##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED March 31, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15
(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 COMMISSION FILE NUMBER: 000-49883
 PLUMAS BANCORP
  California
    
    75-2987096(State or Other Jurisdiction of Incorporation or
    
    (I.R.S. Employer Identification No.)Organization)35 S. Lindan Avenue, Quincy, California
    
    95971(Address of Principal Executive Offices)
    
    (Zip Code)
 (530) 283-7305
 þ o
  o þ o
 o þ




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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 1A RISK FACTORSITEM 2. UNREGISTERD 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 32.1EXHIBIT 32.2    Table of Contents  
 PART
I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 PLUMAS BANCORP
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
 March 31,
    
    
    December 31,2006
    
    
    2005AssetsCash and due from banks
    
    $
    14,701
    
    
    $
    17,271Federal funds sold
    
    
    13,655
    
    
    
    7,325Cash and cash equivalents
    
    
    28,356
    
    
    
    24,596Investment securities (fair value of $89,435 at March 31, 2006 and
$97,712 at December 31, 2005)
    
    
    89,529
    
    
    
    97,844Loans, less allowance for loan losses of $3,436 at March 31, 2006
and $3,256 at December 31, 2005 (Notes 3 and 4)
    
    
    320,251
    
    
    
    319,156Premises and equipment, net
    
    
    12,996
    
    
    
    11,404Intangible assets, net
    
    
    1,563
    
    
    
    1,638Bank owned life insurance
    
    
    9,007
    
    
    
    8,930Accrued interest receivable and other assets
    
    
    9,430
    
    
    
    9,235Total assets
    
    $
    471,132
    
    
    $
    472,803Liabilities and Shareholders EquityDeposits:Non-interest bearing
    
    $
    127,632
    
    
    $
    129,734Interest bearing
    
    
    296,045
    
    
    
    296,826Total deposits
    
    
    423,677
    
    
    
    426,560Accrued interest payable and other liabilities
    
    
    4,829
    
    
    
    4,796Junior subordinated deferrable interest debentures
    
    
    10,310
    
    
    
    10,310Total liabilities
    
    
    438,816
    
    
    
    441,666Commitments 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; 22,500,000 shares authorized; issued
and outstanding  4,997,618 shares at March 31, 2006 and
4,976,654 shares at December 31, 2005
    
    
    4,473
    
    
    
    4,412Retained earnings
    
    
    29,033
    
    
    
    27,816Accumulated other comprehensive loss (Note 6)
    
    
    (1,190
    )
    
    
    (1,091
    )Total shareholders equity
    
    
    32,316
    
    
    
    31,137Total liabilities and shareholders equity
    
    $
    471,132
    
    
    $
    472,803
  2




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##### Table of Contents



PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF INCOME
 UnauditedFor the Three MonthsEnded March 31,2006
    
    
    2005Interest Income:Interest and fees on loans
    
    $
    6,004
    
    
    $
    4,809Interest on investment securities:Taxable
    
    
    687
    
    
    
    710Exempt from Federal income taxes
    
    
    131
    
    
    
    140Interest on Federal funds sold
    
    
    117
    
    
    
    1Total interest income
    
    
    6,939
    
    
    
    5,660Interest Expense:Interest on deposits
    
    
    1,361
    
    
    
    796Interest on Federal Home Loan Bank advances
    
    
    
    
    
    
    35Interest on junior subordinated deferrable interest debentures
    
    
    183
    
    
    
    90Other
    
    
    4
    
    
    
    2Total interest expense
    
    
    1,548
    
    
    
    923Net interest income before provision for loan losses
    
    
    5,391
    
    
    
    4,737Provision for Loan Losses
    
    
    300
    
    
    
    300Net interest income after provision for loan losses
    
    
    5,091
    
    
    
    4,437Non-Interest Income:Service charges
    
    
    761
    
    
    
    730Loss on sale of loans
    
    
    (4
    )
    
    
    Loss on sale of available-for-sale investment securities, net
    
    
    
    
    
    
    (8
    )Loss on sale of other real estate and vehicles, net
    
    
    
    
    
