exhibit 10.45 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.10.47
    
    Specimen form of Incentive Stock Option Agreement under the 1991 Stock Option Plan.10.48
    
    Specimen form of Non-Qualified Stock Option Agreement under the 1991 Stock Option
Plan.10.59
    
    Director Retirement Agreement of Thomas Watson dated May 1, 2003, is included as
Exhibit 10.59 to the Registrants 10-Q for June 30, 2003, which is incorporated by
this reference herein.10.60
    
    Consulting Agreement of Thomas Watson dated May 1, 2003, is included as Exhibit
10.60 to the Registrants 10-Q for June 30, 2003, which is incorporated by this
reference herein.10.62
    
    Deferred Fee Agreement of Thomas Watson dated December 23, 2004, is included as
Exhibit 10.62 to the Registrants 8-K filed on January 6, 2005, which is
incorporated by this reference herein.10.63
    
    Deferred Fee Agreement of Jerry V. Kehr dated December 24, 2004, is included as
Exhibit 10.63 to the Registrants 8-K filed on January 6, 2005, 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 Consolidated Financial Statements as Footnote 5 
Earnings Per Share Computation.31.1
    
    Rule 13a-14(a) [Section 302] Certification of Principal Financial Officer dated
May 11, 2005.31.2
    
    Rule 13a-14(a) [Section 302] Certification of Principal Operating Officer dated
May 11, 2005.31.3
    
    Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated
May 11, 2005.32.1
    
    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 11,
2005.32.2
    
    Certification of Principal Operating Officer pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 11,
2005.32.3
    
    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 11,
2005.
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PLUMAS BANCORP(Registrant)Date: May 11, 2005/s/ William E. ElliottWilliam E. ElliottPresident/Chief Executive Officer/s/ Douglas N. BiddleDouglas N. BiddleExecutive Vice President Chief Operating Officer/s/ Andrew J. RybackAndrew J. RybackExecutive Vice President Chief Financial Officer
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