plbc20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2025

☐	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	75-2987096
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

5525 Kietzke Lane, Suite 100, Reno, Nevada	89511
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code (775) 786-0907

Indicate 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act:

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☒ Smaller Reporting Company ☒ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Trading Symbol	Name of Each Exchange on which Registered:
Common Stock, no par value	PLBC	The NASDAQ Stock Market LLC

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of May 2, 2025: 5,929,106 shares.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

	*March 31,*			*December 31,*
	*2025*			*2024*

Assets
Cash and cash equivalents	$	87,327		$	82,018
Investment securities available for sale, net of allowance for credit losses of $0 at March 31, 2025 and December 31, 2024		447,293			437,735
Loans, less allowance for credit losses of $13,319 at March 31, 2025 and $13,196 at December 31, 2024		1,000,651			1,005,375
Other real estate owned		91			91
Premises and equipment, net		12,349			12,495
Right-of-use assets		24,003			24,334
Bank owned life insurance		16,628			16,519
Goodwill		5,502			5,502
Accrued interest receivable and other assets		39,448			39,257
Total assets	$	1,633,292		$	1,623,326

Liabilities and Shareholders’ Equity

Deposits:
Non-interest bearing	$	676,461		$	699,401
Interest bearing		696,600			671,700
Total deposits		1,373,061			1,371,101
Repurchase agreements		18,732			22,073
Lease liabilities		24,523			24,759
Accrued interest payable and other liabilities		14,373			12,493
Other borrowings		15,000			15,000
Total liabilities		1,445,689			1,445,426

Commitments and contingencies (Note 5)

Shareholders’ equity:
Common stock, no par value; 22,500,000 shares authorized; issued and outstanding – 5,922,116 shares at March 31, 2025 and 5,903,368 at December 31, 2024		29,454			29,043
Retained earnings		179,411			174,002
Accumulated other comprehensive loss, net		(21,262	)		(25,145	)
Total shareholders’ equity		187,603			177,900
Total liabilities and shareholders’ equity	$	1,633,292		$	1,623,326

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	*For the Three Months Ended*
	*March 31,*
	*2025*		*2024*
Interest Income:
Interest and fees on loans	$	15,396	$	14,592
Interest on investment securities		4,510		4,396
Other		684		1,038
Total interest income		20,590		20,026
Interest Expense:
Interest on deposits		1,896		1,186
Interest on borrowings		145		1,367
Other		10		16
Total interest expense		2,051		2,569
Net interest income before provision for credit losses		18,539		17,457
Provision for Credit Losses		250		821
Net interest income after provision for credit losses		18,289		16,636
Non-Interest Income:
Service charges		705		715
Interchange revenue		690		739
Gain on sale of buildings		-		19,854
Net loss on sale of investment securities		-		(19,826	)
Other		1,818		658
Total non-interest income		3,213		2,140
Non-Interest Expenses:
Salaries and employee benefits		5,880		5,366
Occupancy and equipment		2,014		1,690
Other		3,572		3,341
Total non-interest expenses		11,466		10,397
Income before provision for income taxes		10,036		8,379
Provision for Income Taxes		2,856		2,125
Net income	$	7,180	$	6,254

Basic earnings per share	$	1.21	$	1.06
Diluted earnings per share	$	1.20	$	1.05

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	*For the Three Months Ended*
	*March 31,*
	*2025*			*2024*

Net income	$	7,180		$	6,254
Other comprehensive income :
Change in net unrealized loss on securities		5,513			(6,979	)
Less: reclassification adjustments for net loss included in net income		-			19,826
Net unrealized holding gain		5,513			12,847
Related tax effect:
Change in net unrealized loss on securities		(1,630	)		2,063
Reclassification of net loss included in net income		-			(5,861	)
Income tax effect		(1,630	)		(3,798	)
Other comprehensive income		3,883			9,049
Total comprehensive income	$	11,063		$	15,303

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in thousands, except shares)

	*Common Stock*				*Retained*			*Accumulated Other Comprehensive Loss*			*Total Shareholders’*
	*Shares*		*Amount*		*Earnings*			*(Net of Taxes)*			*Equity*

Balance, December 31, 2023		5,871,523	$	28,033	$	151,748		$	(32,464	)	$	147,317
Net Income		-		-		6,254			-			6,254
Other comprehensive loss		-		-		-			9,049			9,049
Cash dividends on common stock ($0.27 per share)		-		-		(1,588	)		-			(1,588	)
Exercise of stock options		24,072		359		-			-			359
Stock-based compensation expense		-		100		-			-			100
Balance, March 31, 2024		5,895,595	$	28,492	$	156,414		$	(23,415	)	$	161,491

Balance, December 31, 2024		5,903,368	$	29,043	$	174,002		$	(25,145	)	$	177,900
Net Income		-		-		7,180			-			7,180
Other comprehensive income		-		-		-			3,883			3,883
Cash dividends on common stock ($0.30 per share)		-		-		(1,771	)		-			(1,771	)
Vesting of restricted stock units		3,033		-		-			-			-
Exercise of stock options		15,715		329		-			-			329
Stock-based compensation expense		-		82		-			-			82
Balance, March 31, 2025		5,922,116	$	29,454	$	179,411		$	(21,262	)	$	187,603

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	*For the Three Months Ended*
	*March 31,*
	*2025*			*2024*
Cash Flows from Operating Activities:
Net income	$	7,180		$	6,254
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		250			821
Change in deferred loan origination costs/fees, net		(100	)		(179	)
Depreciation and amortization		363			448
Stock-based compensation expense		82			100
Net loss on sale of investment securities		-			19,826
Amortization of investment security premiums		180			267
Accretion of investment security discounts		(294	)		(264	)
Loss on sale of other vehicles		14			15
Loans originated for sale		(74	)		(251	)
Earnings on bank-owned life insurance		(109	)		(96	)
Gain on sale of buildings		-			(19,854	)
(Increase) decrease in accrued interest receivable and other assets		(1,963	)		1,151
Increase in accrued interest payable and other liabilities		1,974			924
Net cash provided by operating activities		7,503			9,162

Cash Flows from Investing Activities:
Proceeds from principal repayments from available-for-sale securities		9,250			7,871
Proceeds from sale of available-for-sale securities		-			114,838
Proceeds from matured and called available-for-sale securities		630			850
Purchases of available-for-sale securities		(13,810	)		(88,805	)
Purchase of Federal Reserve Bank stock		(3	)		(3	)
Net decrease (increase) in loans		4,584			(18,227	)
Proceeds from sale of other vehicles		151			310
Proceeds from the sale of buildings		-			25,690
Purchase of premises and equipment		(173	)		(191	)
Net cash provided by investing activities		629			42,333

Continued on next page.

PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

(Continued)

	*For the Three Months Ended*
	*March 31,*
	*2025*			*2024*
Cash Flows from Financing Activities:
Net increase (decrease) in demand, interest bearing and savings deposits	$	13,170		$	(32,990	)
Net decrease in time deposits		(11,210	)		(977	)
Net decrease in securities sold under agreements to repurchase		(3,341	)		(3,723	)
Cash dividends paid on common stock		(1,771	)		(1,588	)
Increase in other borrowings		-			30,000
Proceeds from exercise of stock options		329			359
Net cash used in financing activities		(2,823	)		(8,919	)
Increase in cash and cash equivalents		5,309			42,576
Cash and Cash Equivalents at Beginning of Period		82,018			85,655
Cash and Cash Equivalents at End of Period	$	87,327		$	128,231

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest expense	$	2,462		$	2,569

Supplemental noncash disclosures
Real estate and vehicles acquired through foreclosure/repossession	$	64		$	220
Common stock retired in connection with the exercise of stock options	$	86		$	39
Lease liabilities arising from obtaining right-of-use assets	$	-		$	22,588

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. THE BUSINESS OF PLUMAS BANCORP

During 2002, Plumas Bancorp (the "Company") was incorporated as a bank holding company for the purpose of acquiring Plumas Bank (the "Bank") in a one bank holding company reorganization. This corporate structure gives the Company and the Bank greater flexibility in terms of operation, expansion and diversification. Plumas Bancorp's Principal Executive Office is located in Reno, Nevada.

The Bank operates thirteen branches in California, including branches in Alturas, Chester, Chico, Fall River Mills, Greenville, Kings Beach, Portola, Quincy, Redding, Susanville, Tahoe City, Truckee and Yuba City. The Bank's newest branch was opened in April 2023 and is located in Chico, California. The Bank’s administrative headquarters are in Quincy, California. In December 2015 the Bank opened a branch in Reno, Nevada, its first branch outside of California, and in 2018 the Bank purchased a branch located in Carson City, Nevada. In addition, the Bank operates a lending office specializing in government-guaranteed lending in Auburn, California, and a commercial/agricultural lending office in Klamath Falls, Oregon. 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. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and the consolidated accounts of its wholly-owned subsidiary, Plumas Bank. All significant intercompany balances and transactions have been eliminated.

The accounting and reporting policies of Plumas Bancorp and subsidiary conform with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position at March 31, 2025 and the results of its operations and its cash flows for the three-month periods. Our condensed consolidated balance sheet at December 31, 2024 is derived from audited financial statements.

The unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting on Form 10-Q. Accordingly, certain disclosures normally presented in the notes to the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2024 Annual Report to Shareholders on Form 10-K. The results of operations for the three-month period ended March 31, 2025, 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.

Segment Information

An operating segment is generally defined as a component of business for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker. As a community-oriented financial institution, substantially all of the Company’s operations involve the delivery of loan and deposit products to customers.

The chief operating decision maker makes operating decisions and assesses performance based on an ongoing review of the Company’s community banking activities, which constitutes the Company’s only operating segment for financial reporting purposes. The Company’s single reportable segment is determined by the Chief Financial Officer, who is the designated chief operating decision maker, based upon information provided about the Company’s products and services offered, primarily banking operations. The segment is also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business such as branches and departments, which are then aggregated if operating performance, products/services, and customers are similar. The chief operating decision maker will evaluate the financial performance of the Company’s business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Company’s segment and in the determination of allocating resources. The chief operating decision maker uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. Loans, investments, and deposits provide the revenues in the banking operation. Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation. The consolidated expense information is the same as is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. All operations are domestic.