    
    (15
    )Earnings on Bank owned life insurance policies
    
    
    94
    
    
    
    92Other
    
    
    261
    
    
    
    310Total non-interest income
    
    
    1,112
    
    
    
    1,109Non-Interest Expenses:Salaries and employee benefits
    
    
    2,537
    
    
    
    2,403Occupancy and equipment
    
    
    750
    
    
    
    756Other
    
    
    1,023
    
    
    
    1,042Total non-interest expenses
    
    
    4,310
    
    
    
    4,201Income before provision for income taxes
    
    
    1,893
    
    
    
    1,345Provision for Income Taxes
    
    
    718
    
    
    
    448Net income
    
    $
    1,175
    
    
    $
    897Basic earnings per share (Notes 5 and 8)
    
    $
    0.24
    
    
    $
    0.19Diluted earnings per share (Notes 5 and 8)
    
    $
    0.23
    
    
    $
    0.18
  3




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##### Table of Contents



PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 For the Three MonthsEnded March 31,2006
    
    
    2005Cash Flows from Operating Activities:Net income
    
    $
    1,175
    
    
    $
    897Adjustments to reconcile net income to net cash provided by operating
activities:Provision for loan losses
    
    
    300
    
    
    
    300Change in deferred loan origination costs/fees, net
    
    
    (246
    )
    
    
    (271
    )Depreciation and amortization
    
    
    482
    
    
    
    411Net loss on sale of available-for-sale investment securities
    
    
    
    
    
    
    8Amortization of investment security premiums
    
    
    122
    
    
    
    195Accretion of investment security discounts
    
    
    (22
    )
    
    
    (24
    )Net loss on disposal/sale of premises and equipment
    
    
    1
    
    
    
    Net loss on sale of other real estate and vehicles
    
    
    
    
    
    
    15Earnings on Bank owned life insurance policies
    
    
    (94
    )
    
    
    (91
    )Expenses on Bank owned life insurance policies
    
    
    17
    
    
    
    17(Increase) decrease in accrued interest receivable and other assets
    
    
    (77
    )
    
    
    223Increase in accrued interest payable and other liabilities
    
    
    33
    
    
    
    207Net cash provided by operating activities
    
    
    1,691
    
    
    
    1,887Cash Flows from Investing Activities:Proceeds from matured and called available-for-sale investment securities
    
    
    7,346
    
    
    
    5,500Proceeds from matured and called held-to-maturity investment securities
    
    
    
    
    
    
    507Proceeds from sales of available-for-sale investment securities
    
    
    
    
    
    
    1,992Purchases of held-to-maturity investment securities
    
    
    (155
    )
    
    
    Proceeds from principal repayments from available-for-sale
government-guaranteed mortgage-backed securities
    
    
    837
    
    
    
    769Proceeds from principal repayments from held-to-maturity
government-guaranteed mortgage-backed securities
    
    
    19
    
    
    
    47Net increase in loans
    
    
    (1,209
    )
    
    
    (21,746
    )Proceeds from sale of other real estate and vehicles
    
    
    54
    
    
    
    20Purchase of premises and equipment
    
    
    (2,001
    )
    
    
    (712
    )Net cash provided by (used in) investing activities
    
    
    4,891
    
    
    
    (13,623
    )
  4




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PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 For the Three MonthsEnded March 31,2006
    
    
    2005Cash Flows from Financing Activities:Net increase in demand, interest bearing and savings deposits
    
    $
    3,028
    
    
    $
    3,048Net (decrease) increase in time deposits
    
    
    (5,911
    )
    
    
    1,481Proceeds from Federal Home Loan Bank advances
    
    
    
    
    
    
    8,965Proceeds from exercise of stock options
    
    
    61
    
    
    
    98Net cash (used in) provided by financing activities
    
    
    (2,822
    )
    
    
    13,592Increase in cash and cash equivalents
    
    
    3,760
    
    
    
    1,856Cash and Cash Equivalents at Beginning of Year
    
    
    24,596
    
    
    
    11,444Cash and Cash Equivalents at End of Period
    
    $
    28,356
    
    
    $
    13,300Supplemental Disclosure of Cash Flow Information:Cash paid during the period for:Interest expense
    
