##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)

|  |  |                                                                                                                               
|- |  | ------------------------------------------------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2003

|  |  |                                                                                                                                             
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|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

(Exact Name of Registrant as Specified in Its Charter)


|                                                                                 |  |                                                
|-------------------------------------------------------------------------------- |  | -----------------------------------------------
|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) 283-7307

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 x 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 x

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of August 8, 2003; 3,238,407 shares





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TABLE OF CONTENTS



|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION
|                               | ITEM 1. FINANCIAL STATEMENT                                                                  
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                               | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II - OTHER INFORMATION   
|                               | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                               | ITEM 2. CHANGES IN 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                                                                    
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                    
|EXHIBIT 10.46                 
|EXHIBIT 10.47                 
|EXHIBIT 10.48                 
|EXHIBIT 10.49                 
|EXHIBIT 10.50                 
|EXHIBIT 10.51                 
|EXHIBIT 10.52                 
|EXHIBIT 10.53                 
|EXHIBIT 10.54                 
|EXHIBIT 10.55                 
|EXHIBIT 10.56                 
|EXHIBIT 10.57                 
|EXHIBIT 10.58                 
|EXHIBIT 10.59                 
|EXHIBIT 10.60                 
|EXHIBIT 31.1                  
|EXHIBIT 31.2                  
|EXHIBIT 31.3                  
|EXHIBIT 32.1                  
|EXHIBIT 32.2                  
|EXHIBIT 32.3                  



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##### Table of Contents






PART I  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENT

PLUMAS BANCORP
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)

|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |              |         |         |         | 
|--------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------------------- | ------------------------------------------ | ------- | ----------- | ------- | ------------ | ------- | ------- | ------- | 
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         | June 30,    |         | December 31,
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         | 2003        |         | 2002        
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         | (Unaudited) |         | (Audited)   
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|Assets                                                                                                          |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|Cash and due from banks                                                                                         |                                                                                                                                                                | $              | 24,004                     |                                            |         | $           | 22,665  |             
|Federal funds sold                                                                                              |                                                                                                                                                                |                | 14,095                     |                                            |         |             | 15,265  |             
|Loans held for sale                                                                                             |                                                                                                                                                                |                | 847                        |                                            |         |             | 1,472   |             
|Investment securities (market value of $53,955 at June 30, 2003 and
$61,807 at December 31, 2002)               |                                                                                                                                                                |                | 53,628                     |                                            |         |             | 61,436  |             
|Loans less allowance for loan losses of $2,641 at June 30, 2003 and
$2,471 at December 31, 2002 (Notes 3 and 4) |                                                                                                                                                                |                | 212,083                    |                                            |         |             | 204,649 |             
|Bank premises and equipment, net                                                                                |                                                                                                                                                                |                | 9,062                      |                                            |         |             | 9,323   |             
|Intangible assets, net                                                                                          |                                                                                                                                                                |                | 624                        |                                            |         |             | 690     |             
|Accrued interest receivable and other assets                                                                    |                                                                                                                                                                |                | 11,339                     |                                            |         |             | 9,964   |             
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                |                                                                                                                                                                |                |                            | Total assets                               |         | $           | 325,682 |              |         | $       | 325,464 | 
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|Liabilities and Shareholders Equity                                                                            |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|Deposits:                                                                                                       |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                | Non-interest bearing                                                                                                                                           |                | $                          | 75,133                                     |         |             | $       | 73,552       |        
|                                                                                                                | Interest bearing                                                                                                                                               |                |                            | 217,400                                    |         |             |         | 220,387      |        
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                |                                                                                                                                                                | Total deposits |                            |                                            | 292,533 |             |         |              | 293,939 |        
|Accrued interest payable and other liabilities                                                                  |                                                                                                                                                                |                | 2,475                      |                                            |         |             | 2,237   |             
|Mandatorily redeemable cumulative trust preferred securities of subsidiary
grantor trust                        |                                                                                                                                                                |                | 6,000                      |                                            |         |             | 6,000   |             
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                |                                                                                                                                                                |                | Total liabilities          |                                            |         | 301,008     |         |              |         | 302,176 |        
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|Commitments and contingencies (Note 4)                                                                          |                                                                                                                                                                |                |                           |                                            |         |             |        |             
|Shareholders equity (Notes 5 and 8):                                                                           |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                | Preferred stock, no par value; 10,000,000 shares authorized, no shares
issued or outstanding                                                                   |                |                            |                                           |         |             |         |             |        
|                                                                                                                | Common stock, no par value; 15,000,000 shares authorized; issued and
outstanding  3,230,610 shares at June 30, 2003 and 3,209,396 shares at
December 31, 2002 |                |                            | 3,869                                      |         |             |         | 3,743        |        
|                                                                                                                | Retained earnings                                                                                                                                              |                |                            | 20,264                                     |         |             |         | 19,135       |        
|                                                                                                                | Accumulated other comprehensive income (Note 6)                                                                                                                |                |                            | 541                                        |         |             |         | 410          |        
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                |                                                                                                                                                                |                | Total shareholders equity |                                            |         | 24,674      |         |              |         | 23,288  |        
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             
|                                                                                                                |                                                                                                                                                                |                |                            | Total liabilities and shareholders equity |         | $           | 325,682 |              |         | $       | 325,464 | 
|                                                                                                                |                                                                                                                                                                |                |                            |                                            |         |             |         |             

See notes to consolidated financial statements.

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##### Table of Contents



PLUMAS BANCORP
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)

|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |       |     |       |       | 
|------------------------------------------ | ------------------------------------------------------------- | -------------------------------- | -------------------------- | ---------------------------------------------------- | --- | -------------------- | ----- | ------------------ | --- | ----- | ----- | ----- | --- | ----- | ----- | ----- | --- | ----- | ----- | 
|                                           |                                                               |                                  |                            |                                                      |     | For the Three Months |       | For the Six Months
|                                           |                                                               |                                  |                            |                                                      |     | Ended June 30        |       | Ended June 30     
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                   
|                                           |                                                               |                                  |                            |                                                      |     | 2003                 |       | 2002               |     | 2003  |       | 2002 
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |      
|                                           |                                                               |                                  |                            |                                                      |     | (Unaudited)          |       | (Unaudited)       
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                   
|Interest Income:                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           | Interest and fees on loans                                    |                                  | $                          | 4,200                                                |     |                      | $     | 3,989              |     |       | $     | 8,167 |     |       | $     | 7,853 |    
|                                           | Interest on investment securities:                            |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |       |    
|                                           |                                                               | Taxable                          |                            |                                                      | 429 |                      |       |                    | 492 |       |       |       | 938 |       |       |       | 974 |      
|                                           |                                                               | Exempt from Federal income taxes |                            |                                                      | 33  |                      |       |                    | 37  |       |       |       | 66  |       |       |       | 73  |      
|                                           | Interest on Federal funds sold                                |                                  |                            | 22                                                   |     |                      |       | 46                 |     |       |       | 54    |     |       |       | 104   |    
|                                           | Interest on loans held for sale                               |                                  |                            | 10                                                   |     |                      |       | 9                  |     |       |       | 20    |     |       |       | 19    |    
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  | Total interest income      |                                                      |     | 4,694                |       |                    |     | 4,573 |       |       |     | 9,245 |       |       |     | 9,023 |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|Interest Expense:                          |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           | Interest on deposits                                          |                                  |                            | 713                                                  |     |                      |       | 978                |     |       |       | 1,502 |     |       |       | 2,048 |    
|                                           | Other                                                         |                                  |                            | 72                                                   |     |                      |       | 2                  |     |       |       | 149   |     |       |       | 2     |    
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  | Total interest expense     |                                                      |     | 785                  |       |                    |     | 980   |       |       |     | 1,651 |       |       |     | 2,050 |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  |                            | Net interest income before provision for loan
losses |     |                      | 3,909 |                    |     |       | 3,593 |       |     |       | 7,594 |       |     |       | 6,973 | 
|Provision for Loan Losses                  |                                                               |                                  | 225                        |                                                      |     |                      | 300   |                    |     |       | 450   |       |     |       | 525   |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  |                            | Net interest income after provision for loan losses  |     |                      | 3,684 |                    |     |       | 3,293 |       |     |       | 7,144 |       |     |       | 6,448 | 
|Non-Interest Income:                       |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           | Service charges                                               |                                  |                            | 502                                                  |     |                      |       | 489                |     |       |       | 976   |     |       |       | 919   |    
|                                           | Gain on sale of loans, net                                    |                                  |                            | 31                                                   |     |                      |       | 36                 |     |       |       | 60    |     |       |       | 25    |    
|                                           | Gain on sale of available-for-sale investment securities, net |                                  |                            | 54                                                   |     |                      |       | 2                  |     |       |       | 116   |     |       |       | 62    |    
|                                           | Gain on sale of other real estate, net                        |                                  |                            | 25                                                   |     |                      |       |                   |     |       |       | 20    |     |       |       |      |    
|                                           | Earnings on cash surrender value of life insurance policies   |                                  |                            | 55                                                   |     |                      |       | 54                 |     |       |       | 109   |     |       |       | 108   |    
|                                           | Other income                                                  |                                  |                            | 209                                                  |     |                      |       | 153                |     |       |       | 398   |     |       |       | 350   |    
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  | Total non-interest income  |                                                      |     | 876                  |       |                    |     | 734   |       |       |     | 1,679 |       |       |     | 1,464 |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|Non-Interest Expense:                      |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           | Salaries and employee benefits                                |                                  |                            | 1,724                                                |     |                      |       | 1,478              |     |       |       | 3,495 |     |       |       | 3,039 |    
|                                           | Occupancy and equipment                                       |                                  |                            | 588                                                  |     |                      |       | 420                |     |       |       | 1,105 |     |       |       | 821   |    
|                                           | Other expense                                                 |                                  |                            | 925                                                  |     |                      |       | 934                |     |       |       | 1,722 |     |       |       | 1,717 |    
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  | Total non-interest expense |                                                      |     | 3,237                |       |                    |     | 2,832 |       |       |     | 6,322 |       |       |     | 5,577 |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  |                            | Income before income taxes                           |     |                      | 1,323 |                    |     |       | 1,195 |       |     |       | 2,501 |       |     |       | 2,335 | 
|Income Tax Expense                         |                                                               |                                  | 523                        |                                                      |     |                      | 475   |                    |     |       | 985   |       |     |       | 916   |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|                                           |                                                               |                                  |                            | Net income                                           |     | $                    | 800   |                    |     | $     | 720   |       |     | $     | 1,516 |       |     | $     | 1,419 | 
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|Basic earnings per share (Notes 5 and 8)   |                                                               | $                                | 0.25                       |                                                      |     | $                    | 0.23  |                    |     | $     | 0.47  |       |     | $     | 0.45  |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      
|Diluted earnings per share (Notes 5 and 8) |                                                               | $                                | 0.24                       |                                                      |     | $                    | 0.22  |                    |     | $     | 0.46  |       |     | $     | 0.43  |      
|                                           |                                                               |                                  |                            |                                                      |     |                      |       |                    |     |       |       |       |     |       |       |      

See notes to consolidated financial statements.