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair value of investment securities at March 31, 2025 and December 31, 2024 consisted of the following, in thousands:

Available-for-Sale	March 31, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations - residential		241,045		804		(12,295	)		229,554
U.S. Government-agencies collateralized by mortgage obligations - commercial		139,991		962		(10,203	)		130,750
Obligations of states and political subdivisions		96,442		435		(9,888	)		86,989
	$	477,478	$	2,201	$	(32,386	)	$	447,293

Unrealized losses on available-for-sale investment securities totaling $30,185,000 were recorded, net of $8,923,000 in tax benefit, as accumulated other comprehensive loss within shareholders' equity at March 31, 2025. No investment securities were sold during the three months ended March 31, 2025. During the three months ended March 31, 2024, the Company sold 155 available-for-sale investment securities for proceeds of $114,838,000 recording a $19,826,000 loss on sale. The Company realized a gain on sale from 9 of these securities totaling $86,000 and a loss on sale of 146 securities totaling $19,912,000.

Available-for-Sale	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations - residential		243,709		138		(15,456	)		228,391
U.S. Government-agencies collateralized by mortgage obligations - commercial		133,749		77		(11,956	)		121,870
Obligations of states and political subdivisions		95,975		315		(8,816	)		87,474
	$	473,433	$	530	$	(36,228	)	$	437,735

Unrealized losses on available-for-sale investment securities totaling $35,698,000 were recorded, net of $10,553,000 in tax benefits, as accumulated other comprehensive loss within shareholders' equity at December 31, 2024. During the twelve months ended December 31, 2024, the Company sold 157 available-for-sale investment securities for proceeds of $116,285,000 recording a $19,817,000 net loss on sale. The Company realized a gain on sale from ten of these securities totaling $115,000 and a loss on sale of 147 securities totaling $19,932,000.

There were no transfers of available-for-sale investment securities during the three months ended March 31, 2025 and twelve months ended December 31, 2024. There were no securities classified as held-to-maturity at March 31, 2025 or December 31, 2024.

Investment securities with unrealized losses at March 31, 2025 and December 31, 2024 are summarized and classified according to the duration of the loss period as follows, in thousands:

March 31, 2025	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations - residential	$	44,532	$	692	$	93,425	$	11,603	$	137,957	$	12,295
U.S. Government-agencies collateralized by mortgage obligations - commercial		8,360		41		66,966		10,162		75,326		10,203
Obligations of states and political subdivisions		18,959		492		47,945		9,396		66,904		9,888
	$	71,851	$	1,225	$	208,336	$	31,161	$	280,187	$	32,386

December 31, 2024	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations - residential		107,328		1,917		94,506		13,539		201,834		15,456
U.S. Government-agencies collateralized by mortgage obligations - commercial		55,921		926		57,735		11,030		113,656		11,956
Obligations of states and political subdivisions		18,938		250		48,460		8,566		67,398		8,816
	$	182,187	$	3,093	$	200,701	$	33,135	$	382,888	$	36,228

At March 31, 2025, the Company held 312 securities of which 39 were in a loss position for less than twelve months and 178 were in a loss position for twelve months or more. Of the 312 securities 94 are U.S. Government-sponsored agencies collateralized by residential mortgage obligations,48 were U.S. Government agencies collateralized by commercial mortgage obligations and 170 were obligations of states and political subdivisions. The unrealized losses relate to market rate conditions. All of the securities continue to pay as scheduled. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized costs basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. At March 31, 2025, neither of the criteria regarding intent or requirement to sell was met for any of the securities in an unrealized loss position.

Unrealized losses on investments in obligations of U.S. government agencies and U.S. government sponsored agencies are caused by interest rate increases.

Obligations of states and political subdivisions: Management reviewed the collectability of the obligations of the states and political subdivisions taking into consideration such factors as the financial condition of the issuers, credit ratings, and other information. Management believes the unrealized losses on the obligations of states and political subdivisions are attributable to changes in the investment spreads and interest rates and not changes in the credit quality of the issuers.

The amortized cost and estimated fair value of investment in debt securities at March 31, 2025 by contractual maturity are shown below, in thousands.

	Amortized Cost		Estimated Fair Value
Within one year	$	585	$	584
After one year through five years		7,188		7,157
After five years through ten years		17,389		17,269
After ten years		71,280		61,979
Investment securities not due at a single maturity date:
Government- agencies commercial mortgage-backed securities		139,991		130,750
Government-sponsored agencies residential mortgage-backed securities		241,045		229,554
	$	477,478	$	447,293

Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

Investment securities with amortized costs totaling $411,065,000 and $225,313,000 and estimated fair values totaling $387,167,000 and $212,001,000 at March 31, 2025 and December 31, 2024, respectively, were pledged to secure deposits, repurchase agreements and Federal Reserve Bank borrowings.

4. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES

Outstanding loans are summarized below, in thousands:

	March 31,			December 31,
	2025			2024

Commercial	$	77,745		$	77,444
Agricultural		112,018			118,866
Real estate – residential		11,606			11,539
Real estate – commercial		660,926			646,378
Real estate – construction and land development		46,730			53,503
Equity lines of credit (Equity LOC)		38,634			37,888
Auto		58,295			64,734
Other		4,769			5,072
Total loans		1,010,723			1,015,424
Deferred loan costs, net		3,247			3,147
Loans, amortized cost basis		1,013,970			1,018,571
Allowance for credit losses		(13,319	)		(13,196	)
Total net loans	$	1,000,651		$	1,005,375

Salaries and employee benefits totaling $603,000 and $700,000 have been deferred as loan origination costs during the three months ended March 31, 2025 and 2024, respectively.

The Company assigns a risk rating to all loans and periodically, but not less than annually, performs detailed reviews of all criticized and classified loans over $100,000 to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by independent specialists engaged by the Company and the Company’s regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan.

The risk ratings can be grouped into three major categories, defined as follows:

Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard – A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Well defined weaknesses include a project's lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time or the project's failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass-rated loans.

For other loans, which are primarily consumer loans and automobile loans the Company evaluates credit quality based on the aging status of the loan and by payment activity. Non-performing loans consist of nonaccrual loans and loans past due 90 days or more and still accruing.

Other Real Estate Owned

Other real estate owned relates to real estate acquired in full or partial settlement of loan obligations. At March 31, 2025, and December 31, 2024, other real estate owned totaled $91,000, consisting of one single family residential real estate (SFR) property. There was one equity line of credit with a balance of $122,000 secured by a SFR property for which formal foreclosure proceedings were in process at March 31, 2025 and one commercial loan with a balance of $53,000 secured by a SFR property for which formal foreclosure proceedings were in process at December 31, 2024.

The following table presents the amortized cost basis of the loan portfolio allocated by management's internal risk ratings or payment activity at the dates indicated, in thousands:

	*Amortized Cost Basis by Origination Year and Risk Grades - As of March 31, 2025*
*(in thousands)*	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving Loans Book Amortized Cost Basis*		*Revolving Loans Converted to Term Amortized Cost Basis*		*Total - Amortized Cost Basis*
Commercial
Pass	$	4,597	$	19,434	$	12,136	$	11,276	$	7,869	$	7,863		13,642	$	-	$	76,817
Special Mention		-		-		-		74		339		-		449		-		862
Substandard		5		-		240		157		213		227		-		-		842
Total Commercial loans	$	4,602	$	19,434	$	12,376	$	11,507	$	8,421	$	8,090	$	14,091	$	-	$	78,521
Current period gross charge-offs	$	-	$	114	$	-	$	51	$	-	$	-	$	-	$	-	$	165

Agricultural
Pass	$	1,516	$	4,115	$	8,401	$	7,858	$	10,675	$	40,814	$	5,332	$	-	$	78,711
Special Mention		404		1,814		589		7,318		825		3,654		4,316		-		18,920
Substandard		-		-		2,721		4,519		3,192		1,355		2,831		-		14,618
Total Agricultural	$	1,920	$	5,929	$	11,711	$	19,695	$	14,692	$	45,823	$	12,479	$	-	$	112,249
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real Estate - Residential
Pass	$	430	$	626	$	1,099	$	-	$	2,016	$	6,892	$	320	$	-	$	11,383
Substandard		-		-		-		-		-		250		-		-		250
Total Real Estate - Residential	$	430	$	626	$	1,099	$	-	$	2,016	$	7,142	$	320	$	-	$	11,633
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real Estate -Commercial
Pass	$	13,098	$	88,531	$	95,992	$	145,576	$	81,979	$	220,860	$	6,515	$	-	$	652,551
Special Mention		-		-		-		-		-		3,876		300		-		4,176
Substandard		-		-		-		139		-		4,707		-		-		4,846
Total Real Estate -Commercial	$	13,098	$	88,531	$	95,992	$	145,715	$	81,979	$	229,443	$	6,815	$	-	$	661,573
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real Estate -Construction
Pass	$	-	$	25,413	$	13,163	$	2,134	$	3,824	$	1,766	$	-	$	-	$	46,300
Special Mention		213		-		-		-		-		-		-		-		213
Substandard		-		108		-		-		-		-		-		-		108
Total Real Estate -Construction	$	213	$	25,521	$	13,163	$	2,134	$	3,824	$	1,766	$	-	$	-	$	46,621
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Equity LOC
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	35,891	$	2,801	$	38,692
Substandard		-		-		-		-		-		-		715		113		828
Total Equity LOC	$	-	$	-	$	-	$	-	$	-	$	-	$	36,606	$	2,914	$	39,520
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total
Pass	$	19,641	$	138,119	$	130,791	$	166,844	$	106,363	$	278,195	$	61,700	$	2,801	$	904,454
Special Mention		617		1,814		589		7,392		1,164		7,530		5,065		-		24,171
Substandard		5		108		2,961		4,815		3,405		6,539		3,546		113		21,492
Total	$	20,263	$	140,041	$	134,341	$	179,051	$	110,932	$	292,264	$	70,311	$	2,914	$	950,117
Current period gross charge-offs	$	-	$	114	$	-	$	51	$	-	$	-	$	-	$	-	$	165