    $
    1,468
    
    
    $
    840Income taxes
    
    $
    
    
    
    $
    Non-Cash Investing Activities:Real estate and vehicles acquired through foreclosure
    
    $
    60
    
    
    $
    14Net change in unrealized gain on available-for-sale securities
    
    $
    (99
    )
    
    $
    (718
    )Non-Cash Financing Activities:Common stock retired in connection with the exercise of stock options
    
    $
    312
    
    
    $
    60
  5




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




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##### Table of Contents



3. LOANS
  March 31,
    
    
    December 31,2006
    
    
    2005Commercial
    
    $
    39,187
    
    
    $
    42,252Agricultural
    
    
    30,572
    
    
    
    31,018Real estate  mortgage
    
    
    112,883
    
    
    
    110,686Real estate  construction and land development
    
    
    56,728
    
    
    
    56,370Consumer
    
    
    83,305
    
    
    
    81,320322,675
    
    
    
    321,646Deferred loan costs, net
    
    
    1,012
    
    
    
    766Allowance for loan losses
    
    
    (3,436
    )
    
    
    (3,256
    )$
    320,251
    
    
    $
    319,156
 4. COMMITMENTS AND CONTINGENCIES
     7




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5. EARNINGS PER SHARE
  For the Three MonthsEnded March 31,2006
    
    
    2005Earnings Per Share:Basic earnings per share
    
    $
    0.24
    
    
    $
    0.19Diluted earnings per share
    
    $
    0.23
    
    
    $
    0.18Weighted Average Number of Shares Outstanding:Basic shares
    
    
    4,988,365
    
    
    
    4,847,059Diluted shares
    
    
    5,091,231
    
    
    
    5,124,034
  6. COMPREHENSIVE INCOME
   7. STOCK-BASED COMPENSATION
 Share Based Payment Accounting for Stock Based Compensation Accounting for Stock Issued to
Employees
  8




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Net income as reported
    
    $
    897Deduct: Total stock-based compensation expense determined under the
fair value based method for all awards, net of related tax effects
    
    
    43Pro forma net income
    
    $
    854Basic earnings per share  as reported
    
    $
    0.19Basic earnings per share  pro forma
    
    $
    0.18Diluted earnings per share  as reported
    
    $
    0.18Diluted earnings per share  pro forma
    
    $
    0.17
 8. STOCK OPTION PLANS
  For the Three Months Ended March 31, 2006Weighted Average
    
    
    AverageWeighted Average
    
    
    Remaining
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    Value (in thousands)Incentive:Options outstanding at January 1, 2006
    
    
    242,845
    
    
    
    11.05Options granted
    
    
    
    
    
    
    Options exercised
    
    
    37,416
    
    
    
    9.65Options cancelled
    
    
    
    
    
    
    Options outstanding at March 31, 2006
    
    
    205,429
    
    
    
    11.30
    
    
    
    6.9
    
    
    $
    1,697Options exercisable at March 31, 2006
    
    
    102,621
    
    
    
    9.42
    
    
    
    5.9
    
    
    $
    1,697Nonstatutory:Options outstanding at January 1, 2006
    
    
    113,131
    
    
    
    10.59Options granted
    
    
    2,500
    
    
    
    18.79Options exercised
    
    
    
    
    
    
    Options cancelled
    
    
    
    
    
    
    Options outstanding at March 31, 2006
    
    
    115,631
    
    
    
    10.77
    
    
    
    6.4
    
    
    $
    1,016Options exercisable at March 31, 2006
    
    
    70,386
    
    
    
    9.15
    
    
    
    5.5
    
    
    $
    733
 9




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##### Table of Contents



For the Three Months EndedMarch 31, 2006
    
    
    March 31, 2005Weighted average fair value of options granted
    
    
    4.60
    
    
    $
    N/ADividend yield
    
    
    1.2
    %
    
    
    N/AExpected volatility
    
    
    16.7
    %
    
    
    N/ARisk-free interest rate
    
    
    4.6
    %
    
    
    N/AExpected option life in years
    
    
    5.0
    
    
    