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##### Table of Contents



PLUMAS BANCORP
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)

|                                      |                                                                                   |  |                                                                                                             |                                                     |  |                    |        |       |  |         |         |  
|------------------------------------- | --------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------- | --------------------------------------------------- |  | ------------------ | ------ | ----- |  | ------- | ------- | -
|                                      |                                                                                   |  |                                                                                                             |                                                     |  | Unaudited         
|                                      |                                                                                   |  |                                                                                                             |                                                     |  | For the Six Months
|                                      |                                                                                   |  |                                                                                                             |                                                     |  | Ended June 30     
|                                      |                                                                                   |  |                                                                                                             |                                                     |  |                   
|                                      |                                                                                   |  |                                                                                                             |                                                     |  | 2003               |        | 2002 
|                                      |                                                                                   |  |                                                                                                             |                                                     |  |                    |        |      
|Cash Flows from Operating Activities: |                                                                                   |  |                                                                                                             |                                                     |  |                    |        |      
|                                      | Net income                                                                        |  | $                                                                                                           | 1,516                                               |  |                    | $      | 1,419 | 
|                                      | Adjustments to reconcile net income to net cash provided by operating
activities: |  |                                                                                                             |                                                     |  |                    |        |       | 
|                                      |                                                                                   |  | Provision for loan losses                                                                                   |                                                     |  | 450                |        |       |  | 525     |        
|                                      |                                                                                   |  | Deferred loan origination fees, net                                                                         |                                                     |  | (64                | )      |       |  | (153    | )      
|                                      |                                                                                   |  | Depreciation, amortization and accretion, net                                                               |                                                     |  | 621                |        |       |  | 492     |        
|                                      |                                                                                   |  | Net realized gain on available-for-sale investment securities                                               |                                                     |  | (116               | )      |       |  | (62     | )      
|                                      |                                                                                   |  | Amortization of investment security premiums                                                                |                                                     |  | 338                |        |       |  | 84      |        
|                                      |                                                                                   |  | Accretion of investment security discounts                                                                  |                                                     |  | (7                 | )      |       |  | (64     | )      
|                                      |                                                                                   |  | Net loss on sale of premises and equipment                                                                  |                                                     |  | 1                  |        |       |  | 6       |        
|                                      |                                                                                   |  | Net gain on sale of other real estate                                                                       |                                                     |  | (20                | )      |       |  |        |        
|                                      |                                                                                   |  | Net decrease (increase) in loans held for sale                                                              |                                                     |  | 624                |        |       |  | (152    | )      
|                                      |                                                                                   |  | Increase in cash surrender value of life insurance                                                          |                                                     |  | (92                | )      |       |  | (108    | )      
|                                      |                                                                                   |  | Net decrease (increase) in accrued interest receivable and other assets                                     |                                                     |  | 212                |        |       |  | (22     | )      
|                                      |                                                                                   |  | Net increase (decrease) in accrued interest payable and other liabilities                                   |                                                     |  | 238                |        |       |  | (240    | )      
|                                      |                                                                                   |  | Deferred taxes, net                                                                                         |                                                     |  | (18                | )      |       |  | 24      |        
|                                      |                                                                                   |  |                                                                                                             |                                                     |  |                    |        |      
|                                      |                                                                                   |  |                                                                                                             | Net cash provided by operating activities           |  |                    | 3,683  |       |  |         | 1,749   |  
|                                      |                                                                                   |  |                                                                                                             |                                                     |  |                    |        |      
|Cash Flows from Investing Activities: |                                                                                   |  |                                                                                                             |                                                     |  |                    |        |      
|                                      |                                                                                   |  | Proceeds from matured and called available-for-sale investment securities                                   |                                                     |  | 8,500              |        |       |  | 13,996  |        
|                                      |                                                                                   |  | Proceeds from matured and called held-to-maturity investment securities                                     |                                                     |  | 2,602              |        |       |  | 3,699   |        
|                                      |                                                                                   |  | Proceeds from sales of available-for-sale investment securities                                             |                                                     |  | 6,521              |        |       |  | 530     |        
|                                      |                                                                                   |  | Purchases of available-for-sale investment securities                                                       |                                                     |  | (10,386            | )      |       |  | (15,977 | )      
|                                      |                                                                                   |  | Purchases of held-to-maturity investment securities                                                         |                                                     |  |                   |        |       |  | (685    | )      
|                                      |                                                                                   |  | Proceeds from principal repayments from available-for-sale
government-guaranteed mortgage-backed securities |                                                     |  | 448                |        |       |  | 431     |        
|                                      |                                                                                   |  | Proceeds from principal repayments from held-to-maturity
government-guaranteed mortgage-backed securities   |                                                     |  | 134                |        |       |  | 468     |        
|                                      |                                                                                   |  | Net increase in loans                                                                                       |                                                     |  | (7,820             | )      |       |  | (18,166 | )      
|                                      |                                                                                   |  | Proceeds from sale of other real estate                                                                     |                                                     |  | 145                |        |       |  |        |        
|                                      |                                                                                   |  | Purchase of premises and equipment                                                                          |                                                     |  | (293               | )      |       |  | (1,124  | )      
|                                      |                                                                                   |  | Deposits on single premium cash surrender value life insurance policies                                     |                                                     |  | (1,695             | )      |       |  | (510    | )      
|                                      |                                                                                   |  |                                                                                                             |                                                     |  |                    |        |      
|                                      |                                                                                   |  |                                                                                                             | Net cash (used in) provided by investing activities |  |                    | (1,844 | )     |  |         | (17,338 | )

Continued on next page.

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PLUMAS BANCORP
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Continued)

|                                                  |                                                                |   |                                                               |                                                     |                                                  |                    |        |      |   |        |       |        |  
|------------------------------------------------- | -------------------------------------------------------------- | - | ------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------ | ------------------ | ------ | ---- | - | ------ | ----- | ------ | -
|                                                  |                                                                |   |                                                               |                                                     |                                                  | Unaudited         
|                                                  |                                                                |   |                                                               |                                                     |                                                  | For the Six Months
|                                                  |                                                                |   |                                                               |                                                     |                                                  | Ended June 30     
|                                                  |                                                                |   |                                                               |                                                     |                                                  |                   
|                                                  |                                                                |   |                                                               |                                                     |                                                  | 2003               |        | 2002
|                                                  |                                                                |   |                                                               |                                                     |                                                  |                    |        |     
|Cash Flows from Financing Activities:             |                                                                |   |                                                               |                                                     |                                                  |                    |        |     
|                                                  |                                                                |   | Net increase in demand, interest bearing and savings deposits |                                                     | $                                                | 222                |        |      | $ | 13,385 |      
|                                                  |                                                                |   | Net decrease in time deposits                                 |                                                     |                                                  | (1,628             | )      |      |   | (2,819 | )    
|                                                  |                                                                |   | Proceeds from exercise of stock options                       |                                                     |                                                  | 123                |        |      |   | 33     |      
|                                                  |                                                                |   | Cash dividends paid                                           |                                                     |                                                  | (387               | )      |      |   | (703   | )    
|                                                  |                                                                |   |                                                               | Net cash (used in) provided by financing activities |                                                  |                    | (1,670 | )    |   |        | 9,896 |       
|                                                  |                                                                |   |                                                               |                                                     |                                                  |                    |        |     
|                                                  |                                                                |   |                                                               |                                                     | Increase (decrease) in cash and cash equivalents |                    |        | 169  |   |        |       | (5,693 | )
|Cash and Cash Equivalents at Beginning of Year    |                                                                |   | 37,930                                                        |                                                     |                                                  |                    | 30,088 |     
|                                                  |                                                                |   |                                                               |                                                     |                                                  |                    |        |     
|Cash and Cash Equivalents at End of Period        |                                                                | $ | 38,099                                                        |                                                     |                                                  | $                  | 24,395 |     
|                                                  |                                                                |   |                                                               |                                                     |                                                  |                    |        |     
|Supplemental Disclosure of Cash Flow Information: |                                                                |   |                                                               |                                                     |                                                  |                    |        |     
|                                                  | Cash paid during the period for:                               |   |                                                               |                                                     |                                                  |                    |        |      |  
|                                                  |                                                                |   | Interest expense                                              |                                                     | $                                                | 1,606              |        |      | $ | 2,098  |      
|                                                  |                                                                |   | Income taxes                                                  |                                                     | $                                                | 932                |        |      | $ | 1,045  |      
|Non-Cash Investing Activities:                    |                                                                |   |                                                               |                                                     |                                                  |                    |        |     
|                                                  | Net change in unrealized gain on available-for-sale securities |   | $                                                             | 131                                                 |                                                  |                    | $      | 196  |  
|See notes to consolidated financial statements    |                                                                |   |                                                               |                                                     |                                                  |                    |        |     

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PLUMAS BANCORP
NOTES TO 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s subsidiaries include the Bank and Plumas Statutory Trust I. The
Bank operates nine branches in California, including branches in Alturas,
Chester, Fall River Mills, Greenville, Portola, Quincy, Susanville, 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.     CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the Companys financial position at June 30, 2003
and December 31, 2002, the results of operations for the three months ended
June 30, 2003 and 2002 and the results of operations and cash flows for the six
months ended June 30, 2003 and 2002. Certain reclassifications have been made
to prior years balances to conform to classifications used in 2003.