Auto
Performing	$	-	$	-	$	21,515	$	20,341	$	9,195	$	7,212	$	-	$	-	$	58,263
Non-performing		-		-		139		284		188		149		-		-		760
Total Auto	$	-	$	-	$	21,654	$	20,625	$	9,383	$	7,361	$	-	$	-	$	59,023
Current period gross charge-offs	$	-	$	-	$	21	$	72	$	16	$	10	$	-	$	-	$	119

Other
Performing	$	772	$	1,708	$	1,112	$	711	$	260	$	62	$	150	$	-	$	4,775
Non-performing		-		6		33		11		2		3		-		-		55
Total Other	$	772	$	1,714	$	1,145	$	722	$	262	$	65	$	150	$	-	$	4,830
Current period gross charge-offs	$	-	$	9	$	4	$	12	$	-	$	2	$	1	$	-	$	28

Total
Performing	$	772	$	1,708	$	22,627	$	21,052	$	9,455	$	7,274	$	150	$	-	$	63,038
Non-performing		-		6		172		295		190		152		-		-		815
Total	$	772	$	1,714	$	22,799	$	21,347	$	9,645	$	7,426	$	150	$	-	$	63,853
Total Loans	$	21,035	$	141,755	$	157,140	$	200,398	$	120,577	$	299,690	$	70,461	$	2,914	$	1,013,970
Total gross charge-offs	$	-	$	123	$	25	$	135	$	16	$	12	$	1	$	-	$	312

	*Term Loans*
	*Amortized Cost Basis by Origination Year and Risk Grades - As of December 31, 2024*
(in thousands)	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Revolving Loans Book Balance Basis*		*Revolving loans converted to term Book Balance Basis*		*Total*
Commercial
Pass	$	19,885	$	12,642	$	12,042	$	8,405	$	1,658	$	6,886	$	13,232	$	-	$	74,750
Special Mention		-		-		157		444		-		36		513		-		1,150
Substandard		61		244		1,050		365		469		30		75		-		2,294
Total Commercial loans	$	19,946	$	12,886	$	13,249	$	9,214	$	2,127	$	6,952	$	13,820	$	-	$	78,194
Current period gross charge-offs	$	-	$	86	$	43	$	-	$	-	$	22	$	151	$	-	$	302

Agricultural
Pass	$	6,421	$	9,331	$	14,290	$	11,389	$	14,252	$	28,075	$	13,356	$	-	$	97,114
Special Mention		518		53		1,159		358		1,307		1,639		534		-		5,568
Substandard		-		2,710		4,606		3,252		78		1,281		4,501		-		16,428
Total Agricultural	$	6,939	$	12,094	$	20,055	$	14,999	$	15,637	$	30,995	$	18,391	$	-	$	119,110
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real Estate - Residential
Pass	$	632	$	1,105	$	-	$	2,064	$	2,355	$	4,639	$	520	$	-	$	11,315
Substandard		-		-		-		-		-		253		-		-		253
Total Real Estate - Residential	$	632	$	1,105	$	-	$	2,064	$	2,355	$	4,892	$	520		-	$	11,568
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real Estate -Commercial
Pass	$	90,579	$	92,735	$	137,607	$	82,627	$	73,405	$	154,466	$	7,142	$	-	$	638,561
Special Mention		-		-		171		-		-		4,460		450		-		5,081
Substandard		-		-		628		-		921		1,760		-		-		3,309
Total Real Estate -Commercial	$	90,579	$	92,735	$	138,406	$	82,627	$	74,326	$	160,686	$	7,592	$	-	$	646,951
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real Estate -Construction
Pass	$	21,110	$	15,244	$	11,054	$	3,767	$	947	$	843	$	-	$	-	$	52,965
Special Mention		-		-		210		-		-		-		-		-		210
Substandard		110		-		-		-		-		-		-		-		110
Total Real Estate -Construction	$	21,220	$	15,244	$	11,264	$	3,767	$	947	$	843	$	-	$	-	$	53,285
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Equity LOC
Pass	$	-	$	-	$	-	$	-	$	-			$	34,622	$	3,483	$	38,105
Substandard		-		-		-		-		-				371		279		650
Total Equity LOC	$	-	$	-	$	-	$	-	$	-	$	-	$	34,993	$	3,762	$	38,755
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total
Pass	$	138,627	$	131,057	$	174,993	$	108,252	$	92,617	$	194,909	$	68,872	$	3,483	$	912,810
Special Mention		518		53		1,697		802		1,307		6,135		1,497		-		12,009
Substandard		171		2,954		6,284		3,617		1,468		3,324		4,947		279		23,044
Total	$	139,316	$	134,064	$	182,974	$	112,671	$	95,392	$	204,368	$	75,316	$	3,762	$	947,863
Current period gross charge-offs	$	-	$	86	$	43	$	-	$	-	$	22	$	151	$	-	$	302

Auto
Performing	$	-	$	23,163	$	22,361	$	10,426	$	4,779	$	4,063	$	-	$	-	$	64,792
Non-performing		-		147		241		187		129		88		-		-		792
Total Auto	$	-	$	23,310	$	22,602	$	10,613	$	4,908	$	4,151	$	-	$	-	$	65,584
Current period gross charge-offs	$	-	$	389	$	598	$	262	$	171	$	223	$	-	$	-	$	1,643

Other
Performing	$	2,433	$	1,245	$	799	$	318	$	88	$	5	$	157	$	-	$	5,045
Non-performing		-		48		24		3		2		-		2		-		79
Total Other	$	2,433	$	1,293	$	823	$	321	$	90	$	5	$	159	$	-	$	5,124
Current period gross charge-offs	$	-	$	9	$	35	$	31	$	6	$	12	$	1	$	-	$	94

Total
Performing	$	2,433	$	24,408	$	23,160	$	10,744	$	4,867	$	4,068	$	157	$	-	$	69,837
Non-performing		-		195		265		190		131		88		2		-		871
Total	$	2,433	$	24,603	$	23,425	$	10,934	$	4,998	$	4,156	$	159	$	-	$	70,708
Total Loans	$	141,749	$	158,667	$	206,399	$	123,605	$	100,390	$	208,524	$	75,475	$	3,762	$	1,018,571
Total gross charge-offs	$	-	$	484	$	676	$	293	$	177	$	257	$	152	$	-	$	2,039

The following table shows the ending balance of nonaccrual loans by loan category as of the date indicated:

	Non Performing Loans
	March 31, 2025						December 31, 2024
(in thousands)	Nonaccrual with no allowance for credit losses		Total nonaccrual		Past due 90 days or more and still accruing		Nonaccrual with no allowance for credit losses		Total nonaccrual		Past due 90 days or more and still accruing

Commercial	$	281	$	333	$	-	$	302	$	355	$	-
Agricultural		577		577		-		567		567		-
Real estate – residential		81		81		-		83		83		-
Real estate – commercial		1,052		1,052		-		1,579		1,579		-
Real estate – construction & land development		-		-		-		-		-		-
Equity lines of credit		828		828		-		650		650		-
Auto		760		760		-		792		792		-
Other		55		55		-		77		79		-
Total Gross Loans	$	3,634	$	3,686	$	-	$	4,050	$	4,105	$	-

The Company places loans 90 days or more past due on nonaccrual status unless the loan is well secured and in the process of collection. A loan is considered to be in the process of collection if, based on a probable specific event, it is expected that the loan will be repaid or brought current. Generally, this collection period would not exceed 90 days. When a loan is placed on nonaccrual status the Company's general policy is to reverse and charge against current income previously accrued but unpaid interest. Interest income on such loans is subsequently recognized only to the extent that cash is received, and future collection of principal is deemed by management to be probable. Where the collectability of the principal or interest on a loan is considered to be doubtful by management, it is placed on nonaccrual status prior to becoming 90 days delinquent.

The following tables show interest reversed against interest income for loans placed on nonaccrual status during the three months ended March 31, 2025 and 2024.

Three months ended:

(in thousands)	March 31, 2025		March 31, 2024
Commercial	$	4	$	4
Agricultural		1		-
Real estate – residential		-		9
Real estate – commercial		-		14
Equity lines of credit		4		10
Auto		3		2
Other		1		-
Total	$	13	$	39

On March 31, 2025, and December 31, 2024, there was one commercial nonaccrual loan with an amortized cost of $52,000 and $55,000, respectively that had an allowance for credit losses totaling $29,000. No income was recognized on nonaccrual loans accounted on a cash basis during the three months ended March 31, 2025 and 2024.

The following table presents the amortized cost basis of loans at March 31, 2025, that were both experiencing financial difficulty and modified during the three months ended March 31, 2025, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

	Term Extension
(in thousands)	Amortized Cost Basis		Total Class of Financing Receivable
Agricultural		6,638		5.91	%
Real estate – commercial		772		0.12	%
Total	$	7,410		0.73	%

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty as of March 31, 2025:

	Weighted-Average Term Extension (in months)
Agricultural		5.4
Real estate – commercial		3.0
Total		5.1

The following table presents the amortized cost basis of loans at March 31, 2024, that were both experiencing financial difficulty and modified during the three months ended March 31, 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

	Term Extension
(in thousands)	Amortized Cost Basis		Total Class of Financing Receivable
Commercial		36		0.04%

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty as of March 31, 2024:

		Weighted-Average Term Extension (in months)
Commercial			6.0

Loans with payment defaults by borrowers experiencing financial difficulty during the three months ended March 31, 2025, which had material modifications in rate, term or principal forgiveness during the twelve months prior to default consisted of one Agricultural loan totaling $2.0 million. This loan had a payment during the current quarter which brought it current as of March 31, 2025, under its modified terms. There were no loans payment defaults by borrowers experiencing financial difficulty during the three months ended March 31, 2024, which had material modifications in rate, term or principal forgiveness during the twelve months prior to default.