    N/A
  9. RECENT ACCOUNTING DEVELOPMENTS
 Accounting for Servicing of Financial Assets  An Amendment of FASB Statement No. 140.
  10. SUBSEQUENT EVENTS
  10




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PART
I  FINANCIAL INFORMATION
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   INTRODUCTION
   STOCK SPLIT
  CASH DIVIDEND
  11




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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 Share Based Payment for Stock-Based
Compensation.
  OVERVIEW
    RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2006
 Net interest income before provision for loan losses.
   12




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For the Three Months Ended March 31, 2006
    
    
    For the Three Months Ended March 31, 2005Average Balance
    
    
    Interest
    
    
    Yield/
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/(in thousands)
    
    
    (in thousands)
    
    
    Rate
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    RateInterest-earning assets:Loans (1) (2)
    
    $
    321,136
    
    
    $
    6,004
    
    
    
    7.58
    %
    
    $
    274,435
    
    
    $
    4,809
    
    
    
    7.11
    %Investment securities (1)
    
    
    93,366
    
    
    
    818
    
    
    
    3.55
    %
    
    
    108,117
    
    
    
    850
    
    
    
    3.19
    %Federal funds sold
    
    
    10,745
    
    
    
    117
    
    
    
    4.42
    %
    
    
    238
    
    
    
    1
    
    
    
    1.70
    %Total interest-earning assets
    
    
    425,247
    
    
    
    6,939
    
    
    
    6.62
    %
    
    
    382,790
    
    
    
    5,660
    
    
    
    6.00
    %Cash and due from banks
    
    
    14,042
    
    
    
    
    
    
    
    
    
    
    
    14,724Other assets
    
    
    29,721
    
    
    
    
    
    
    
    
    
    
    
    25,979Total assets
    
    $
    469,010
    
    
    
    
    
    
    
    
    
    
    $
    423,493Interest-bearing liabilities:NOW deposits
    
    $
    72,658
    
    
    
    263
    
    
    
    1.47
    %
    
    $
    44,342
    
    
    
    15
    
    
    
    0.14
    %Money market deposits
    
    
    64,731
    
    
    
    201
    
    
    
    1.26
    %
    
    
    63,793
    
    
    
    155
    
    
    
    0.99
    %Savings deposits
    
    
    63,945
    
    
    
    116
    
    
    
    0.74
    %
    
    
    67,218
    
    
    
    92
    
    
    
    0.56
    %Time deposits
    
    
    97,227
    
    
    
    781
    
    
    
    3.26
    %
    
    
    95,367
    
    
    
    534
    
    
    
    2.27
    %Federal Home Loan Bank advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,436
    
    
    
    35
    
    
    
    2.61
    %Other interest-bearing liabilities
    
    
    273
    
    
    
    4
    
    
    
    5.94
    %
    
    
    227
    
    
    
    2
    
    
    
    3.57
    %Junior subordinated debentures
    
    
    10,310
    
    
    
    183
    
    
    
    7.20
    %
    
    
    6,186
    
    
    
    90
    
    
    
    5.90
    %Total interest-bearing liabilities
    
    
    309,144
    
    
    
    1,548
    
    
    
    2.03
    %
    
    
    282,569
    
    
    
    923
    
    
    
    1.32
    %Non-interest bearing deposits
    
    
    123,102
    
    
    
    
    
    
    
    
    
    
    
    108,648Other liabilities
    
    
    4,642
    
    
    
    
    
    
    
    
    
    
    
    3,650Shareholders equity
    
    
    32,122
    
    
    
    
    
    
    
    
    
    
    
    28,626Total liabilities & equity
    
    $
    469,010
    
    
    
    
    
    
    
    
    
    
    $
    423,493Cost of funding interest-earning assets (3)
    
    
    
    
    
    
    
    
    
    
    1.48
    %
    
    
    
    
    
    
    
    
    
    
    0.98
    %Net interest income and margin (4)
    
    
    
    
    
    $
    5,391
    
    
    
    5.14
    %
    
    
    
    
    
    $
    4,737
    
    
    
    5.02
    %
 
 (1)
    