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
2002 Annual Report to Shareholders. The results of operations for the
three-month and six-month periods ended June 30, 2003 and 2002 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.

3.     LOANS

Outstanding loans are summarized below:

|                                                |  |          |         |              |  |   |         |  
|----------------------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | -
|                                                |  | June 30, |         | December 31,
|                                                |  | 2003     |         | 2002        
|                                                |  |          |         |             
|Commercial                                      |  | $        | 52,701  |              |  | $ | 52,432  |  
|Agricultural                                    |  |          | 29,015  |              |  |   | 25,610  |  
|Real estate  mortgage                          |  |          | 70,140  |              |  |   | 66,039  |  
|Real estate  construction and land development |  |          | 16,253  |              |  |   | 15,175  |  
|Consumer                                        |  |          | 47,152  |              |  |   | 48,465  |  
|                                                |  |          |         |              |  |   |         |  
|                                                |  |          | 215,261 |              |  |   | 207,721 |  
|Deferred loans fees, net                        |  |          | (537    | )            |  |   | (601    | )
|Allowance for loan losses                       |  |          | (2,641  | )            |  |   | (2,471  | )
|                                                |  |          |         |              |  |   |         |  
|                                                |  | $        | 212,083 |              |  | $ | 204,649 |  
|                                                |  |          |         |              |  |   |         |  

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4.     COMMITMENTS AND CONTINGENCIES

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 $54,203,000 and $49,267,000 and letters of credit of
$1,947,000 and $509,000 at June 30, 2003 and December 31, 2002, respectively.

Approximately $12,547,000 of the loan commitments outstanding at June 30, 2003
are for real estate construction loans and 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.

On April 30 the Company announced that it has entered into an agreement with
Placer Sierra Bank to purchase five branches from the Auburn, California based
bank, subject to regulatory approval. The five branches are in the communities
of Quincy, Portola, Loyalton, Truckee and Kings Beach, California. As of June
30, 2003, total deposits at these branches amounted to $53.9 million. If the
transaction is approved, it is expected that the assets acquired will include
premises and equipment of approximately $600 thousand and a core deposit
intangible estimated to range between $2.2 million and $2.6 million that will
be amortized using the straight-line method over a period of ten years.

5.     EARNINGS PER SHARE COMPUTATION

Basic earnings per share are computed by dividing net income by the weighted
average common shares outstanding for the period. Diluted earnings per share
reflect the potential dilution that could occur if outstanding stock options
were exercised. Diluted earnings per share are computed by dividing net income
by the weighted average common shares outstanding for the period plus the
dilutive effect of options. Earnings per share computations have been
retroactively adjusted for stock splits for all periods presented.

|                                               |                            |  |                      |           |                    |  |      |           |      |  |   |           |  |  |   |           | 
|---------------------------------------------- | -------------------------- |  | -------------------- | --------- | ------------------ |  | ---- | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                               |                            |  | For the Three Months |           | For the Six Months
|                                               |                            |  | Ended June 30        |           | Ended June 30     
|                                               |                            |  |                      |           |                   
|                                               |                            |  | 2003                 |           | 2002               |  | 2003 |           | 2002
|                                               |                            |  |                      |           |                    |  |      |           |     
|Earnings Per Share:                            |                            |  |                      |           |                    |  |      |           |      |  |   |           |  |  |   |          
|                                               | Basic earnings per share   |  | $                    | 0.25      |                    |  | $    | 0.23      |      |  | $ | 0.47      |  |  | $ | 0.45      | 
|                                               | Diluted earnings per share |  | $                    | 0.24      |                    |  | $    | 0.22      |      |  | $ | 0.46      |  |  | $ | 0.43      | 
|Weighted Average Number of
Shares Outstanding: |                            |  |                      |           |                    |  |      |           |      |  |   |           |  |  |   |          
|                                               | Basic shares               |  |                      | 3,228,280 |                    |  |      | 3,193,738 |      |  |   | 3,223,138 |  |  |   | 3,194,296 | 
|                                               | Diluted shares             |  |                      | 3,466,437 |                    |  |      | 3,218,451 |      |  |   | 3,468,899 |  |  |   | 3,254,422 | 

6.     COMPREHENSIVE INCOME

Total comprehensive income for the three months ended June 30, 2003 and 2002
totaled $1,014,000 and $921,000, respectively. Comprehensive income is
comprised of net unrealized gains, net of taxes, on available-for-sale
investment securities, which were $214,000 and $201,000 for the three months
ended June 30, 2003 and 2002, respectively, along with net income.

Total comprehensive income for the six months ended June 30, 2003 and 2002
totaled $1,647,000 and $1,534,000, respectively. Comprehensive income is
comprised of net unrealized gains, net of taxes, on available-for-sale
investment securities, which were $131,000 and $115,000 for the six months
ended June

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30, 2003 and 2002, respectively, along with net income. At June 30, 2003 and
2002, accumulated other comprehensive income totaled $541,000 and $263,000,
respectively, and as reflected as a component shareholders equity.

7.     ACCOUNTING PRONOUCEMENTS

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). This
Statement is effective for financial instruments entered into or modified by
the Company after May 31, 2003, and otherwise is effective at the beginning of
the first interim period beginning after June 15, 2003. The Company has
previously accounted for its mandatorily redeemable cumulative trust preferred
securities in a manner consistent with the Statement and, in managements
opinion, adoption of this Statement did not have a material effect on the
Companys consolidated financial position or results of operations.

On April 30, 2003, the Financial Accounting Standards Board issued Statement
No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. This Statement amends and clarifies the accounting for derivative
instruments by providing guidance related to circumstances under which a
contract with a net investment meets the characteristics of a derivative as
discussed in Statement 133. The Statement also clarifies when a derivative
contains a financing component. The Statement is intended to result in more
consistent reporting for derivative contracts and must be applied prospectively
for contracts entered into or modified after June 30, 2003, except for hedging
relationships designated after June 30, 2003. In managements opinion,
adoption of this statement is not expected to have a material effect on the
Companys consolidated financial position or results of operations.

8.     STOCK-BASED COMPENSATION

At June 30, 2003, 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.

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:

|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |      |   |       |       |  |   |       |       | 
|-------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | - | -------------------- | --- | ------------------ | - | ---- | --- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                                                                                                                                       |                      |   | For the Three Months |     | For the Six Months
|                                                                                                                                       |                      |   | Ended June 30        |     | Ended June 30     
|                                                                                                                                       |                      |   |                      |     |                   
|                                                                                                                                       |                      |   | 2003                 |     | 2002               |   | 2003 |     | 2002
|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |     
|Net income as reported                                                                                                                 |                      | $ | 800                  |     |                    | $ | 720  |     |      | $ | 1,516 |       |  | $ | 1,419 |      
|Deduct: Total stock-based compensation
expense determined under the fair value
based method for all awards, net of
related tax effects |                      |   | 22                   |     |                    |   | 150  |     |      |   | 43    |       |  |   | 165   |      
|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |      |   |       |       |  |   |       |      
|                                                                                                                                       | Pro forma net income |   | $                    | 778 |                    |   | $    | 570 |      |   | $     | 1,473 |  |   | $     | 1,254 | 
|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |      |   |       |       |  |   |       |      
|Basic earnings per share  as reported                                                                                                 |                      | $ | 0.25                 |     |                    | $ | 0.23 |     |      | $ | 0.47  |       |  | $ | 0.45  |      
|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |      |   |       |       |  |   |       |      
|Basic earnings per share  pro forma                                                                                                   |                      | $ | 0.24                 |     |                    | $ | 0.18 |     |      | $ | 0.46  |       |  | $ | 0.39  |      
|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |      |   |       |       |  |   |       |      
|Diluted earnings per share  as reported                                                                                               |                      | $ | 0.24                 |     |                    | $ | 0.22 |     |      | $ | 0.46  |       |  | $ | 0.43  |      
|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |      |   |       |       |  |   |       |      
|Diluted earnings per share  pro forma                                                                                                 |                      | $ | 0.24                 |     |                    | $ | 0.17 |     |      | $ | 0.45  |       |  | $ | 0.38  |      
|                                                                                                                                       |                      |   |                      |     |                    |   |      |     |      |   |       |       |  |   |       |      

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The fair value of each option grant is estimated on the date of grant using an
option-pricing model with the following assumptions:

|                                               |  |                             |      |               |  |  |     | 
|---------------------------------------------- |  | --------------------------- | ---- | ------------- |  |  | --- | 
|                                               |  | For the three-months ended,
|                                               |  |                            
|                                               |  | June 30, 2003               |      | June 30, 2002
|                                               |  |                             |      |              
|Weighted average fair value of options granted |  | $                           | 4.23 |               |  |  | N/A | 
|Dividend yield                                 |  |                             | 1.3  | %             |  |  | N/A | 
|Expected volatility                            |  |                             | 17.3 | %             |  |  | N/A | 
|Risk-free interest rate                        |  |                             | 2.3  | %             |  |  | N/A | 
|Expected option life in years                  |  |                             | 5.0  |               |  |  | N/A | 

There were no option grants made during the three-month period ended June 30,
2002.

|                                               |  |                           |      |               |  |  |     | 
|---------------------------------------------- |  | ------------------------- | ---- | ------------- |  |  | --- | 
|                                               |  | For the six-months ended,
|                                               |  |                          
|                                               |  | June 30, 2003             |      | June 30, 2002
|                                               |  |                           |      |              
|Weighted average fair value of options granted |  | $                         | 4.06 |               |  |  | N/A | 
|Dividend yield                                 |  |                           | 1.4  | %             |  |  | N/A | 
|Expected volatility                            |  |                           | 17.3 | %             |  |  | N/A | 
|Risk-free interest rate                        |  |                           | 2.5  | %             |  |  | N/A | 
|Expected option life in years                  |  |                           | 5.0  |               |  |  | N/A | 

There were no option grants made during the six-month period ended June 30,
2002.