The following tables show the allocation of the allowance for credit losses at the dates indicated, in thousands:

Three Months Ended March 31, 2025:	Commercial			Agricultural			Real Estate-Residential			Real Estate-Commercial		Real Estate-Construction			Equity LOC			Auto			Other			Total
Allowance for credit losses
Beginning balance	$	1,265		$	1,802		$	102		$	7,459	$	815		$	460		$	1,215		$	78		$	13,196
Charge-offs		(165	)		-			-			-		-			-			(119	)		(28	)		(312	)
Recoveries		4			-			1			-		-			-			177			3			185
Provision for (recovery of) credit losses		182			(37	)		8			176		(23	)		93			(190	)		41			250
Ending balance	$	1,286		$	1,765		$	111		$	7,635	$	792		$	553		$	1,083		$	94		$	13,319

Three Months Ended March 31, 2024:
Allowance for credit losses
Beginning balance	$	1,134		$	1,738		$	137		$	6,678	$	797		$	439		$	1,865		$	79		$	12,867
Charge-offs		(43	)		-			-			-		-			-			(633	)		(4	)		(680	)
Recoveries		9			-			1			-		-			-			57			3			70
Provision for (recovery of) credit losses		211			(86	)		(4	)		239		121			(2	)		411			10			900
Ending balance	$	1,311		$	1,652		$	134		$	6,917	$	918		$	437		$	1,700		$	88		$	13,157

The following tables summarize the activity in the reserve for unfunded commitments, which is recorded on the balance sheet within other liabilities, for the three months ended March 31, 2025 and 2024.

Three months ended:

(in thousands)	March 31, 2025		March 31, 2024
Beginning balance	$	620	$	799
Recovery of provision for credit losses		-		(79	)
Ending balance	$	620	$	720

The following tables show an aging analysis of the loan portfolio by the time past due, in thousands:

									Total
March 31, 2025					90 Days				Past Due
	30-59 Days		60-89 Days		and Still				and
	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total

Commercial	$	463	$	42	$	-	$	333	$	838	$	77,683	$	78,521
Agricultural		370		336		-		577		1,283		110,966		112,249
Real estate – residential		348		153		-		81		582		11,051		11,633
Real estate – commercial		835		346		-		1,052		2,233		659,340		661,573
Real estate - construction & land		-		-		-		-		-		46,621		46,621
Equity Lines of Credit		375		153		-		828		1,356		38,164		39,520
Auto		1,111		312		-		760		2,183		56,840		59,023
Other		86		11		-		55		152		4,678		4,830
Total	$	3,588	$	1,353	$	-	$	3,686	$	8,627	$	1,005,343	$	1,013,970

									Total
December 31, 2024					90 Days				Past Due
	30-59 Days		60-89 Days		and Still				and
	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total

Commercial	$	1,074	$	533	$	-	$	355	$	1,962	$	76,232	$	78,194
Agricultural		273		-		-		567		840		118,270		119,110
Real estate – residential		348		319		-		83		750		10,818		11,568
Real estate - commercial		1,954		82		-		1,579		3,615		643,336		646,951
Real estate - construction & land		2,133		-		-		-		2,133		51,152		53,285
Equity Lines of Credit		1,416		189		-		650		2,255		36,500		38,755
Auto		1,251		242		-		792		2,285		63,299		65,584
Other		72		7		-		79		158		4,966		5,124
Total	$	8,521	$	1,372	$	-	$	4,105	$	13,998	$	1,004,573	$	1,018,571

The following tables present the amortized cost basis of collateral dependent loans by class of loans at March 31, 2025 in thousands:

					Commercial -1st		SFR-1st		SFR-2nd		SFR-3rd
	Equipment		Crops		Deed		Deed		Deed		Deed		Total

Commercial	$	231	$	-	$	-	$	-	$	-	$	-	$	231
Agricultural		-		535		-		-		-		-		535
Real estate – residential		-		-		-		-		-		-		-
Real estate – commercial		-		-		756		-		165		47		968
Real estate - construction & land		-		-		-		-		-		-		-
Equity Lines of Credit		-		-		-		-		281		-		281
Auto		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Total	$	231	$	535	$	756	$	-	$	446	$	47	$	2,015

The following tables present the amortized cost basis of collateral dependent loans by class of loans at December 31, 2024 in thousands:

					Commercial -1st		SFR-1st		SFR-2nd		SFR-3rd
	Equipment		Crops		Deed		Deed		Deed		Deed		Total

Commercial	$	245	$	-	$	-	$	-	$	-	$	-	$	245
Agricultural		-		535		-		-		-		-		535
Real estate – residential		-		-		-		-		-		-		-
Real estate – commercial		-		-		739		53		652		50		1,494
Real estate - construction & land		-		-		-		-		-		-		-
Equity Lines of Credit		-		-		-				173		-		173
Total	$	245	$	535	$	739	$	53	$	825	$	50	$	2,447

5. COMMITMENTS AND CONTINGENCIES

The Company is party to claims and legal proceedings arising in the ordinary course of business. In the opinion of the Company’s management, the amount of ultimate liability with respect to such proceedings will not have a material adverse effect on the financial condition or result of operations of the Company taken as a whole. In the normal course of business, there are various outstanding commitments to extend credit, which are not reflected in the financial statements, including loan commitments of $157.9 million and $155.4 million and stand-by letters of credit of $0 at March 31, 2025 and December 31, 2024, respectively.

Of the loan commitments outstanding at March 31, 2025, $15.5 million are real estate construction loan commitments that are expected to fund within the next twelve months. The remaining commitments primarily relate to revolving lines of credit or other commercial loans, and many of these are expected to expire without being drawn upon. Therefore, the total commitments do not necessarily represent future cash requirements. Each loan commitment and the amount and type of collateral obtained, if any, are evaluated on an individual basis. Collateral held varies, but may include real property, bank deposits, debt or equity securities or business assets. The reserve for unfunded commitments at March 31, 2025 and December 31, 2024 totaled $620,000.

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.

6. EARNINGS PER SHARE

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, result in the issuance of common stock which shares in the earnings of the Company. The treasury stock method has been applied to determine the dilutive effect of stock options in computing diluted earnings per share.

	*For the Three Months Ended*
	*March 31,*
(In thousands, except per share data)	*2025*		*2024*
Net Income:
Net income	$	7,180	$	6,254
Earnings Per Share:
Basic earnings per share	$	1.21	$	1.06
Diluted earnings per share	$	1.20	$	1.05
Weighted Average Number of Shares Outstanding:
Basic shares		5,911		5,887
Effect of dilutive of stock options and restricted stock		91		59
Diluted shares		6,002		5,946

There were no stock options having an antidilutive effect during the three-month period ended March 31, 2025 and 2024.

7. STOCK-BASED COMPENSATION

In May 2022, the Company’s shareholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for the grant of up to 576,550 shares of common stock, including 126,550 shares that remained available for grant under the 2013 Stock Option Plan when the 2022 Plan was adopted. The 2022 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The frequency, amount and terms of stock-based awards may be determined by the Board of Directors or its compensation committee, consistent with the terms and purposes of the 2022 plan.

In May 2013, the Company established the 2013 Stock Option Plan for which 114,342 shares of common stock are reserved. With the establishment of the Company’s 2022 Equity Incentive Plan, no further options may be issued under the 2013 Stock Option Plan, though options previously granted continue to be outstanding and governed by the 2013 Stock Option Plan.

There were no options granted under the 2022 Plan during the three months ended March 31, 2025. 107,200 options were granted under the 2022 Plan during the three months ended March 31, 2024.The fair value of each option was estimated on the date of grant using the following assumptions.

	2024
Expected life of stock options (in years)		6.2
Risk free interest rate		3.98	%
Annualized Volatility		32.3	%
Dividend yields		3.17	%
Weighted-average fair value of options granted during the three months ended March 31, 2024	$	9.25

A summary of the activity within the 2013 Plan follows:

	*Shares*			*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Term in Years*		*Intrinsic Value*
Options outstanding at January 1, 2024		165,517		$	21.52
Options exercised		(32,070	)		17.03
Options cancelled		(1,600	)		24.40
Options outstanding at December 31, 2024		131,847		$	22.58
Options cancelled
Options exercised		(17,505	)		23.44
Options outstanding at March 31, 2025		114,342		$	22.45		2.0	$	2,381,744
Options exercisable at March 31, 2025		114,342		$	22.45		2.0	$	2,381,744

A summary of the activity within the 2022 Plan follows:

	*Shares*			*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Term in Years*		*Intrinsic Value*
Options outstanding at January 1, 2024		105,500		$	31.00
Options granted		107,200			34.07
Options cancelled		(1,200	)		34.07
Options exercised		(1,300	)		31.00
Options outstanding at December 31, 2024		210,200		$	32.55
Options granted		-
Options cancelled		(1,560	)		34.07
Options exercised		(120	)		34.07
Options outstanding at March 31, 2025		208,520		$	32.54		7.9	$	2,237,420
Options exercisable at March 31, 2025		64,560		$	32.00		7.6	$	727,591
Expected to vest after March 31, 2025		134,271		$	32.78		8.1	$	1,408,503

As of March 31, 2025, there was $1.2 million in total unrecognized compensation cost related to non-vested stock options under the 2022 plan. That cost is expected to be recognized over a weighted average period of 3.3 years. There were no unrecognized costs remaining under the 2013 plan as of March 31, 2025.

Information related to the stock options plans during the three months ended March 31, 2025 and 2024.

	2025		2024
Fair value of options vested	$	193,000	$	199,000
Intrinsic value of options exercised	$	372,000	$	532,000
Cash received from option exercises	$	329,000	$	359,000
Tax benefit from option exercises	$	17,000	$	69,000
Compensation cost	$	67,000	$	88,000
Tax benefit associated with compensation cost	$	5,000	$	7,000

During the three months ended March 31, 2024, the Company granted 3,033 restricted stock units with a fair value of $34.07 per share and a one-year vesting period. Compensation costs related to these units during the three months ended March 31, 2025, and March 31, 2024, were $14,000 and $12,000, respectively. As of March 31, 2025, there was no unrecognized compensation cost related to restricted stock units.

8. INCOME TAXES

The Company files its income taxes on a consolidated basis with its subsidiary. Income tax expense is the total of current year income tax due or refundable and the change in deferred tax assets and liabilities.

Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amount of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. A valuation allowance is recognized if, based on the weight of available evidence, management believes it is more likely than not that some portion or all of the deferred tax assets will not be realized. On the consolidated balance sheet, net deferred tax assets are included in accrued interest receivable and other assets.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statements of income. There have been no significant changes to unrecognized tax benefits or accrued interest and penalties for the three months ended March 31, 2025 and 2024.

9. FAIR VALUE MEASUREMENT

FASB ASC 820, “Fair Value Measurement and Disclosures,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

The Company measures fair value under the fair value hierarchy described below.

Level 1: Quoted prices for identical instruments traded in active exchange markets.

Level 2: Quoted prices (unadjusted) for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable or can be corroborated by observable market data.

Level 3: Model based techniques that use one significant assumption not observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use on pricing the asset or liability. Valuation techniques include management judgment and estimation which may be significant.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period.

Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings.

Fair Value of Financial Instruments

FASB ASC 825, Financial Instruments, requires disclosure about fair value of financial instruments, including those financial assets and financial liabilities that are not required to be measured and reported at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. The carrying amounts and estimated fair values of the Company’s financial instruments are presented in the following tables whether or not recognized on the Consolidated Balance Sheets at fair value.

The carrying amounts and estimated fair values of financial instruments, at March 31, 2025 follows, in thousands:

			Fair Value Measurements at March 31, 2025, Using:
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	87,327	$	87,327	$	-	$	-	$	87,327
Investment securities		447,293		-		447,293		-		447,293
Loans, net		1,000,651		-		-		974,008		974,008
FHLB stock		6,234		-		6,234		-		6,234
FRB Stock		1,383		-		1,383		-		1,383
Financial liabilities:
Deposits		1,373,061		1,290,082		-		81,862		1,371,944
Repurchase agreements		18,732		-		18,732		-		18,732
Borrowings		15,000		-		-		14,083		14,083

The carrying amounts and estimated fair values of financial instruments, at December 31, 2024 follows, in thousands:

			Fair Value Measurements at December 31, 2024 Using:
Financial assets:		Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Cash and cash equivalents	$	82,018	$	82,018	$	-	$	-	$	82,018
Investment securities		437,735		-		437,735		-		437,735
Loans, net		1,005,375		-		-		981,114		981,114
FHLB stock		6,234		-		6,234		-		6,234
FRB Stock		1,380		-		1,380		-		1,380
Financial liabilities:
Deposits		1,371,101		1,276,912		-		94,161		1,371,073
Repurchase agreements		22,073		-		22,073		-		22,073
Borrowings		15,000		-		-		13,967		13,967

The methods and assumptions used to estimate the fair value of each class of financial instruments not measured at fair value are as follows:

Cash and cash equivalents - The carrying values of cash and due from banks are of such short duration that carrying value reasonably approximates fair value.

Loans - Loans are generally valued by discounting expected cash flows using market inputs with adjustments based on cohort level assumptions for certain loan types as well as internally developed estimates at a business segment level. Due to the significance of the unobservable market inputs and assumptions, as well as the absence of a liquid secondary market for most loans, these loans are classified as Level 3. Nonaccrual loans are written down and reported at their estimated recovery value which approximates their fair value and classified as Level 3.

FHLB/FRB stock -The carrying value of restricted equity investments approximates fair value based on the redemption provisions of the issuer and classified as Level 2.

Deposits - The estimated fair value of deposits with no stated maturity, such as demand deposit accounts, money market accounts, and savings accounts was the amount payable on demand at the reporting date. The fair value of time deposits was estimated based on a discounted cash flow technique using Level 3 inputs appropriate to the contractual maturity.

Repurchase agreements - The fair value of the repurchase agreement is based on Level 2 inputs. The primary inputs used in the valuation include the market interest rate and the credit quality of the underlying securities.

Borrowings - The cash flows were calculated using the contractual features of the borrowing and then discounted using observable market

Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors. Those estimates that are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision are included in Level 3. Changes in assumptions could significantly affect the fair values presented.

These estimates do not reflect any premium or discount that could result from offering the Company's entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of March 31, 2025 and December 31, 2024, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and liabilities measured at fair value on a recurring basis at March 31, 2025 are summarized below, in thousands:

			Fair Value Measurements at
			March 31, 2025 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential		229,554		-		229,554		-
U.S. Government agencies collateralized by mortgage obligations-commercial		130,750		-		130,750		-
Obligations of states and political subdivisions		86,989		-		86,989		-
	$	447,293	$	-	$	447,293	$	-

Assets and liabilities measured at fair value on a recurring basis at December 31, 2024 are summarized below, in thousands:

			Fair Value Measurements at
			December 31, 2024 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations - residential		228,391		-		228,391		-
U.S. Government-agencies collateralized by mortgage obligations - commercial		121,870		-		121,870		-
Obligations of states and political subdivisions		87,474		-		87,474		-
	$	437,735	$	-	$	437,735	$	-

The fair value of securities available-for-sale equals quoted market price, if available. If quoted market prices are not available, fair value is determined using quoted market prices for similar securities or matrix pricing. There were no changes in the valuation techniques used during 2025 or 2024. Transfers between hierarchy measurement levels are recognized by the Company as of the beginning of the reporting period. Changes in fair market value are recorded in other comprehensive income.

Assets and liabilities measured at fair value on a non-recurring basis at March 31, 2025 are summarized below, in thousands:

			Fair Value Measurements at
			March 31, 2025 Using
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses Three Months Ended March 31, 2025

Assets:
Collateral-dependent loans
Commercial	$	24	$	-	$	-	$	24	$	-

Other Real Estate Owned:
RE – Residential	$	91	$	-	$	-	$	91	$	-

Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2024 are summarized below, in thousands:

			Fair Value Measurements at
			December 31, 2024 Using
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses Three Months Ended March 31, 2024
Assets:
Collateral-dependent loans
Commercial	$	24	$	-	$	-	$	24	$	-

Other Real Estate Owned:
RE – Residential	$	91	$	-	$	-	$	91	$	-

The following methods were used to estimate fair value.

Collateral-Dependent Loans: The Bank does not record loans at fair value on a recurring basis. However, from time to time, fair value adjustments are recorded on these loans to reflect partial write-downs, through charge-offs or specific reserve allowances, that are based on fair value estimates of the underlying collateral. The fair value estimates for collateral-dependent loans are generally based on recent real estate appraisals or broker opinions, obtained from independent third parties, which are frequently adjusted by management to reflect current conditions and estimated selling costs (Level 3). No impairment charges were recognized during the three months ended March 31, 2025, and 2024, related to the above collateral dependent loan. The collateral- dependent loans at March 31, 2025 and December 31, 2024 consist solely of one loan which had been allocated a specific credit reserve.

Other Real Estate: Nonrecurring adjustments to certain real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. Fair values are generally based on third party appraisals of the property which are commonly adjusted by management to reflect current conditions and selling costs (Level 3).

Appraisals for both collateral-dependent loans and other real estate are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Loan Administration Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On a quarterly basis, the Company compares the actual selling price of similar collateral that has been liquidated to the most recent appraised value for unsold properties to determine what additional adjustment, if any, should be made to the appraisal value to arrive at fair value. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2025 and December 31, 2024 (dollars in thousands):


							Range			Range
	Fair Value		Fair Value		Valuation		(Weighted Average)			(Weighted Average)
Description	3/31/2025		12/31/2024		Technique	Significant Unobservable Input	3/31/2025			12/31/2024
Collateral-dependent loans
Commercial	$	24	$	24	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs		55	%		53	%

Other Real Estate:
RE – Residential	$	91	$	91	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs		60	%		60	%

10. OTHER COMPREHENSIVE LOSS

The changes in the accumulated balances for each component of other comprehensive loss, net of tax for the three months ended March 31, 2024 and March 31, 2025 were as follows:

	Unrealized			Accumulated
	Losses			Comprehensive
	on AFS Securities			Loss, net of tax
Beginning Balance, January 1, 2024	$	(46,088	)	$	(32,464	)
Current year-to-date other comprehensive income		12,847			9,049
Ending balance, March 31, 2024	$	(33,241	)	$	(23,415	)

Beginning Balance, January 1, 2025	$	(35,698	)	$	(25,145	)
Current year-to-date other comprehensive income		5,513			3,883
Ending balance, March 31, 2025	$	(30,185	)	$	(21,262	)

Reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2025 and March 31, 2024, were as follows:

*Amounts Reclassified from Accumulated Other Comprehensive Loss*
Details about Accumulated Other Comprehensive (Loss) Components	*Three Months Ended March 31, 2025*		*Three Months Ended March 31, 2024*			*Affected Line Item on the Statement of Income*
Investment securities:
Loss on sale of investment securities	$	-	$	19,826		Non-Interest Income
Tax effect		-		(5,861	)	Provision for income taxes
Total reclassifications for the period	$	-	$	13,965		Net income

11. RECENT ACCOUNTING PRONOUNCEMENTS

Pending Accounting Pronouncements

Accounting Standards Update 2023-09 “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures” (“ASU 2023-09”): In December 2023, the FASB amended the Income Taxes topic in the Accounting Standards Codification to improve the transparency of income tax disclosures. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company does not expect these amendments to have a material effect on its financial statements. .

Accounting Standards Update 2024-03 “Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): In November 2024, the FASB amended the Income Statement— Reporting Comprehensive Income topic in the Accounting Standards Codification to require public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. The amendments are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Impact of Recently Issued Accounting Pronouncements

In November 2023, FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which amends the disclosure requirements related to segment reporting primarily through enhanced disclosure about significant segment expenses and by requiring disclosure of segment information on an annual and interim basis. ASU 2023-07 was effective January 1, 2024 and did not have a significant impact on the Company's financial statements.