    Not computed on a tax-equivalent basis.(2)
    
    Loan (costs) fees included in loan interest income for the three-month periods ended March
31, 2006 and 2005 were ($56,000) and $49,000, respectively.(3)
    
    Total annualized interest expense divided by the average balance of total earning assets.(4)
    
    Annualized net interest income divided by the average balance of total earning assets. 13




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2006 over 2005 change in net interest incomefor the three months ended March 31(in thousands)Volume (1)
    
    
    Rate (2)
    
    
    Mix (3)
    
    
    TotalInterest-earning assets:Loans
    
    $
    818
    
    
    $
    322
    
    
    $
    55
    
    
    $
    1,195Investment securities
    
    
    (116
    )
    
    
    97
    
    
    
    (13
    )
    
    
    (32
    )Federal funds sold
    
    
    44
    
    
    
    2
    
    
    
    70
    
    
    
    116Total interest income
    
    
    746
    
    
    
    421
    
    
    
    112
    
    
    
    1,279Interest-bearing liabilities:NOW deposits
    
    
    10
    
    
    
    146
    
    
    
    92
    
    
    
    248Money market deposits
    
    
    2
    
    
    
    43
    
    
    
    1
    
    
    
    46Savings deposits
    
    
    (4
    )
    
    
    30
    
    
    
    (2
    )
    
    
    24Time deposits
    
    
    10
    
    
    
    232
    
    
    
    5
    
    
    
    247FHLB advances
    
    
    (35
    )
    
    
    (35
    )
    
    
    35
    
    
    
    (35
    )Other interest-bearing liabilities
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    2Junior subordinated debentures
    
    
    60
    
    
    
    20
    
    
    
    13
    
    
    
    93Total interest expense
    
    
    43
    
    
    
    437
    
    
    
    145
    
    
    
    625Net interest income
    
    $
    703
    
    
    $
    (16
    )
    
    $
    (33
    )
    
    $
    654
 
 (1)
    
    The volume change in net interest income represents the change in average balance multiplied by
the previous years rate.(2)
    
    The rate change in net interest income represents the change in rate multiplied by the previous
years average balance.(3)
    
    The mix change in net interest income represents the change in average balance multiplied by
the change in rate. Provision for loan losses.
 Non-interest income.
   14




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For the ThreeMonthsEnded March 31Dollar
    
    
    Percentage2006
    
    
    2005
    
    
    Change
    
    
    ChangeService charges on deposit accounts
    
    $
    761
    
    
    $
    730
    
    
    $
    31
    
    
    
    4.2
    %Earnings on life insurance policies
    
    
    94
    
    
    
    92
    
    
    
    2
    
    
    
    2.2
    %Merchant processing income
    
    
    61
    
    
    
    62
    
    
    
    (1
    )
    
    
    -1.6
    %Official check fees
    
    
    35
    
    
    
    22
    
    
    
    13
    
    
    
    59.1
    %Mortgage loan commission and servicing fees
    
    
    30
    
    
    
    49
    
    
    
    (19
    )
    
    
    -38.8
    %Customer service fees
    
    
    28
    
    
    
    24
    
    
    
    4
    
    
    
    16.7
    %Federal Home Loan Bank dividends
    
    
    23
    
    
    
    
    
    
    
    23
    
    
    
    100.0
    %Investment services income
    
    
    22
    
    
    
    44
    
    
    
    (22
    )
    
    
    -50.0
    %Safe deposit box and night depository income
    
    
    20
    
    
    
    19
    
    
    
    1
    
    
    
    5.3
    %Other deposit account fees
    
    
    15
    
    
    
    6
    
    
    
    9
    
    
    
    150.0
    %Printed check fee income
    
    
    11
    
    
    
    8
    
    
    
    3
    
    
    
    37.5
    %Loss on sale of loans
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )
    
    
    -100.0
    %Loss on sale of securities
    
    
    
    
    
    
    (8
    )
    
    
    8
    
    
    
    100.0
    %Loss on sale of real estate and vehicles
    
    
    
    
    
    
    (15
    )
    
    
    15
    
    
    