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##### Table of Contents



PART I  FINANCIAL INFORMATION




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Plumas Bancorp (the Company) is traded on the OTC Bulletin Board under the
ticker symbol PLBC. The following discussion and analysis sets forth certain
statistical information relating to the Company as of June 30, 2003 and
December 31, 2002, for the three months ended June 30, 2003 and June 30, 2002
and for the six months ended June 30, 2003 and June 30, 2002. This discussion
should be read in conjunction with the financial statements and related notes
included elsewhere in this Quarterly Report on Form 10-Q and the financial
statements and notes thereto included in Plumas Bancorps Annual Report filed
on Form 10-KSB for the year ended December 31, 2002. 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, are 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. Such risks and uncertainties include, but are
not limited to, those described in MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 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.

OVERVIEW

The Companys net income increased $97,000, or 6.8%, to $1,516,000 for the six
months ended June 30, 2003 from $1,419,000 for the same period in 2002. The
primary contributors to the increase in net income for the first six months of
2003 were a $621 thousand increase in net interest income, a $75 thousand
decrease in provision for loan losses and a $215 thousand increase in
non-interest income, partially offset by a $745 thousand increase in
non-interest expenses and a $69 thousand increase in income tax expense.

Total assets at June 30, 2003 were $325.7 million, virtually unchanged from the
$325.5 million at December 31, 2002. Although total assets remained relatively
static, the composition of assets changed slightly. The growth in the loan
portfolio was generally funded by declines in the investment portfolio. The
loan portfolio grew $7.4 million, or 3.6%, to $212.1 million while the
investment portfolio declined $7.8 million, or 12.7%, to $53.6 million during
this same period. Deposits also remained relatively static during this period
with ending balances of $292.5 million at June 30, 2003 versus $293.9 million
at December 31, 2002.

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The return on average assets was 0.95% for the six months ended June 30, 2003
compared to 1.03% for the same period in 2002. The return on average equity
was 12.7% for the six months ended June 30, 2003 compared to 13.6% for the same
period in 2002. Although the Companys earnings increased during the first six
months of 2003 when compared to the same period in 2002, the Companys rapid
growth during this same time-frame resulted in declines in the return on
average asset and equity ratios. Total average assets for the six months ended
June 30, 2003 increased $42.6 million, or 15%, from the same period in 2002.
Total average equity for the six months ended June 30, 2003 increased $2.9
million, or 14%, from the same period in 2002.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003

Net interest income before provision for loan losses.Net interest income, on a nontax-equivalent basis, was $7.6 million for the six months ended June 30,
2003, an increase of $621,000, or 9%, from $7.0 million for the same period in
2002. The increase in net interest income was primarily attributed to declines
in rates paid on the Companys deposits combined with volume increases in the
Companys average loan balances, partially offset by declines in the yield on
the Companys interest-earning assets.

Interest income increased $222,000, or 2%, to $9.2 million for the six months
ended June 30, 2003, up slightly from $9.0 million for the same period in 2002.
The increase in interest income was primarily attributed to volume increases
in loans and investment balances largely offset by falling yields on loan and
investment balances. The Companys average loan balances were $212 million for
the six months ended June 30, 2003, up $21 million, or 11%, from the $191
million for the same period in 2002. Significantly offsetting the benefits of
the increased loan volume was the impact of falling interest rates on the
Companys loan portfolio. The Companys average loan yield was 7.77% for the
six months ended June 30, 2003, down 52 basis points, or 6%, from the 8.29% for
the same period in 2002.

Interest expense decreased $399,000, or 19%, to $1.7 million for the six months
ended June 30, 2003, down from $2.1 million for the same period in 2002. The
decrease in interest expense was primarily attributed to rate decreases on time
deposits partially offset by interest expense on the Companys trust preferred
securities issued in September of 2002. The Companys average rate paid on
time deposits was 2.39% for the six months ended June 30, 2003, down 98 basis
points, or 29%, from the 3.37% paid for the same period in 2002.

The net interest margin for the six months ended June 30, 2003 decreased 28
basis points, or 5%, to 5.40%, down from 5.68% for the same period in 2002.
Similar to most of the banking industry, the Companys net interest margin
continues to be challenged by the impact of the numerous decreases to the
Federal funds rate which have occurred over the past 30 months. The most
recent Federal funds rate cut occurred in June 2003 and amounted to 25 basis
points. This latest rate cut resulted in the Federal funds target rate hitting
the historic low rate of 1%. Maintaining the spread between loan yields and
the effective rates paid on deposits has become increasingly difficult as
deposit rates may be near the bottom of consumer tolerance and customers may
seek higher yielding alternatives outside the Bank.

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The following table presents for the six-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. Nonaccrual loans are included in the calculation of average loans
while nonaccrued interest thereon is excluded from the computation of yields
earned:

|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |      |      |  
|------------------------------------------ | ------------------------ | ---------------------------------- |  | -------------------------------------- |  | -------------------------------------- | ------ | ------- | ------- | --------------- | ----- | -------------- | ----- | ------ | ---- | ---- | ---- | - |  |  |  |  | ------ | ------- | ------- | - | ----- | ----- | ----- |  | ---- | ---- | ---- | -
|                                           |                          |                                    |  | For the Six Months Ended June 30, 2003 |  | For the Six Months Ended June 30, 2002
|                                           |                          |                                    |  |                                        |  |                                       
|                                           |                          |                                    |  | Average Balance                        |  | Interest                               |        | Yield/  |         | Average Balance |       | Interest       |       | Yield/
|                                           |                          |                                    |  | (in thousands)                         |  | (in thousands)                         |        | Rate    |         | (in thousands)  |       | (in thousands) |       | Rate  
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |       
|Interest-earning assets:                   |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|                                           | Loans(1)(2)              |                                    |  |                                        |  |                                        | $      | 212,590 |         |                 | $     | 8,187          |       |        |      | 7.77 | %    |   |  |  |  |  | $      | 191,385 |         |   | $     | 7,872 |       |  |      | 8.29 | %   
|                                           | Investment securities(1) |                                    |  |                                        |  |                                        |        | 61,867  |         |                 |       | 1,004          |       |        |      | 3.27 | %    |   |  |  |  |  |        | 43,291  |         |   |       | 1,047 |       |  |      | 4.88 | %   
|                                           | Federal funds sold       |                                    |  |                                        |  |                                        |        | 9,344   |         |                 |       | 54             |       |        |      | 1.17 | %    |   |  |  |  |  |        | 12,778  |         |   |       | 104   |       |  |      | 1.64 | %   
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|                                           |                          | Total earning assets               |  |                                        |  |                                        |        |         | 283,801 |                 |       |                | 9,245 |        |      |      | 6.57 | % |  |  |  |  |        |         | 247,454 |   |       |       | 9,023 |  |      |      | 7.35 | %
|Cash and demand deposits with banks        |                          |                                    |  |                                        |  |                                        | 19,655 |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  | 15,278 |         |         |   |       |       |       |  |      |     
|Other assets                               |                          |                                    |  |                                        |  |                                        | 17,072 |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  | 15,212 |         |         |   |       |       |       |  |      |     
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|                                           |                          | Total assets                       |  |                                        |  |                                        |        | $       | 320,528 |                 |       |                |       |        |      |      |      |   |  |  |  |  |        | $       | 277,944 |   |       |       |       |  |      |      |      |  
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|Interest-bearing liabilities:              |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|                                           | NOW deposits             |                                    |  |                                        |  |                                        | $      | 33,510  |         |                 |       | 48             |       |        |      | 0.29 | %    |   |  |  |  |  | $      | 31,742  |         |   |       | 57    |       |  |      | 0.36 | %   
|                                           | Money market deposits    |                                    |  |                                        |  |                                        |        | 57,402  |         |                 |       | 289            |       |        |      | 1.02 | %    |   |  |  |  |  |        | 48,255  |         |   |       | 365   |       |  |      | 1.53 | %   
|                                           | Savings deposits         |                                    |  |                                        |  |                                        |        | 45,302  |         |                 |       | 191            |       |        |      | 0.85 | %    |   |  |  |  |  |        | 36,675  |         |   |       | 206   |       |  |      | 1.13 | %   
|                                           | Time deposits            |                                    |  |                                        |  |                                        |        | 82,242  |         |                 |       | 974            |       |        |      | 2.39 | %    |   |  |  |  |  |        | 85,065  |         |   |       | 1,420 |       |  |      | 3.37 | %   
|                                           | Other borrowings(3)      |                                    |  |                                        |  |                                        |        | 6,184   |         |                 |       | 149            |       |        |      | 4.86 | %    |   |  |  |  |  |        | 72      |         |   |       | 2     |       |  |      | 5.60 | %   
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|                                           |                          | Total interest-bearing liabilities |  |                                        |  |                                        |        |         | 224,640 |                 |       |                | 1,651 |        |      |      | 1.48 | % |  |  |  |  |        |         | 201,809 |   |       |       | 2,050 |  |      |      | 2.05 | %
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|Non-interest bearing deposits              |                          |                                    |  |                                        |  |                                        | 69,544 |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  | 52,866 |         |         |   |       |       |       |  |      |     
|Other liabilities                          |                          |                                    |  |                                        |  |                                        | 2,329  |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  | 2,168  |         |         |   |       |       |       |  |      |     
|Shareholders equity                       |                          |                                    |  |                                        |  |                                        | 24,015 |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  | 21,101 |         |         |   |       |       |       |  |      |     
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     
|                                           |                          | Total liabilities & equity         |  |                                        |  |                                        |        | $       | 320,528 |                 |       |                |       |        |      |      |      |   |  |  |  |  |        | $       | 277,944 |   |       |       |       |  |      |      |      |  
|Cost of funding interest-earning assets(4) |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        | 1.17 | %    |      |   |  |  |  |  |        |         |         |   |       |       |       |  | 1.67 | %   
|Net interest income and margin             |                          |                                    |  |                                        |  |                                        |        |         |         | $               | 7,594 |                |       |        | 5.40 | %    |      |   |  |  |  |  |        |         |         | $ | 6,973 |       |       |  | 5.68 | %   
|                                           |                          |                                    |  |                                        |  |                                        |        |         |         |                 |       |                |       |        |      |      |      |   |  |  |  |  |        |         |         |   |       |       |       |  |      |     



