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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

AGREEMENT made as of May 16, 2001 between Plumas Bank (hereinafter referred to
as the "Employer"), and William E. Elliott (hereinafter referred to as the
"Executive").

                                   WITNESSETH:

WHEREAS, Employer is desirous of employing Executive in the capacity hereinafter
stated, and Executive is desirous of entering into the employ of Employer in
such capacity, for the period and on the terms and conditions set forth herein:

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
conditions herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:

1.      EMPLOYMENT

        Employer hereby employs Executive as the President and Chief Executive
        Officer of Plumas Bank, and the Executive accepts the duties described
        herein, and agrees to discharge the same faithfully and to the best of
        his ability. Executive shall devote his full business time and attention
        to the business and affairs of Employer to which he may be elected and
        shall perform the duties thereof to the best of his ability. Executive
        shall perform such other duties as shall be from time to time prescribed
        by the Board of Directors of Employer.

        Executive shall have such responsibility and duties and such authority
        to transact business on behalf of Employer, as are customarily incident
        to the office of President and Chief Executive Officer of a banking
        institution.

2.      TERM

        Employer hereby employs Executive and Executive hereby accepts
        employment with Employer for the period from May 16, 2001 to July 1,
        2006 (the "Term"), commencing with the effective date, subject, however,
        to prior termination of this Employment Agreement as hereinafter
        provided. Where used herein, "Term" shall refer to the entire period of
        employment of Executive by Employer, whether for the period provided
        above, or whether terminated earlier as hereinafter provided, or
        extended by mutual agreement by the Employer and Executive.

3.      COMPENSATION

        In consideration for all services to be rendered by Executive to
        Employer, Employer agrees to pay Executive a base salary of One Hundred
        Fifty-Eight Thousand Dollars ($158,000 commencing April 1, 2001). Future
        base salary increases, which may be considered on an annual basis taking
        into consideration job performance and California Peer Group Salary
        Date, will be granted at the sole discretion of the Board of Directors.
        Employer shall deduct therefrom all taxes which may be required to be
        deducted or withheld under any provision of the law (including, but not
        limited to,


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        social security payments and income tax withholding) now in effect or
        which may become effective anytime during the term of this Employment
        Agreement.

        Employer also agrees to provide Executive with $100,000 life insurance
        benefits effective immediately, with Executive having absolute
        discretion to determine beneficiary of such insurance benefits, and
        $100,000 term life insurance with Plumas Bank as beneficiary.

        Executive shall be entitled to participate in any and all other employee
        benefits and plans that are existing or may be developed and adopted by
        the Employer.

4.      DISCRETIONARY COMPENSATION

        Based upon an evaluation to be prepared by the Board of Directors, not
        later than March 31 of each succeeding year, the Board of Directors, at
        their sole discretion, will approve additional compensation to be paid
        in the form of an annual bonus for the previous year. The evaluation
        will give consideration to total performance, to include the following
        attributes.

        -      Technical expertise

        -      Leadership and managerial skills

        -      Scope of duties

        -      Meeting or exceeding mutually agreed upon goals and objectives

        As part of the evaluation process, goals and objectives will be
        established for the current year. They are to be mutually agreed upon
        goals and objectives and will include the following:

        -      Goals and objectives identified in prior years evaluation

        -      Current financial model (budget)

        -      Specific objectives addressed by the Board of Directors for the
               current year

        Based upon the evaluation referred to above, the Board will have the
        option of giving a annual bonus as a percentage of base salary based on
        superior performance. The bonus consideration shall be for each calendar
        year ending December 31. Executive will have the option to receive
        discretionary compensation in cash or participate in a deferred
        compensation program that may be established by Employer.

5.      TERMINATION

        Employer shall have the right to terminate this Employment Agreement for
        any of the following reasons by serving written notice upon Executive:

        (a) Willful breach of or habitual neglect of or inability to perform
        Executive's duties and obligations as President and Chief Executive
        Officer;

        (b) Malfeasance or misfeasance in the performance of Executive's duties
        as President and Chief Executive Officer;



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        (c) Immoral or illegal conduct of a serious nature;

        (d) Physical or mental disability rendering Executive incapable of
        performing his duties for a consecutive period of 180 days, or by death;

        (e) Determination by Employer's Board of Directors that the continued
        employment of Executive is detrimental to the best interest of
        Employer's shareholders

        In the event this Employment Agreement is terminated for any of the
        reasons specified in the paragraphs (a), (b), (c), or (d) above,
        Executive will be paid the salary due him at the end of the month in
        which such termination occurred, plus any pay in lieu of vacation
        accrued to, but not taken as of the date of termination.

        In the event this Employment Agreement is terminated for the reason
        specified in paragraph (e) above, Executive shall be entitled to
        termination pay of one (1) year's salary or the balance due per this
        Employment Agreement, whichever is less, plus any pay in lieu of
        vacation which has been accrued.