    100.0
    %Tax refunds
    
    
    
    
    
    
    58
    
    
    
    (58
    )
    
    
    -100.0
    %Other
    
    
    16
    
    
    
    18
    
    
    
    (2
    )
    
    
    -11.1
    %Total non-interest income
    
    $
    1,112
    
    
    $
    1,109
    
    
    $
    3
    
    
    
    0.3
    %
 Non-interest expenses.
 Share Based Payment
   15




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##### Table of Contents



For the ThreeMonthsEnded March 31Dollar
    
    
    Percentage2006
    
    
    2005
    
    
    Change
    
    
    ChangeSalaries and employee benefits
    
    $
    2,537
    
    
    $
    2,403
    
    
    $
    134
    
    
    
    5.6
    %Occupancy and equipment
    
    
    750
    
    
    
    756
    
    
    
    (6
    )
    
    
    -0.1
    %Professional fees
    
    
    164
    
    
    
    165
    
    
    
    (1
    )
    
    
    -0.1
    %Business development
    
    
    133
    
    
    
    100
    
    
    
    33
    
    
    
    33.0
    %Advertising and shareholder relations
    
    
    99
    
    
    
    107
    
    
    
    (8
    )
    
    
    -7.5
    %Director compensation
    
    
    88
    
    
    
    78
    
    
    
    10
    
    
    
    12.8
    %Telephone and data communication
    
    
    86
    
    
    
    75
    
    
    
    11
    
    
    
    14.7
    %Deposit premium amortization
    
    
    75
    
    
    
    75
    
    
    
    
    
    
    
    Stationery and supplies
    
    
    74
    
    
    
    74
    
    
    
    
    
    
    
    Armored car and courier
    
    
    65
    
    
    
    92
    
    
    
    (27
    )
    
    
    -29.3
    %Postage
    
    
    63
    
    
    
    61
    
    
    
    2
    
    
    
    3.3
    %Outside service fees
    
    
    44
    
    
    
    77
    
    
    
    (33
    )
    
    
    -42.9
    %Insurance
    
    
    42
    
    
    
    53
    
    
    
    (11
    )
    
    
    -20.8
    %Loan and collection expenses
    
    
    27
    
    
    
    37
    
    
    
    (10
    )
    
    
    -27.0
    %Other
    
    
    63
    
    
    
    48
    
    
    
    15
    
    
    
    31.3
    %Total non-interest expense
    
    $
    4,310
    
    
    $
    4,201
    
    
    $
    109
    
    
    
    2.6
    %
 FINANCIAL CONDITION
 Loan portfolio composition.
 Nonperforming assets.
 16




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##### Table of Contents



Analysis of allowance for loan losses.
  For the Three MonthsEnded March 31,2006
    
    
    2005Balance at January 1,
    
    $
    3,256
    
    
    $
    2,762Charge-offs:Commercial and agricultural
    
    
    (77
    )
    
    
    Real estate mortgage
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    Consumer
    
    
    (98
    )
    
    
    (132
    )Total charge-offs
    
    
    (175
    )
    
    
    (132
    )Recoveries:Commercial and agricultural
    
    
    19
    
    
    
    2Real estate mortgage
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    Consumer
    
    
    36
    
    
    
    32Total recoveries
    
    
    55
    
    
    
    34Net charge-offs
    
    
    (120
    )
    
    
    (98
    )Provision for loan losses
    
    
    300
    
    
    
    300Balance at March 31,
    
    $
    3,436
    
    
    $
    2,964Net charge-offs during the three-month period to average loans
    
    
    0.04
    %
    
    
    0.04
    %Allowance for loan losses to total loans
    
    
    1.06
    %
    
    
    1.03
    %
 Investment securities.
 17




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##### Table of Contents



Premises and equipment.
 Deposits.
 CAPITAL RESOURCES
    18




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##### Table of Contents



March 31, 2006
    

December 31, 2005Amount
    
    Ratio
    
    Amount
    
    RatioTier 1 Leverage RatioPlumas Bancorp and Subsidiary
    
    $
    41,943
    
    
    
    8.9
    %
    
    $
    40,589
    
    
    