---

|(1) |  | Not computed on a tax-equivalent basis.                                                                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Loan fees included in loan interest income for the six-month periods
ended June 30, 2003 and 2002 amounted to $360 and $386, respectively.                                                    
|   
|(3) |  | For the purpose of this schedule the interest expense related to the
Companys junior subordinated debentures is included in other borrowings.
These debentures were issued in September 2002.
|   
|(4) |  | Total interest expense divided by the average balance of total earning
assets                                                                                                                 

12



---



##### Table of Contents



The following table sets forth changes in interest income and interest expense,
for the six-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:

|                              |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |      |      |  
|----------------------------- | --------------------- | ---------------------- | ----- | -------------------------------------------- | ----- | -------- | ---- | -------------- | ---- | ----- | ---- | --- | ---- | - | --- | ---- | ---- | -
|                              |                       |                        |       | 2003 over 2002 change in net interest income
|                              |                       |                        |       |                                             
|                              |                       |                        |       |                                              |       |          |      | (in thousands) |      |       |      |    
|                              |                       |                        |       | Volume (1)                                   |       | Rate (2) |      | Mix (3)        |      | Total
|                              |                       |                        |       |                                              |       |          |      |                |      |      
|Interest-earning assets:      |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |     
|Loans                         |                       | $                      | 873   |                                              |       | $        | (502 | )              |      | $     | (56  | )   |      | $ | 315 |     
|Investment securities         |                       |                        | 449   |                                              |       |          | (344 | )              |      |       | (148 | )   |      |   | (43 | )   
|Federal funds sold            |                       |                        | (28   | )                                            |       |          | (30  | )              |      |       | 8    |     |      |   | (50 | )   
|                              |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |     
|                              |                       | Total interest income  |       |                                              | 1,294 |          |      |                | (876 | )     |      |     | (196 | ) |     |      | 222  |  
|                              |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |     
|Interest-bearing liabilities: |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |     
|                              | NOW deposits          |                        |       | 4                                            |       |          |      | (12            | )    |       |      | (1  | )    |   |     | (9   | )   
|                              | Money market deposits |                        |       | 69                                           |       |          |      | (122           | )    |       |      | (23 | )    |   |     | (76  | )   
|                              | Savings deposits      |                        |       | 48                                           |       |          |      | (51            | )    |       |      | (12 | )    |   |     | (15  | )   
|                              | Time deposits         |                        |       | (47                                          | )     |          |      | (413           | )    |       |      | 14  |      |   |     | (446 | )   
|                              | Other borrowings      |                        |       | 170                                          |       |          |      |               |      |       |      | (23 | )    |   |     | 147  |     
|                              |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |     
|                              |                       | Total interest expense |       |                                              | 244   |          |      |                | (598 | )     |      |     | (45  | ) |     |      | (399 | )
|                              |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |     
|Net interest income           |                       | $                      | 1,050 |                                              |       | $        | (278 | )              |      | $     | (151 | )   |      | $ | 621 |     
|                              |                       |                        |       |                                              |       |          |      |                |      |       |      |     |      |   |     |     



---

|(1) |  | The volume change in net interest income represents the change in average
balance divided by the 2002 rate.     
|--- |  | ----------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The rate change in net interest income represents the change in rate
divided by the 2002 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 $450,000 in provision for loan
losses for the six months ended June 30, 2003, down $75,000, or 14%, from the
$525,000 provision for the same period in 2002. The Company 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 six months ended June 30, 2003, total
non-interest income increased $215,000, or 15%, to $1.7 million, up from $1.5
million for the comparable period in 2002. The increase in non-interest income
is primarily due to increases in the number of fee generating accounts, the
restructuring of the Banks service charge fee schedule during the first
quarter of 2002, gains on the sale of investment securities, income from
mortgage loan activity and gains on the sale of mortgage loans.

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 six
months ended June 30, 2003, non-interest expense increased $745,000, or 13%, to
$6.3 million, up from $5.6 million for the comparable period in 2002.

13



---



##### Table of Contents



Salaries and employee benefits increased $456,000, or 15%, over the same
six-month period last year. This increase was due primarily to the continued
expansion of the Companys centralized lending function, staffing additions to
manage the overall growth and expansion of the Company and increased employee
benefit costs related to health-care and life insurance.

Occupancy and equipment increased $284,000, or 35%, over the same six-month
period last year. This increase was due primarily to additional depreciation
and operating costs associated with new network security and monitoring
systems, upgrades to the networks operating system, enhancements to the item
processing system, installation of a new automated teller platform system, the
Companys new centralized lending facility, remodeling costs associated with
the Companys administrative building and leasing cost on the Tahoe City branch
that is scheduled to be opened in later part of 2003.

The following table describes the components of non-interest expense for the
six-month periods ending June 30, 2003 and 2002.

|                               |                            |   |                    |       |      |   |       |       | 
|------------------------------ | -------------------------- | - | ------------------ | ----- | ---- | - | ----- | ----- | 
|                               |                            |   | Unaudited         
|                               |                            |   | For the Six Months
|                               |                            |   | Ended June 30     
|                               |                            |   |                   
|                               |                            |   | 2003               |       | 2002
|                               |                            |   |                    |       |     
|Salaries and employee benefits |                            | $ | 3,495              |       |      | $ | 3,039 |      
|Occupancy and equipment        |                            |   | 1,105              |       |      |   | 821   |      
|Professional fees              |                            |   | 285                |       |      |   | 336   |      
|Business development           |                            |   | 201                |       |      |   | 186   |      
|Armored car and courier        |                            |   | 165                |       |      |   | 156   |      
|Telephone                      |                            |   | 158                |       |      |   | 172   |      
|Loan expenses                  |                            |   | 144                |       |      |   | 110   |      
|Stationery and supplies        |                            |   | 136                |       |      |   | 173   |      
|Advertising and promotion      |                            |   | 133                |       |      |   | 132   |      
|Postage                        |                            |   | 128                |       |      |   | 108   |      
|Director compensation          |                            |   | 126                |       |      |   | 106   |      
|Other expense                  |                            |   | 246                |       |      |   | 238   |      
|                               |                            |   |                    |       |      |   |       |      
|                               | Total non-interest expense |   | $                  | 6,322 |      |   | $     | 5,577 | 
|                               |                            |   |                    |       |      |   |       |      

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2003

Net interest income before provision for loan losses.Net interest income, on
a nontax-equivalent basis, was $3.9 million for the three months ended June 30,
2003, an increase of $316,000, or 9%, from $3.6 million for the same period in
2002. The increase in net interest income was primarily attributed to declines
in rates paid on the Companys deposits combined with volume increases in the
Companys average loan and investment balances, partially offset by declines in
the yield on the Companys interest-earning assets.

Interest income increased $121,000 or 3%, to $4.7 million for the three months
ended June 30, 2003, up slightly from $4.6 million for the same period in 2002.
The increase in interest income was primarily attributed to volume increases
in loans and investment balances largely offset by falling yields on loan and
investment balances. The Companys average loan balances were $216 million for
the three months ended June 30, 2003, up $20 million, or 10%, from the $196
million for the same period in 2002. Significantly offsetting the benefits of
the increased loan volume was the impact of falling interest rates on the
Companys loan portfolio. The Companys average loan yield was 7.81% for the
three months ended June 30, 2003, down 36 basis points, or 4%, from the 8.17%
for the same period in 2002.

Interest expense decreased $195,000, or 20%, to $785,000 for the three months
ended June 30, 2003, down from $980,000 for the same period in 2002. The
decrease in interest expense was primarily attributed to rate decreases for
time deposits partially offset by interest expense on the Companys trust
preferred securities issued in September of 2002. The Companys average rate
paid on time deposits was 2.28% for

14



---



##### Table of Contents



the three months ended June 30, 2003, down 86 basis points, or 27%, from the
3.14% paid for the same period in 2002.

The net interest margin for the three months ended June 30, 2003 decreased 21
basis points, or 4%, to 5.55%, down from 5.76% for the same period in 2002.