        Executive shall have the right to terminate this Employment Agreement
        without cause upon 90 days written notice to Employer, and if Executive
        does so terminate, Executive further agrees to resign from Employer's
        Board of Directors.

6.      ACQUISITION OR DISSOLUTION OF EMPLOYER

        This employment Agreement shall not be terminated by (i) the voluntary
        or involuntary dissolution of Employer, except in a liquidation of
        Employer by an appropriate regulatory agency, (ii) any merger or
        consolidation where Employer is not the surviving or resulting
        corporation, (iii) any substantial transfer of assets by Employer, or
        (iv) the filing of an application with any appropriate regulatory agency
        for the acquisition of 25% of the Employer's common stock by a third
        party or group acting in concert, (any of which events shall be called a
        "Special Transaction"). The provisions of this Employment Agreement
        shall be binding upon and inure to the benefit of the surviving or
        resulting corporation or the corporation to which such assets shall be
        transferred or acquired by. Notwithstanding the foregoing, Executive
        will have the sole option to demand and receive two (2) years' salary
        pursuant to this Employment Agreement in the event of a Special
        Transaction occurring.

7.      INDEMNIFICATION

        To the extent permitted by law, Employer shall indemnify Executive who
        was or is a party or is threatened to be made a party in any action
        brought by a third party against the Executive (whether or not Employer
        is joined as a party defendant) against expenses, judgments, fines,
        settlements, and other amounts actually and reasonably incurred in
        connection with said action if Executive acted in good faith and in a
        manner Executive reasonably believed to be in the best interest of the
        Employer, all provided the alleged conduct of Executive arose out of and
        was within the course and scope of his employment as an officer and
        employee of Employer.



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8.      RETURN OF DOCUMENTS

        Executive expressly agrees that all manuals, documents, files, reports,
        studies, instruments or other materials used and/or developed by
        Executive during the Term are solely the property of Employer, and
        Executive has no right, title or interest therein. Upon termination of
        the Employment Agreement, Executive or Executive's representatives shall
        promptly deliver possession of all of said property to Employer in good
        condition.

9.      NOTICES

        Any notice, request, or demand, or other communication required or
        permitted hereunder shall be deemed to be properly given when personally
        served in writing, when deposited in the U. S. mail, postage prepaid, or
        when communicated to a public telegraph company for transmittal,
        addressed to the party at the address given at the beginning of this
        Employment Agreement or at any other address as Employer or Executive
        may designate to the other in writing.

10.     BENEFIT OF AGREEMENT

        This Employment Agreement shall inure to the benefit of and be binding
        upon the parties hereto and their respective executors, administrators,
        successors and assigns.

11.     APPLICABLE LAW

        Except to the extent governed by the laws of the United States, this
        Employment Agreement is to be governed by and construed under the laws
        of the State of California.

12.     CAPTIONS AND PARAGRAPH HEADINGS

        Captions and paragraph headings used herein are for convenience only and
        are not a part of this Employment Agreement and shall not be used in
        construing it.

13.     INVALID PROVISIONS

        Should any provisions of the Employment Agreement for any reason be
        declared invalid, void, or unenforceable by a court of competent
        jurisdiction, the validity and binding effect of any remaining portion
        shall not be affected and the remaining portions of this Employment
        Agreement shall remain in full force and effect as if this Employment
        Agreement had been executed with said provisions eliminated.

14.     ENTIRE AGREEMENT

        This Employment Agreement contains the entire agreement of the parties
        and it supersedes any and all other agreements, either oral or in
        writing, between the parties hereto with respect to the employment of
        Executive by Employer, except to the extent that it is contemplated that
        the parties have and will enter into Stock Option Agreements. The
        parties further agree that prior to or on the



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        expiration date of Executive's existing options, to negotiate the
        granting of new options to Executive on such terms and conditions as the
        parties shall determine. Each party to this Employment Agreement
        acknowledges that no representations, inducements, promises, or
        agreements, oral or otherwise, have been made by any party, or anyone
        acting on behalf of any party, which are not embodied herein, and that
        no other agreement, statement, or promise not contained in this
        Employment Agreement shall be valid or binding. This Employment
        Agreement may not be modified or amended by oral agreement, but only by
        an agreement in writing signed by Employer and Executive.

15.     ARBITRATION

        Any controversy or claim arising out of or relating to this Employment
        Agreement, or the breach thereof, shall be settled by arbitration in
        accordance with the rules of the American Arbitration Association, and
        judgment upon the award rendered by the arbitrator(s) may be entered
        into any court having jurisdiction thereof.

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the day and year first above written.

                                              EMPLOYER

DATED:  July 18, 2001                         SIGNED:  /s/ JERRY V. KEHR
        -------------                                --------------------------


DATED:  July 9, 2001                          SIGNED:  /s/ ROBERT SCHOENSEE
        ------------                                 --------------------------


                                              EMPLOYEE

DATED:  June 28, 2001                         SIGNED:  /s/ W. E. ELLIOTT
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