PART I – FINANCIAL INFORMATION

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

Certain matters discussed in this Quarterly Report are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Such risks and uncertainties include, among others, (1) significant increases in competitive pressures in the financial services industry; (2) changes in the interest rate environment resulting in reduced margins; (3) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality; (4) changes in regulatory environment; (5) loss of key personnel; (6) fluctuations in the real estate market; (7) changes in business conditions and inflation; (8) operational risks including data processing systems failures or fraud; and (9) changes in securities markets. Therefore, the information set forth herein should be carefully considered when evaluating the business prospects of Plumas Bancorp (the “Company”).

When the Company uses in this Quarterly Report the words “anticipate”, “estimate”, “expect”, “project”, “intend”, “commit”, “believe” and similar expressions, the Company intends to identify forward-looking statements. Such statements are not guarantees of performance and are subject to certain risks, uncertainties and assumptions, including those described in this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed. The future results and stockholder values of the Company may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond the Company’s ability to control or predict. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

INTRODUCTION

The following discussion and analysis sets forth certain statistical information relating to the Company as of March 31, 2025 and December 31, 2024 and for the three-month periods ended March 31, 2025 and 2024. This discussion should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto included in Plumas Bancorp’s Annual Report filed on Form 10-K for the year ended December 31, 2024.

Plumas Bancorp trades on The NASDAQ Capital Market under the ticker symbol “PLBC”.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes to the Company’s critical accounting policies from those disclosed in the Company’s 2024 Annual Report to Shareholders on Form 10-K.

SALES/LEASEBACK AND INVESTMENT RESTRUCTURING - March 31, 2024

On January 19, 2024, Plumas Bank entered into a purchase and sale of real property (the “Sale Agreement”). The Sale Agreement provided for the sale to MountainSeed of nine properties owned and operated by Plumas Bank as branches (the “Branches”) for an aggregate cash purchase price of approximately $25.7 million. The sale was completed on February 14, 2024, resulting in a net gain on sale of $19.9 million, recording of right-of-use assets totaling $22.3 million and recording a lease liability of $22.3 million.

Concurrently with the closing of the sale of the branch properties, we entered into triple net lease agreements (the “Lease Agreements”) pursuant to which Plumas Bank leased back each of the properties sold. Each Lease Agreement has an initial term of fifteen years with one 15-year renewal option. The Lease Agreements provide for an annual rent of approximately $2.4 million in the aggregate for the nine properties increased by two percent (2%) per annum for each year during the initial Term. During the renewal term, the initial rent will be the basic rent during the last year of the initial term, increased by two percent (2%) per annum for each year during the renewal term.

The gain on sales of the branches was offset by losses on the sale of approximately $115 million in investment securities. During the three months ended March 31, 2024, we sold $115 million in investment securities having a weighted average tax equivalent yield of 2.24% recording a $19.8 million net loss on the sales. As part of the restructuring, beginning in December 2023 and ending on March 27, 2024, we purchased $120 million in investment securities having a weighted average tax equivalent yield of 5.25%.

RESULTS OF OPERATIONS FOR THE three MONTHS ENDED March 31, 2025

Net Income. The Company recorded net income of $7.2 million for the three months ended March 31, 2025, up from net income of $6.3 million for the three months ended March 31, 2024. Increases of $1.1 million in net interest income and $1.1 million in non-interest income and a decline of $571,000 in the provision for credit losses were partially offset by increases of $1.1 million in non-interest expense and $731,000 in the provision for income tax expense. The annualized return on average assets was 1.79% for the three months ended March 31, 2025, up from 1.55% for the three months ended March 31, 2024. The annualized return on average equity decreased from 16.4% during the first quarter of 2024 to 16.0% during the current quarter.

Net-interest income increased by $1.1 million from $17.4 million during the three months ending March 31, 2024, to $18.5 million during the current quarter. The provision for credit losses decreased from $821 thousand during the first quarter of 2024 to $250 thousand during the current quarter.

Non-interest income increased by $1.1 million from $2.1 million during the three months ended March 31, 2024 to $3.2 million during the first quarter of 2025 related to a legal settlement totaling $1.1 million. This settlement related to the Dixie Fire in August of 2021 which swept through the town of Greenville, California. The fire caused severe damage to the Greenville area, including the telecommunications infrastructure which adversely affected our ability to service our customers in this area during the last few years.

Non-interest expense increased by $1.1 million from $10.4 million during the first quarter of 2024 to $11.5 million during the current quarter. Of this amount $569 thousand relates to costs associated with our pending acquisition of Cornerstone Community Bancorp. We signed a definitive agreement to acquire Cornerstone Community Bancorp on January 28, 2025. Merger transaction costs that facilitate the merger are not deductible for income tax purposes. Of the $569 thousand in merger related costs, $562 thousand is estimated to be not deductible for state and federal income tax.

The provision for income taxes increased by $731 thousand from $2.1 million, or 25.4% of pre-tax income, during the three months ended March 31, 2024 to $2.9 million, or 28.5% of pre-tax income, during the current quarter.

The following is a detailed discussion of each component of the change in net income.

Net interest income before provision for credit losses. Driven mostly by growth in the loan portfolio and the repayment of the Bank Term Funding Program (BTFP) borrowings, net interest income increased by $1.1 million from $17.4 million during the three months ended March 31, 2024, to $18.5 million for the three months ended March 31, 2025. The increase in net interest income includes an increase of $564 thousand in interest income and a decline of $518 thousand in interest expense.

Interest and fees on loans increased by $804 thousand related both to an increase in average balance and an increase in yield. Average loan balances increased by $48 million, while the average yield on loans increased by 8 basis points from 6.09% during the first quarter of 2024 to 6.17% during the current quarter. The average prime interest rate decreased from 8.5% during the first quarter of 2024 to 7.5% during the current quarter. Approximately 16% of the Company's loans are tied to the prime interest rate and most of these reprice within one to three months with a change in prime. The negative effect of the decrease in prime was offset by an increase in average yield on the bank’s fixed rate portfolio which includes growth in fixed rate SBA loans which totaled $74 million at March 31, 2025, and $42 million at March 31, 2024. The weighted average rate earned on this portfolio at March 31, 2025, was 8.3%.

Interest on investment securities increased by $114 thousand related to an increase in yield on investment securities of 44 basis points to 4.12%. The increase in investment yields is consistent with the partial restructuring of the investment portfolio during the first quarter of 2024. The effect of this increase in yield was mostly offset by a decline of $36 million in average investment securities.

Interest on cash balances decreased by $354 thousand related to a decline in average balance of $14 million and a decrease in average rate paid on cash balances of 105 basis points from 5.57% during the first quarter of 2024 to 4.52% during the current quarter. This decline in yield was mostly related to a decline in rate paid on balances held at the Federal Reserve Bank (FRB). The average rate earned on FRB balances decreased from 5.40% during the first quarter of 2024 to 4.40% during the current quarter.

Interest expense decreased by $518 thousand, mostly related to the repayment of the BTFP borrowings. See “Short-term Borrowing Arrangements” for a discussion additional discussion related to the BTFP. The average rate paid on interest bearing liabilities decreased from 1.33% during the 2024 quarter to 1.14% in 2025 related mainly to the decrease in these borrowings.

Interest paid on deposits increased by $710 thousand and is broken down by product type as follows: money market accounts - $770 thousand and savings deposits - $26 thousand. The increase in interest paid on money market accounts mostly relates to an increase in public entity balances. Interest on time deposits declined by $86 thousand related to a decline in average balance of $3 million and a decline in rate paid of 27 basis points. During the second half of 2024 and continuing into 2025, we have offered a premium rate on large balances of public entities in our service area, matching the rate they could earn from the California local agency investment fund. This has led to a significant increase in these balances and an increase in the overall rate paid on money market accounts. The average rate paid on interest-bearing deposits increased from 0.75% during the first quarter of 2024 to 1.11% during the current quarter.

Net interest margin for the three months ended March 31, 2025, increased 33 basis points to 4.95%, up from 4.62% for the same period in 2024.

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 annualized yields expressed in both dollars and annualized yield percentages, as well as the amounts of interest expense on interest bearing liabilities and the resultant cost expressed in both dollars and annualized rate percentages. Average balances are based on daily averages. Nonaccrual loans are included in the calculation of average loans while nonaccrued interest thereon is excluded from the computation of yields earned:

	For the Three Months Ended							For the Three Months Ended
	March 31, 2025							March 31, 2024
	Average							Average
	Balance		Interest		Yield/			Balance		Interest		Yield/
	(in thousands)		(in thousands)		Rate			(in thousands)		(in thousands)		Rate
Interest-earning assets:
Loans (2) (3)	$	1,011,968	$	15,396		6.17	%		964,132	$	14,592		6.09	%
Taxable investment securities		369,126		3,927		4.31	%		371,792		3,605		3.90	%
Non-taxable investment securities (1)		74,883		583		3.16	%		108,175		791		2.94	%
Interest-bearing deposits		61,409		684		4.52	%		75,005		1,038		5.57	%
Total interest-earning assets		1,517,386		20,590		5.50	%		1,519,104		20,026		5.30	%
Cash and due from banks		26,477							26,586
Other assets		86,335							80,508
Total assets	$	1,630,198						$	1,626,198

Interest-bearing liabilities:
Money market deposits	$	279,184	$	1,145		1.66	%	$	211,183	$	375		0.71	%
Savings deposits		323,449		206		0.26	%		335,565		180		0.22	%
Time deposits		88,386		545		2.50	%		91,501		631		2.77	%
Total deposits		691,019		1,896		1.11	%		638,249		1,186		0.75	%
Other borrowings		15,000		145		3.92	%		114,342		1,367		4.81	%
Repurchase agreements & other		21,190		10		0.19	%		21,713		16		0.30	%
Total interest-bearing liabilities		727,209		2,051		1.14	%		774,304		2,569		1.33	%
Non-interest-bearing deposits		682,495							673,789
Other liabilities		38,096							24,440
Shareholders' equity		182,398							153,665
Total liabilities & equity	$	1,630,198						$	1,626,198
Cost of funding interest-earning assets (4)						0.55	%						0.68	%
Net interest income and margin (5)			$	18,539		4.95	%			$	17,457		4.62	%

(1)	Not computed on a tax-equivalent basis.
(2)	Average nonaccrual loan balances of $3.8 million for 2025 and $5.6 million for 2024 are included in average loan balances for computational purposes.
(3)	Net costs included in loan interest income for the three-month period ended March 31, 2025 and 2024 were $275,000 and $344,000, respectively.
(4)	Total annualized interest expense divided by the average balance of total earning assets.
(5)	Annualized net interest income divided by the average balance of total earning assets.