15



---



##### Table of Contents



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. 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 June 30, 2003 |         | For the Three Months Ended June 30, 2002
|                                            |                           |                                    |        |                                          |         |                                         
|                                            |                           |                                    |        | Average Balance                          |         | Interest                                 |       | Yield/ |       | Average Balance |      | Interest       |      | Yield/
|                                            |                           |                                    |        | (in thousands)                           |         | (in thousands)                           |       | Rate   |       | (in thousands)  |      | (in thousands) |      | Rate  
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |       
|Interest-earning assets:                    |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|                                            | Loans (1) (2)             |                                    | $      | 216,312                                  |         |                                          | $     | 4,210  |       |                 |      | 7.81           | %    |        | $      | 196,398 |         |   | $     | 3,998 |       |  |      | 8.17  | %   
|                                            | Investment securities (1) |                                    |        | 59,058                                   |         |                                          |       | 462    |       |                 |      | 3.14           | %    |        |        | 42,714  |         |   |       | 529   |       |  |      | 4.97  | %   
|                                            | Federal funds sold        |                                    |        | 7,061                                    |         |                                          |       | 22     |       |                 |      | 1.25           | %    |        |        | 11,253  |         |   |       | 46    |       |  |      | 1.64  | %   
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|                                            |                           | Total earning assets               |        |                                          | 282,431 |                                          |       |        | 4,694 |                 |      |                | 6.67 | %      |        |         | 250,365 |   |       |       | 4,573 |  |      |       | 7.33 | %
|Cash and demand deposits with banks         |                           |                                    | 20,129 |                                          |         |                                          |       |        |       |                 |      |                |      |        | 13,727 |         |         |   |       |       |       |  |      |      
|Other assets                                |                           |                                    | 16,358 |                                          |         |                                          |       |        |       |                 |      |                |      |        | 16,252 |         |         |   |       |       |       |  |      |      
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|                                            |                           | Total assets                       |        | $                                        | 318,918 |                                          |       |        |       |                 |      |                |      |        |        | $       | 280,344 |   |       |       |       |  |      |       |      |  
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|Interest-bearing liabilities:               |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|                                            | NOW deposits              |                                    | $      | 33,620                                   |         |                                          |       | 24     |       |                 |      | 0.29           | %    |        | $      | 31,806  |         |   |       | 27    |       |  |      | 0.34  | %   
|                                            | Money market deposits     |                                    |        | 55,346                                   |         |                                          |       | 130    |       |                 |      | 0.94           | %    |        |        | 49,031  |         |   |       | 186   |       |  |      | 1.52  | %   
|                                            | Savings deposits          |                                    |        | 45,363                                   |         |                                          |       | 93     |       |                 |      | 0.82           | %    |        |        | 37,146  |         |   |       | 105   |       |  |      | 1.13  | %   
|                                            | Time deposits             |                                    |        | 81,845                                   |         |                                          |       | 466    |       |                 |      | 2.28           | %    |        |        | 84,221  |         |   |       | 660   |       |  |      | 3.14  | %   
|                                            | Other borrowings (3)      |                                    |        | 6,000                                    |         |                                          |       | 72     |       |                 |      | 4.81           | %    |        |        | 76      |         |   |       | 2     |       |  |      | 10.56 | %   
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|                                            |                           | Total interest-bearing liabilities |        |                                          | 222,174 |                                          |       |        | 785   |                 |      |                | 1.42 | %      |        |         | 202,280 |   |       |       | 980   |  |      |       | 1.94 | %
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|Non-interest bearing deposits               |                           |                                    | 70,062 |                                          |         |                                          |       |        |       |                 |      |                |      |        | 54,971 |         |         |   |       |       |       |  |      |      
|Other liabilities                           |                           |                                    | 2,420  |                                          |         |                                          |       |        |       |                 |      |                |      |        | 2,094  |         |         |   |       |       |       |  |      |      
|Shareholders equity                        |                           |                                    | 24,262 |                                          |         |                                          |       |        |       |                 |      |                |      |        | 20,999 |         |         |   |       |       |       |  |      |      
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|                                            |                           | Total liabilities & equity         |        | $                                        | 318,918 |                                          |       |        |       |                 |      |                |      |        |        | $       | 280,344 |   |       |       |       |  |      |       |      |  
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      
|Cost of funding interest-earning assets (4) |                           |                                    |        |                                          |         |                                          |       |        |       |                 | 1.11 | %              |      |        |        |         |         |   |       |       |       |  | 1.57 | %    
|Net interest income and margin              |                           |                                    |        |                                          |         | $                                        | 3,909 |        |       |                 | 5.55 | %              |      |        |        |         |         | $ | 3,593 |       |       |  | 5.76 | %    
|                                            |                           |                                    |        |                                          |         |                                          |       |        |       |                 |      |                |      |        |        |         |         |   |       |       |       |  |      |      



---

|(1) |  | Not computed on a tax-equivalent basis.                                                                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Loan fees included in loan interest income for the three-month periods
ended June 30, 2003 and 2002 amounted to $207 and $174, respectively.                                                  
|   
|(3) |  | For the purpose of this schedule the interest expense related to the
Companys junior subordinated debentures is included in other borrowings.
These debentures were issued in September 2002.
|   
|(4) |  | Total interest expense divided by the average balance of total earning
assets                                                                                                                 

16



---



##### 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:

|                              |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |      |      |  
|----------------------------- | --------------------- | ---------------------- | --- | -------------------------------------------- | --- | -------- | ---- | -------------- | ---- | ----- | --- | --- | --- | - | --- | ---- | ---- | -
|                              |                       |                        |     | 2003 over 2002 change in net interest income
|                              |                       |                        |     |                                             
|                              |                       |                        |     |                                              |     |          |      | (in thousands) |      |       |     |    
|                              |                       |                        |     | Volume (1)                                   |     | Rate (2) |      | Mix (3)        |      | Total
|                              |                       |                        |     |                                              |     |          |      |                |      |      
|Interest-earning assets:      |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |     
|Loans                         |                       | $                      | 405 |                                              |     | $        | (175 | )              |      | $     | (18 | )   |     | $ | 212 |     
|Investment securities         |                       |                        | 202 |                                              |     |          | (195 | )              |      |       | (74 | )   |     |   | (67 | )   
|Federal funds sold            |                       |                        | (17 | )                                            |     |          | (11  | )              |      |       | 4   |     |     |   | (24 | )   
|                              |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |     
|                              |                       | Total interest income  |     |                                              | 590 |          |      |                | (381 | )     |     |     | (88 | ) |     |      | 121  |  
|                              |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |     
|Interest-bearing liabilities: |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |     
|                              | NOW deposits          |                        |     | 2                                            |     |          |      | (5             | )    |       |     |    |     |   |     | (3   | )   
|                              | Money market deposits |                        |     | 24                                           |     |          |      | (71            | )    |       |     | (9  | )   |   |     | (56  | )   
|                              | Savings deposits      |                        |     | 23                                           |     |          |      | (29            | )    |       |     | (6  | )   |   |     | (12  | )   
|                              | Time deposits         |                        |     | (19                                          | )   |          |      | (180           | )    |       |     | 5   |     |   |     | (194 | )   
|                              | Other borrowings      |                        |     | 156                                          |     |          |      | (1             | )    |       |     | (85 | )   |   |     | 70   |     
|                              |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |     
|                              |                       | Total interest expense |     |                                              | 186 |          |      |                | (286 | )     |     |     | (95 | ) |     |      | (195 | )
|                              |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |     
|Net interest income           |                       | $                      | 404 |                                              |     | $        | (95  | )              |      | $     | 7   |     |     | $ | 316 |     
|                              |                       |                        |     |                                              |     |          |      |                |      |       |     |     |     |   |     |     



---

|(1) |  | The volume change in net interest income represents the change in average
balance divided by the 2002 rate.     
|--- |  | ----------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The rate change in net interest income represents the change in rate
divided by the 2002 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 $225,000 in provision for loan
losses for the three months ended June 30, 2003, down $75,000, or 25%, from the
$300,000 provision for the same period in 2002. The Company 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 June 30, 2003, total
non-interest income increased $142,000, or 19%, to $876,000, up from $734,000
for the comparable period in 2002. The increase in non-interest income is
primarily due to gains on the sale of investment securities, income from
mortgage loan activity, alternative investment fee income and dividend income
on Federal Home Loan Bank Stock holdings.

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 June 30, 2003, non-interest expense increased $405,000, or 14%, to
$3.2 million, up from $2.8 million for the comparable period in 2002.

17



---



##### Table of Contents



Salaries and employee benefits increased $246,000, or 17%, over the same
three-month period last year. This increase was due primarily to the expansion
of the Companys centralized lending function, staffing additions to manage the
overall growth and expansion of the Company and increased employee benefit
costs related to health-care and life insurance.

Occupancy and equipment increased $168,000, or 40%, over the same three-month
period last year. This increase was due primarily to additional depreciation
and operating costs associated with new network security and monitoring
systems, upgrades to the networks operating system, enhancements to the item
processing system, the Companys new centralized lending facility, remodeling
costs associated with the administrative building and leasing cost on the
soon-to-be opened branch in Tahoe City.

The following table describes the components of non-interest expense for the
three-month periods ending June 30, 2003 and 2002.

|                               |                            |   |                      |       |      |   |       |       | 
|------------------------------ | -------------------------- | - | -------------------- | ----- | ---- | - | ----- | ----- | 
|                               |                            |   | Unaudited           
|                               |                            |   | For the Three Months
|                               |                            |   | Ended June 30       
|                               |                            |   |                     
|                               |                            |   | 2003                 |       | 2002
|Salaries and employee benefits |                            | $ | 1,724                |       |      | $ | 1,478 |      
|Occupancy and equipment        |                            |   | 588                  |       |      |   | 420   |      
|Professional fees              |                            |   | 145                  |       |      |   | 187   |      
|Business development           |                            |   | 119                  |       |      |   | 110   |      
|Advertising and promotion      |                            |   | 89                   |       |      |   | 87    |      
|Armored car and courier        |                            |   | 86                   |       |      |   | 80    |      
|Loan expenses                  |                            |   | 84                   |       |      |   | 63    |      
|Stationery and supplies        |                            |   | 75                   |       |      |   | 87    |      
|Telephone                      |                            |   | 68                   |       |      |   | 97    |      
|Director compensation          |                            |   | 63                   |       |      |   | 57    |      
|Postage                        |                            |   | 62                   |       |      |   | 49    |      
|Other expense                  |                            |   | 134                  |       |      |   | 117   |      
|                               |                            |   |                      |       |      |   |       |      
|                               | Total non-interest expense |   | $                    | 3,237 |      |   | $     | 2,832 | 
|                               |                            |   |                      |       |      |   |       |      

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 the area it serves. 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
offer diversification as to industries and types of businesses, thus limiting
material exposure in any industry concentrations. 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 June 30, 2003,
agricultural loans grew to 13.5% of the loan portfolio versus 12.3% at December
31, 2002. Real estate loans increased slightly to 40.1% of the loan portfolio
versus 39.1% at December 31, 2002. Commercial loans decreased slightly to
24.5% of the portfolio as of June 30, 2003 as compared to 25.3% at December 31,
2002. Consumer loans also decreased to 21.9% of the loan portfolio at June 30,
2003 compared to 23.3% at December 31, 2002.