    8.5
    %Minimum regulatory requirement
    
    
    18,719
    
    
    
    4.0
    %
    
    
    19,013
    
    
    
    4.0
    %Plumas Bank
    
    
    39,102
    
    
    
    8.4
    %
    
    
    37,611
    
    
    
    7.8
    %Minimum requirement for
Well-Capitalized institution
    
    
    23,343
    
    
    
    5.0
    %
    
    
    24,060
    
    
    
    5.0
    %Minimum regulatory requirement
    
    
    18,674
    
    
    
    4.0
    %
    
    
    19,248
    
    
    
    4.0
    %Tier 1 Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    41,943
    
    
    
    10.6
    %
    
    
    40,589
    
    
    
    10.3
    %Minimum regulatory requirement
    
    
    15,847
    
    
    
    4.0
    %
    
    
    15,780
    
    
    
    4.0
    %Plumas Bank
    
    
    39,102
    
    
    
    9.9
    %
    
    
    37,611
    
    
    
    9.6
    %Minimum requirement for
Well-Capitalized institution
    
    
    23,734
    
    
    
    6.0
    %
    
    
    23,635
    
    
    
    6.0
    %Minimum regulatory requirement
    
    
    15,823
    
    
    
    4.0
    %
    
    
    15,757
    
    
    
    4.0
    %Total Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    45,379
    
    
    
    11.5
    %
    
    
    43,845
    
    
    
    11.1
    %Minimum regulatory requirement
    
    
    31,694
    
    
    
    8.0
    %
    
    
    31,560
    
    
    
    8.0
    %Plumas Bank
    
    
    42,539
    
    
    
    10.8
    %
    
    
    40,867
    
    
    
    10.4
    %Minimum requirement for
Well-Capitalized institution
    
    
    39,557
    
    
    
    10.0
    %
    
    
    39,392
    
    
    
    10.0
    %Minimum regulatory requirement
    
    
    31,646
    
    
    
    8.0
    %
    
    
    31,514
    
    
    
    8.0
    %
 LIQUIDITY
     19




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      20




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
   
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A RISK FACTORS
  
 ITEM 2. UNREGISTERD SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  21




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##### Table of Contents



ITEM 6. EXHIBITS
  3.1
    
    Articles of Incorporation as amended of Registrant included as exhibit 3.1 to
the Registrants Form S-4, File No. 333-84534, which is incorporated by
reference herein.3.2
    
    Bylaws of Registrant included as exhibit 3.2 to the Registrants Form S-4, File
No. 333-84534, which is incorporated by reference herein.3.3
    
    Amendment of the Articles of Incorporation of Registrant dated November 1, 2002.3.4
    
    Amendment of the Articles of Incorporation of Registrant dated August 17, 2005.4
    
    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
    
    Executive Salary Continuation Agreement of Andrew J. Ryback dated August 23,
2005, is included as Exhibit 10.1 to the Registrants 8-K filed on October 17,
2005, 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.10.3
    
    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.10.5
    
    Employment Agreement of Douglas N. Biddle dated January 1, 2006 is included as
Exhibit 10.5 to the Registrants 8-K filed on March 15, 2006, 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.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.
 22




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##### Table of Contents



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.10.16
    
    Deferred Fee Agreement of Jerry V. Kehr dated December 21, 2005 is included as Exhibit
10.16 to the Registrants 8-K filed on March 15, 2006, 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.
 23




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##### Table of Contents



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.10.39
    
    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. 333-96957.10.42
    
    1991 Stock Option Plan on Form S-8 filed August 19, 2002, File No. 333-98319.10.43
    
    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. 333-103229.10.44
    
    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.10.59
    
    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 9, 2006.31.2
    
    Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated May 9, 2006.
 24




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##### Table of Contents



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 9, 2006.32.2
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 9, 2006.
 
 SIGNATURES
  PLUMAS BANCORP(Registrant)Date: May 9, 2006/s/ Andrew J. RybackAndrew J. RybackExecutive Vice President Chief Financial Officer/s/ Douglas N. BiddleDouglas N. BiddlePresident and Chief Executive Officer
 25