The following table sets forth changes in interest income and interest expense for the three-months ended March 31, 2025, 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:

	2025 over 2024 change in net interest income
	for the three months ended March 31,
	(in thousands)
	Volume (1)			Rate (2)			Mix (3)			Total

Interest-earning assets:
Loans	$	718		$	197		$	(111	)	$	804
Taxable investment securities		(25	)		380			(33	)		322
Non-taxable investment securities		(242	)		58			(24	)		(208	)
Interest-bearing deposits		(186	)		(194	)		26			(354	)
Total interest income		265			441			(142	)		564
Interest-bearing liabilities:
Money market deposits		120			494			156			770
Savings deposits		(6	)		35			(3	)		26
Time deposits		(21	)		(62	)		(3	)		(86	)
Other borrowings		(1,178	)		(250	)		206			(1,222	)
Repurchase agreements & other		-			(6	)		-			(6	)
Total interest expense		(1,085	)		211			356			(518	)
Net interest income	$	1,350		$	230		$	(498	)	$	1,082

	(1)	The volume change in net interest income represents the change in average balance divided by the previous year’s rate.
	(2)	The rate change in net interest income represents the change in rate divided by the previous year’s average balance.
	(3)	The mix change in net interest income represents the change in average balance multiplied by the change in rate.

Provision for credit losses. During the first quarter of 2025 we recorded a provision for credit losses of $250,000 consisting of a provision for credit losses on loans of $250,000. This compares to a provision for credit losses of $821,000 consisting of a provision for credit losses on loans of $900,000 and a decrease in the reserve for unfunded commitments of $79,000 during the first quarter of 2024. See “Analysis of Asset Quality and Allowance for Loan Losses” for a discussion of loan quality trends and the provision for credit losses.

Non-interest income. During the three months ended March 31, 2025, non-interest income totaled $3.2 million, an increase of $1.1 million from the three months ended March 31, 2024. The largest component of this increase was the $1.1 million settlement related to the Dixie Fire as discussed earlier. This settlement is included in Other in the following table.

The following table describes the components of non-interest income for the three-month periods ended March 31, 2025 and 2024, dollars in thousands:

	For the Three Months Ended
	March 31,
	2025		2024			Dollar Change			Percentage Change
Service charges on deposit accounts	$	705	$	715		$	(10	)		(1.4	)%
Interchange income		690		739			(49	)		(6.6	)%
Loan servicing fees		186		213			(27	)		(12.7	)%
FHLB Dividends		137		137			0			-	%
Earnings on life insurance policies		109		96			13			13.5	%
Gain on sale of buildings		-		19,854			(19,854	)		(100.0	)%
Loss on sale of investment securities		-		(19,826	)		19,826			100.0	%
Other		1,386		212			1,174			553.8	%
Total non-interest income	$	3,213	$	2,140		$	1,073			50.1	%

Non-interest expense. Non-interest expense increased by $1.1 million from $10.4 million during the first quarter of 2024 to $11.5 million during the current quarter. Of this amount $569,000 relates to costs associated with our pending acquisition of Cornerstone Community Bancorp. We signed a definitive agreement to acquire Cornerstone Community Bancorp on January 28, 2025. Merger transaction costs that facilitate the merger are not deductible for income tax purposes. Of the $569,000 in merger related costs, $562,000 is estimated to be not deductible for state and federal income tax. Salary and benefit expense increased by $514,000 which includes an increase in salary expense of $269,000 related primarily to merit and promotional salary increases. Related mostly to an increase in pre-tax income, bonus expense increased by $216,000. A decrease in deferred loan origination fees of $97,000 was offset by a decline in commission expense of $137,000. Both items mostly relate to a decline in SBA loan production during the comparison quarters. Occupancy and equipment expense increased by $324,000 from $1.7 million during the first quarter of 2024 to $2.0 million during the current quarter related to an increase of $338,000 in rent expense related to the February 2024 sales/leaseback transaction.

The following table describes the components of non-interest expense for the three-month periods ended March 31, 2025 and 2024, dollars in thousands:

	For the Three Months Ended
	March 31,
	2025		2024		Dollar Change			Percentage Change
Salaries and employee benefits	$	5,880	$	5,366	$	514			9.6	%
Occupancy and equipment		2,014		1,690		324			19.2	%
Outside service fees		1,263		1,132		131			11.6	%
Merger and acquisition expenses		569		-		569			100.0	%
Advertising and shareholder relations		262		244		18			7.4	%
Professional fees		229		439		(210	)		(47.8	)%
Armored car and courier		217		203		14			6.9	%
Deposit insurance		182		187		(5	)		(2.7	)%
Telephone and data communication		174		222		(48	)		(21.6	)%
Director compensation and expense		167		167		-			-	%
Business development		167		153		14			9.2	%
Loan collection expenses		72		104		(32	)		(30.8	)%
Amortization of Core Deposit Intangible		44		51		(7	)		(13.7	)%
Other		226		439		(213	)		(48.5	)%
Total non-interest expense	$	11,466	$	10,397	$	1,069			10.3	%

Provision for income taxes. The Company recorded an income tax provision of $2.9 million, or 28.5% of pre-tax income, for the three months ended March 31, 2025. This compares to an income tax provision of $2.1 million, or 25.4% of pre-tax income, for the three months ended March 31, 2024. The percentages for 2025 and 2024 differ from statutory rates as tax exempt items of income such as earnings on Bank owned life insurance and municipal securities interest decrease taxable income. While non-deductible merger transaction costs incurred during the current quarter effectively increase taxable income.

FINANCIAL CONDITION

Total assets on March 31, 2025, were $1.6 billion, an increase of $10 million from December 31, 2024. The largest components of this increase were increases in investment securities of $9.6 million and $5.3 million in cash equivalents. These increases were partially offset by a decrease of $4.7 million in net loans. Deposits increased by $2.0 million and totaled $1.4 billion at March 31, 2025. Accrued interest payable and other liabilities increased by $1.9 million to $14.4 million. The largest decline in liabilities was a decrease in repurchase agreements of $3.3 million. Total liabilities were $1.4 billion on March 31, 2025, and December 31, 2024. Shareholders’ equity increased by $9.7 million from $177.9 million on December 31, 2024, to $187.6 million on March 31, 2025. A detailed discussion of each of these changes follows.

Loan Portfolio. Gross loans decreased by approximately $4.7 million, or 0.5%, and totaled $1.0 billion on March 31, 2025, and December 31, 2024. The largest increases in loans were $14.5 million in commercial real estate loans and $746,000 in equity lines of credit. These were offset by declines of $6.8 million in agricultural loans, $6.8 million in construction and land development loans and $6.4 million in auto loans. Although the Company offers a broad array of financing options, it continues to concentrate its focus on small to medium sized commercial businesses. These 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. In the fourth quarter of 2023 we terminated our indirect automobile loan program. Ending this program, which was our lowest yielding loan segment, also improved our loan loss risk profile since this program had historically higher charge-off rates. Terminating this program also improved our consumer compliance risk profile.

As shown in the following table the Company's largest lending categories are commercial real estate loans, agricultural loans, commercial loans and auto loans.

			Percent of					Percent of
			Loans in Each					Loans in Each
	Balance at End		Category to			Balance at End		Category to
(dollars in thousands)	of Period		Total Loans			of Period		Total Loans
	03/31/2025		03/31/2025			12/31/2024		12/31/2024
Commercial	$	77,745		7.7	%	$	77,444		7.6	%
Agricultural		112,018		11.1	%		118,866		11.7	%
Real estate – residential		11,606		1.1	%		11,539		1.1	%
Real estate – commercial		660,926		65.4	%		646,378		63.7	%
Real estate – construction & land		46,730		4.6	%		53,503		5.3	%
Equity Lines of Credit		38,634		3.8	%		37,888		3.7	%
Auto		58,295		5.8	%		64,734		6.4	%
Other		4,769		0.5	%		5,072		0.5	%
Total Gross Loans	$	1,010,723		100	%	$	1,015,424		100	%

The Company’s real estate related loans, including real estate mortgage loans, real estate construction and land development loans, consumer equity lines of credit, and agricultural loans secured by real estate, comprised 83% of the total loan portfolio at March 31, 2025. Moreover, the business activities of the Company currently are focused in the California counties of Butte, Lassen, Modoc, Nevada, Placer, Plumas, Shasta and Sutter and in Washoe and Carson City Counties in Northern Nevada. Consequently, the results of operations and financial condition of the Company are dependent upon the general trends in these economies and, in particular, the commercial real estate markets. In addition, the concentration of the Company's operations in these areas of Northeastern California and Northwestern Nevada exposes it to greater risk than other banking companies with a wider geographic base in the event of catastrophes, such as earthquakes, fires and floods in these regions.

Commercial real estate loans (“CRE”), which comprised 65% of the lending portfolio at March 31, 2025, included 27% investor-owned, 29% owner-occupied, and 9% multi-family. Concentrations by real estate type within the CRE portfolio, excluding multi-family, were 13% Mixed Commercial Real Estate, 13% Retail, 12% Office, 8% Hospitality, 8% Gas Stations, 8% Special Purpose, 7% Industrial, 6% Mini Storage Facilities, 6% Residential, and 5% Mixed Commercial and Residential, with all remaining concentrations below 5%. There were no rent-controlled properties within the multi-family category. Office facilities are typically small and located in more rural areas. 28% of CRE loans were located in northern Nevada and 48% were located in northern California. Of the $3.7 million in non-accrual balances at March 31, 2025, approximately 29% were CRE. Of the $21.5 million in substandard balances at March 31, 2025 approximately 23% were CRE.