Nonperforming assets.Nonperforming loans increased $148,000, or 9%, to
$1,859,000 as of June 30, 2003 as compared to $1,711,000 as of December 31,
2002. However as a result of the overall increase in loan balances,
nonperforming loans as a percent of total loans remained unchanged at 0.86% as
of both June 30, 2003 and December 31, 2002. Nonperforming assets as a percent
of total assets were 0.61% as of June 30, 2003 up slightly from 0.59% at
December 31, 2002. The slight increase in this ratio was the result of
nonperforming loan balances increasing while assets in total remained
relatively static. Slightly offsetting the increase in nonperforming loan
balances was the sale of two of the Companys other real estate property
holdings with total book balances of $125,000 during 2003.

18



---



##### Table of Contents



Analysis of allowance for loan losses.Net charge-offs during the six months
ended June 30, 2003 totaled $280,000, or 0.13% of total loans, compared to
$193,000, or 0.10% of total loans, for the comparable period in 2002. The
allowance for loan losses stood at 1.23% of total loans as of June 30, 2003,
versus 1.19% of total loans as of December 31, 2002. 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.

The following table provides certain information for the six-month periods
indicated with respect to the Companys allowance for loan losses as well as
charge-off and recovery activity.

|                                                             |                             |   |       |     |      |   |       |     | 
|------------------------------------------------------------ | --------------------------- | - | ----- | --- | ---- | - | ----- | --- | 
|                                                             |                             |   | 2003  |     | 2002
|                                                             |                             |   |       |     |     
|Balance at January 1,                                        |                             | $ | 2,471 |     |      | $ | 2,153 |    
|                                                             |                             |   |       |     |      |   |       |    
|Charge-offs:                                                 |                             |   |       |     |      |   |       |    
|                                                             | Commercial and agricultural |   |       | 74  |      |   |       | 127 | 
|                                                             | Real estate mortgage        |   |       | 26  |      |   |       |    | 
|                                                             | Real estate construction    |   |       |    |      |   |       |    | 
|                                                             | Consumer                    |   |       | 282 |      |   |       | 103 | 
|                                                             |                             |   |       |     |      |   |       |    
|Total charge-offs                                            |                             |   | 382   |     |      |   | 230   |    
|                                                             |                             |   |       |     |      |   |       |    
|Recoveries:                                                  |                             |   |       |     |      |   |       |    
|                                                             | Commercial and agricultural |   |       | 14  |      |   |       | 4   | 
|                                                             | Real estate mortgage        |   |       |    |      |   |       |    | 
|                                                             | Real estate construction    |   |       |    |      |   |       |    | 
|                                                             | Consumer                    |   |       | 88  |      |   |       | 33  | 
|                                                             |                             |   |       |     |      |   |       |    
|Total recoveries                                             |                             |   | 102   |     |      |   | 37    |    
|                                                             |                             |   |       |     |      |   |       |    
|Net charge-offs                                              |                             |   | 280   |     |      |   | 193   |    
|                                                             |                             |   |       |     |      |   |       |    
|Provision for loan losses                                    |                             |   | 450   |     |      |   | 525   |    
|                                                             |                             |   |       |     |      |   |       |    
|Balance at June 30,                                          |                             | $ | 2,641 |     |      | $ | 2,486 |    
|                                                             |                             |   |       |     |      |   |       |    
|Net charge-offs during the six-month period to average loans |                             |   | 0.13  | %   |      |   | 0.10  | %  
|Allowance for loan losses to total Loans                     |                             |   | 1.23  | %   |      |   | 1.23  | %  

Investment securities and Federal funds sold.Total investment securities and
Federal funds sold decreased $9.0 million, or 12%, to $67.7 million as of June
30, 2003, down from $76.7 million at December 31, 2002. Proceeds from maturing
direct obligations of U.S. agencies and corporate bonds, along with the
proceeds from the sale of short-term direct obligations of U.S. agencies were
used to fund the Companys continued loan growth.

The Companys investment in U.S. Treasury securities and direct obligations of
U.S. agencies decreased slightly to 83.3% of the investment portfolio at June
30, 2003, versus 87.3% at December 31, 2002. The Companys investment in
corporate bonds rose to 10.6% of the investment portfolio at June 30, 2003,
versus 7.3% at December 31, 2002. The remainder of the Companys investment
portfolio consists of municipal obligations.

19



---



##### Table of Contents



Deposits.Total deposits were $292.5 million as of June 30, 2003, a decrease
of $1.4 million, or less than 1%, from the December 31, 2002 balance of $293.9
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-interest bearing demand deposits and interest checking deposits
remained unchanged at 36.7% of total deposits as of June 30, 2003 and December
31, 2002. Money market and savings deposits increased slightly to 35.5% of
total deposits as of June 30, 2003 compared to 35.1% as of December 31, 2002.
Time deposits decreased slightly to 27.8% of total deposits as of June 30,
2003, versus 28.2% as of December 31, 2002.

CAPITAL RESOURCES

Shareholders equity as of June 30, 2003 increased $1.4 million, or 6%, to
$24.7 million from $23.3 million as of December 31, 2002. This increase was
primarily due to the retention of current period earnings partially offset by a
$387 thousand semi-annual cash dividend payment in the second quarter of 2003.

The Bank is subject to certain regulatory capital requirements administered by
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 Banks 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 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 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 Bank met all its capital adequacy requirements as of June 30, 2003.

|                  |  |                |        |         |  |             |      |   |  |  |     |  
|----------------- |  | -------------- | ------ | ------- |  | ----------- | ---- | - |  |  | --- | -
|                  |  | Plumas Bancorp
|                  |  |               
|                  |  | Actual         |        | Minimum
|                  |  |                |        | Capital
|                  |  | Capital        |        | Ratio   |  | Requirement
|                  |  |                |        |         |  |            
|Leverage          |  | $              | 29,510 |         |  |             | 9.3  | % |  |  | 4.0 | %
|Tier 1 Risk-Based |  |                | 29,510 |         |  |             | 11.7 | % |  |  | 4.0 | %
|Total Risk-Based  |  |                | 32,152 |         |  |             | 12.7 | % |  |  | 8.0 | %

|                  |  |                |        |         |  |             |      |   |  |  |     |  
|----------------- |  | -------------- | ------ | ------- |  | ----------- | ---- | - |  |  | --- | -
|                  |  | Plumas Bancorp
|                  |  |               
|                  |  | Actual         |        | Minimum
|                  |  |                |        | Capital
|                  |  | Capital        |        | Ratio   |  | Requirement
|                  |  |                |        |         |  |            
|Leverage          |  | $              | 26,017 |         |  |             | 8.2  | % |  |  | 4.0 | %
|Tier 1 Risk-Based |  |                | 26,017 |         |  |             | 10.3 | % |  |  | 4.0 | %
|Total Risk-Based  |  |                | 28,658 |         |  |             | 11.3 | % |  |  | 8.0 | %

20



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##### Table of Contents



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, in
addition to Federal Funds sold, 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.

Customer deposits are the Companys primary source of funds. Those funds are
held in various forms with varying maturities. The Company does not accept
brokered deposits. During the first six months of 2003, deposits declined $1.4
million, or less than 1%, from the December 31, 2002 balance of $293.9 million.
Loan growth during the first half of 2003 was funded through reductions in
investment securities and Federal funds sold rather than increases in deposit balances. 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 summer and fall
months.

The Companys securities portfolio, Federal funds sold, and cash and due from
banks serve as the primary sources of liquidity, providing adequate funding for
loans during periods of high loan demand. During periods of decreased lending,
funds obtained from the maturing or sale of investments, 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.

21



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##### Table of Contents






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, other than those
which possess a short term to maturity. Since virtually all of the Companys
interest earning assets and all of the Companys interest bearing liabilities
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.

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 profile for the six months ended June 30, 2003 compared to December
31, 2002 as discussed in the Companys 2002 annual report and form 10-KSB.

22



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##### Table of Contents






ITEM 4. CONTROLS AND PROCEDURES

The Companys Chief Executive Officer, Chief Financial Officer and Controller,
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14(c)), have concluded that the Companys disclosure controls and
procedures are adequate and effective for purposes of Rule 13a14(c) 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.




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. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The voting results of the registrants annual meeting of the shareholders held
on May 21, 2003 are as follows:

Proposal: Election of Directors

On the proposal to elect Directors of Plumas Bancorp, Managements nominees
were elected as Directors of Plumas Bancorp for the period corresponding to the
class designated and until their successors are duly elected and qualified.
The voting results were as follows:

|                      |  |                   |           |                 |  |                   |       |                  |  |  |         |  |  |  |   | 
|--------------------- |  | ----------------- | --------- | --------------- |  | ----------------- | ----- | ---------------- |  |  | ------- |  |  |  | - | 
|                      |  |                   |           |                 |  | Votes Withheld or |       |                  |  |  |         |  |  | 
|Nominee               |  | Votes For Nominee |           | Against Nominee |  | Abstentions       |       | Broker Non-Votes
|                      |  |                   |           |                 |  |                   |       |                 
|Alvin G. Blickenstaff |  |                   | 2,719,028 |                 |  |                   | 748   |                  |  |  | 493,882 |  |  |  | 0 | 
|Jerry V. Kehr         |  |                   | 2,715,701 |                 |  |                   | 4,075 |                  |  |  | 493,882 |  |  |  | 0 | 
|William E. Elliott    |  |                   | 2,719,028 |                 |  |                   | 748   |                  |  |  | 493,882 |  |  |  | 0 | 
|Gerald W. Fletcher    |  |                   | 2,719,028 |                 |  |                   | 748   |                  |  |  | 493,882 |  |  |  | 0 | 
|Arthur C. Grohs       |  |                   | 2,719,028 |                 |  |                   | 748   |                  |  |  | 493,882 |  |  |  | 0 | 
|Christine McArthur    |  |                   | 2,710,984 |                 |  |                   | 8,792 |                  |  |  | 493,882 |  |  |  | 0 | 
|Terrance J. Reeson    |  |                   | 2,719,028 |                 |  |                   | 748   |                  |  |  | 493,882 |  |  |  | 0 | 
|Walter Sphar          |  |                   | 2,715,701 |                 |  |                   | 4,075 |                  |  |  | 493,882 |  |  |  | 0 | 
|Thomas Watson         |  |                   | 2,719,028 |                 |  |                   | 748   |                  |  |  | 493,882 |  |  |  | 0 | 
|Daniel E. West        |  |                   | 2,719,028 |                 |  |                   | 748   |                  |  |  | 493,882 |  |  |  | 0 | 

23



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##### Table of Contents






ITEM 5. OTHER INFORMATION

None.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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.                                  
|      |  |                                                                                                                                                                                                                           
|10.2  |  | Incentive Stock Option Agreement as amended of William E. Elliott dated November
18, 1998, is included as Exhibit 10.2 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.                           
|      |  |                                                                                                                                                                                                                           
|10.5  |  | Incentive Stock Option Agreement as amended of Douglas N. Biddle dated November
18, 1998, is included as Exhibit 10.5 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.                            
|      |  |                                                                                                                                                                                                                           
|10.8  |  | Incentive Stock Option Agreement as amended of Dennis C. Irvine dated November 18,
1998, is included as Exhibit 10.8 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 |  | Incentive Stock Option Agreement as amended of Robert T. Herr dated July 19, 2000,
is included as Exhibit 10.11 to the Registrants 10-QSB for June 30, 2002, which
is incorporated by this reference herein.             
|      |  |                                                                                                                                                                                                                           
|10.12 |  | Non-Qualified Stock Option Agreement as amended of Jerry V. Kehr dated November
18, 1998, is included as Exhibit 10.12 to the Registrants 10-QSB for June 30,
2002, 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.      

24



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##### Table of Contents



|      |  |                                                                                                                                                                                                                             
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                             
|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 |  | Non-Qualified Stock Option Agreement as amended of Daniel E. West dated November
19, 1997, is included as Exhibit 10.16 to the Registrants 10-QSB for June 30,
2002, which is incorporated by this reference herein.       
|      |  |                                                                                                                                                                                                                             
|10.17 |  | Non-Qualified Stock Option Agreement as amended of Daniel E. West dated November
18, 1998, is included as Exhibit 10.17 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 |  | Non-Qualified Stock Option Agreement as amended of Alvin G. Blickenstaff dated
November 18, 1998, is included as Exhibit 10.20 to the Registrants 10-QSB for
June 30, 2002, 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.                                 
|      |  |                                                                                                                                                                                                                             
|10.23 |  | Non-Qualified Stock Option Agreement as amended of Gerald W. Fletcher dated
November 18, 1998, is included as Exhibit 10.23 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.                                   
|      |  |                                                                                                                                                                                                                             
|10.26 |  | Non-Qualified Stock Option Agreement as amended of Arthur C. Grohs dated November
18, 1998, is included as Exhibit 10.26 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.                                       
|      |  |                                                                                                                                                                                                                             
|10.29 |  | Non-Qualified Stock Option Agreement as amended of Christine McArthur dated August
16, 2000, is included as Exhibit 10.29 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.                                   
|      |  |                                                                                                                                                                                                                             
|10.32 |  | Non-Qualified Stock Option Agreement as amended of Terrance J. Reeson dated
November 18, 1998, is included as Exhibit 10.32 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.   

25



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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.                           
|      |  |                                                                                                                                                                                                                     
|10.35 |  | Non-Qualified Stock Option Agreement as amended of Walter Sphar dated November 18,
1998, is included as Exhibit 10.35 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. 
|      |  |                                                                                                                                                                                                                     
|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.                                  
|      |  |                                                                                                                                                                                                                     
|10.38 |  | Non-Qualified Stock Option Agreement as amended of Thomas Watson dated November
21, 2001, is included as Exhibit 10.38 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 as amended is included as exhibit 99.1 of the 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.             
|      |  |                                                                                                                                                                                                                     
|10.45 |  | 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 |  | Incentive Stock Option Agreement of William E. Elliott dated December 18, 2002.                                                                                                                                     
|      |  |                                                                                                                                                                                                                     
|10.47 |  | Incentive Stock Option Agreement of Douglas N. Biddle dated December 18, 2002.                                                                                                                                      
|      |  |                                                                                                                                                                                                                     
|10.48 |  | Incentive Stock Option Agreement of Dennis C. Irvine dated December 18, 2002.                                                                                                                                       
|      |  |                                                                                                                                                                                                                     
|10.49 |  | Incentive Stock Option Agreement of Robert T. Herr dated December 18, 2002.                                                                                                                                         
|      |  |                                                                                                                                                                                                                     
|10.50 |  | Non-Qualified Stock Option Agreement of Jerry V. Kehr dated December 18, 2002.                                                                                                                                      
|      |  |                                                                                                                                                                                                                     
|10.51 |  | Non-Qualified Stock Option Agreement of Daniel E. West dated December 18, 2002.                                                                                                                                     
|      |  |                                                                                                                                                                                                                     
|10.52 |  | Non-Qualified Stock Option Agreement of Alvin G. Blickenstaff dated December 18,
2002.                                                                                                                              
|      |  |                                                                                                                                                                                                                     
|10.53 |  | Non-Qualified Stock Option Agreement of Gerald W. Fletcher dated December 18, 2002.                                                                                                                                 
|      |  |                                                                                                                                                                                                                     
|10.54 |  | Non-Qualified Stock Option Agreement of Arthur C. Grohs dated December 18, 2002.                                                                                                                                    
|      |  |                                                                                                                                                                                                                     
|10.55 |  | Non-Qualified Stock Option Agreement of Christine McArthur dated December 18, 2002.                                                                                                                                 
|      |  |                                                                                                                                                                                                                     
|10.56 |  | Non-Qualified Stock Option Agreement of Terrance J. Reeson dated December 18, 2002.                                                                                                                                 
|      |  |                                                                                                                                                                                                                     
|10.57 |  | Non-Qualified Stock Option Agreement of Walter Sphar dated December 18, 2002.                                                                                                                                       
|      |  |                                                                                                                                                                                                                     
|10.58 |  | Non-Qualified Stock Option Agreement of Thomas Watson dated December 18, 2002.                                                                                                                                      
|      |  |                                                                                                                                                                                                                     
|10.59 |  | Director Retirement Agreement of Thomas Watson dated May 1, 2003.                                                                                                                                                   
|      |  |                                                                                                                                                                                                                     
|10.60 |  | Consulting Agreement of Thomas Watson dated May 1, 2003.                                                                                                                                                            
|      |  |                                                                                                                                                                                                                     
|11    |  | Computation of per share earnings appears in the attached 10-Q under Plumas
Bancorp Notes to Consolidated Financial Statements as Footnote 5  Earnings Per
Share Computation.                                      
|      |  |                                                                                                                                                                                                                     
|31.1  |  | Rule 13a-14(a) [Section 302] Certification of Principal Accounting Officer dated
August 8, 2003.                                                                                                                    
|      |  |                                                                                                                                                                                                                     
|31.2  |  | Rule 13a-14(a) [Section 302] Certification of Principal Financial Officer dated
August 8, 2003.                                                                                                                     

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##### Table of Contents



|     |  |                                                                                                                                                                             
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                             
|31.3 |  | Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated
August 8, 2003.                                                                             
|     |  |                                                                                                                                                                             
|32.1 |  | Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated August
8, 2003.
|     |  |                                                                                                                                                                             
|32.2 |  | 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 August
8, 2003. 
|     |  |                                                                                                                                                                             
|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 August
8, 2003. 

(b)  Reports on Form 8-K



| |  | On April 16, 2003, the Company filed a Current Report on Form 8-K. The Current
Report included as an exhibit, the press release dated April 16, 2003, filed by
the Company containing unaudited financial information and announcement of a
semi-annual cash dividend.                  
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On April 30, 2003, the Company filed a Current Report on Form 8-K. The Current
Report included as an exhibit, the press release dated April 30, 2003, filed by
the Company announcing an agreement to purchase five branches located in
Northeastern California from Placer Sierra Bank.
|
| |  | On July 16, 2003, the Company filed a Current Report on Form 8-K. The Current
Report included as an exhibit, the press release dated July 16, 2003, filed by
the Company containing unaudited financial information and second quarter
earnings.                                        




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: August 8, 2003

| |  |                                                                  
| |  | -----------------------------------------------------------------
| |  | /s/ William E. Elliott                                           
| |  |                                                                  
| |  | William E. ElliottPresident/Chief Executive Officer              
| |  |                                                                  
| |  | /s/ Douglas N. Biddle                                            
| |  |                                                                  
| |  | Douglas N. BiddleExecutive Vice President Chief Financial Officer
| |  |                                                                  
| |  | /s/ Andrew J. Ryback                                             
| |  |                                                                  
| |  | Andrew J. RybackSenior Vice President Controller                 

27