CRE loans consist of term loans secured by a mortgage lien on real property and include both owner occupied CRE loans as well as investor-owned loans. Investor- owned CRE loans consist of mortgage loans to finance investments in real property that may include, but are not limited to, multi-family, industrial, office, retail and other specific use properties. The primary risk characteristics in the investor-owned portfolio include impacts of overall leasing rates, absorption timelines, levels of vacancy rates and operating expenses. The Company requires collateral values in excess of the loan amounts, cash flows in excess of expected debt service requirements and equity investment in the project. The expected cash flows from all significant new or renewed income producing property commitments are stress tested to reflect the risks in varying interest rates, vacancy rates and rental rates. Inherent lending risks are monitored on a continuous basis through quarterly monitoring and the Bank’s annual underwriting process, incorporating an analysis of cash flow, collateral, market conditions and guarantor liquidity, if applicable. CRE loan policies are specific to individual product types and underwriting parameters vary depending on the risk profile of each asset class. CRE loan policies are reviewed no less than annually by management and approved by the Company’s Board of Directors to ensure they align with current market conditions and the Company’s moderate risk appetite. CRE concentration limits have been established by product type and are monitored quarterly by the Company’s Board of Directors.

The rates of interest charged on variable rate loans are set at specific increments in relation to the Company's lending rate or other indexes such as the published prime interest rate or U.S. Treasury rates and vary with changes in these indexes. The frequency in which variable rate loans reprice can vary from one day to several years. At March 31, 2025, and December 31, 2024, approximately 77% of the Company's loan portfolio was comprised of variable rate loans. Loans indexed to the prime interest rate were approximately 20% of the Company’s variable rate loan portfolio on March 31, 2025; these loans reprice within one day to three months of a change in the prime rate. The remainder of the Company's variable rate loans mostly consist of commercial real estate loans tied to U.S. Treasury rates and reprice every five years. Approximately 77% of the variable rate loans are indexed to the five-year T-Bill rate and reprice every five years. While real estate mortgage, agricultural, commercial and consumer lending remain the foundation of the Company's historical loan mix, some changes in the mix have occurred due to the changing economic environment and the resulting change in demand for certain loan types

Analysis of Asset Quality and Allowance for Credit Losses. The Company attempts to minimize credit risk through its underwriting and credit review policies. The Company’s credit review process includes internally prepared credit reviews as well as contracting with an outside firm to conduct periodic credit reviews. The Company’s management and lending officers evaluate the loss exposure of classified and nonaccrual loans on a quarterly basis, or more frequently as loan conditions change. The Management Asset Resolution Committee (MARC) reviews the asset quality of criticized and past due loans monthly and reports the findings to the full Board of Directors. In management's opinion, this loan review system helps facilitate the early identification of potential criticized loans. MARC also provides guidance for the maintenance and timely disposition of OREO properties including developing financing and marketing programs to incent individuals to purchase OREO. MARC consists of the Bank’s Chief Executive Officer, Chief Financial Officer and Chief Credit Officer, and the activities are governed by a formal written charter. The MARC meets monthly and reports to the Board of Directors.

The allowance for credit losses is established through charges to earnings in the form of the provision for credit losses. Loan losses are charged to, and recoveries are credited to, the allowance for credit losses. The allowance for credit losses is maintained at a level deemed appropriate by management to provide for known and inherent risks in the loan portfolio.

To estimate the Allowance for Credit Loss (ACL), the Company elected to use the Discounted Cash Flow (DCF) methodology. This method uses loan level repayment terms to determine expected cash flows which are then discounted by various assumptions such as prepayment or curtailment rates, Probability of Default and Loss Given Default rates.

The ACL is measured on the loan’s amortized cost over the remaining contractual lives of the loan portfolios, adjusted for industry average prepayment and curtailment rates. The Company established a 12-month term for forecasting economic conditions followed by a 24-month straight line reversion to historical average conditions as its basis for the probability of loan default. The probability of default rate is determined by reviewing loans with similar risk characteristics that are combined to form loan pools which are statistically correlated with historical credit losses, defaults and various economic metrics, including California Unemployment rates, California Housing Prices and California Gross Domestic Product. Pool balances that are determined to have probable default are then adjusted for expected Loss Given Default. The Company selected the Frye Jacobs Index as its basis for Loss Given Default. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and annual back-testing of model performance to actual realized results.

At January 1, 2023, the adoption and implementation date of ASC Topic 326, March 31, 2025, and December 31, 2024, the Company utilized a reasonable and supportable forecast period of approximately four quarters and obtained the forecast data from publicly available sources. The Company also considered the impact of portfolio concentrations, changes in underwriting practices, and other risk factors that might influence its loss estimation process. Management believes that the allowance for credit losses at March 31, 2025, appropriately reflected expected credit losses inherent in the loan portfolio at that date.

In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. The Company's policy is that loans designated as nonaccrual no longer share risk characteristics similar to other loans evaluated collectively and as such, all nonaccrual loans, in excess of $100,000, are individually evaluated for reserves. As of March 31, 2025 and December 31, 2024, the Bank's nonaccrual loans comprised the entire population of loans individually evaluated. The Company's policy is that nonaccrual loans, in excess of $100,000, also represent the subset of loans where borrowers are experiencing financial difficulty where an evaluation of the source of repayment is required to determine if the nonaccrual loans should be categorized as collateral dependent. Nonaccrual loans with a balance less than or equal to $100,000 are evaluated collectively and consist primarily of automobile loans.

The following table provides certain information for the dates indicated with respect to the Company's allowance for credit losses as well as charge-off and recovery activity.

	For the Three Months Ended						For the Year Ended
*(dollars in thousands)*	March 31,						December 31,
	2025			2024			2024			2023			2022
Balance at beginning of period	$	13,196		$	12,867		$	12,867		$	10,717		$	10,352
Impact of CECL Adoption		-			-			-			529			-
Adjusted balance		13,196			12,867			12,867			11,246			10,352
Charge-offs:
Commercial		165			43			302			123			207
Agricultural		-			-			-			-			-
Real estate – residential		-			-			-			-			-
Real estate – commercial		-			-			-			-			19
Real estate – construction & land		-			-			-			-			-
Equity Lines of Credit		-			-			-			-			-
Auto		119			633			1,643			1,550			1,195
Other		28			4			94			129			40
Total charge-offs		312			680			2,039			1,802			1,461
Recoveries:
Commercial		4			9			25			44			27
Agricultural		-			-			-			-			-
Real estate – residential		1			1			4			3			3
Real estate – commercial		-						1			1			2
Real estate – construction & land		-			-			-			-			-
Equity Lines of Credit		-			-			-			-			-
Auto		177			57			928			746			482
Other		3			3			35			54			12
Total recoveries		185			70			993			848			526
Net charge-offs		127			610			1,046			954			935
Provision for credit losses - loans		250			900			1,375			2,575			1,300
Balance at end of period	$	13,319		$	13,157		$	13,196		$	12,867		$	10,717
Net charge-offs during the period to average loans (annualized for the three-month periods)		0.05	%		0.25	%		0.11	%		0.10	%		0.11	%
Allowance for credit losses to total loans		1.32	%		1.35	%		1.30	%		1.34	%		1.18	%

The following table provides a breakdown of the allowance for credit losses at March 31, 2025 and December 31, 2024:

			Percent of					Percent of
			Loans in Each					Loans in Each
	Balance at End		Category to			Balance at End		Category to
(dollars in thousands)	of Period		Total Loans			of Period		Total Loans
	3/31/2025		3/31/2025			12/31/2024		12/31/2024
Commercial	$	1,286		7.7	%	$	1,265		7.6	%
Agricultural		1,765		11.1	%		1,802		11.7	%
Real estate – residential		111		1.1	%		102		1.1	%
Real estate – commercial		7,635		65.4	%		7,459		63.7	%
Real estate – construction & land development		792		4.6	%		815		5.3	%
Equity Lines of Credit		553		3.8	%		460		3.7	%
Auto		1,083		5.8	%		1,215		6.4	%
Other		94		0.5	%		78		0.5	%
Total	$	13,319		100	%	$	13,196		100	%

At least quarterly, the Company evaluates each specific reserve and if it determines that the loss represented by the specific reserve is uncollectable it records a charge-off for the uncollectable portion. Specific reserves related to collateral dependent loans totaled $29,000 at March 31, 2025, and December 31, 2024. The allowance for credit losses as a percentage of total loans was 1.32% on March 31, 2025, and 1.30% on December 31, 2024.

The following table sets forth the amount of the Company's nonperforming assets as of the dates indicated.

	At
	March 31,			At December 31,
	2025			2024			2023			2022
	*(dollars in thousands)*

Nonaccrual loans	$	3,686		$	4,105		$	4,820		$	1,172
Loans past due 90 days or more and still accruing		-			-			-			-
Total nonperforming loans		3,686			4,105			4,820			1,172
Other real estate owned		91			91			357			0
Other vehicles owned		10			111			138			18
Total nonperforming assets	$	3,787		$	4,307		$	5,315		$	1,190
Interest income forgone on nonaccrual loans	$	69		$	301		$	257		$	121
Interest income recorded on a cash basis on nonaccrual loans	$	-		$	-		$	-		$	-
Nonperforming loans to total loans		0.36	%		0.40	%		0.50	%		0.13	%
Nonperforming assets to total assets		0.23	%		0.27	%		0.33	%		0.07	%

The Company places loans 90 days or more past due on nonaccrual status unless the loan is well secured and in the process of collection. A loan is considered to be in the process of collection if, based on a probable specific event, it is expected that the loan will be repaid or brought current. Generally, this collection period would not exceed 90 days. When a loan is placed on nonaccrual status the Company's general policy is to reverse and charge against current income previously accrued but unpaid interest. Interest income on such loans is subsequently recognized only to the extent that cash is received and future collection of principal is deemed by management to be probable. Where the collectability of the principal or interest on a loan is considered to be doubtful by management, it is placed on nonaccrual status prior to becoming 90 days delinquent.

Nonperforming loans at March 31, 2025, were $3.7 million, a decrease of $0.4 million from $4.1 million at December 31, 2024.

A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any. Total substandard loans decreased by $1.5 million from $23.0 million on December 31, 2024, to $21.5 million on March 31, 2025. Loans classified as special mention increased by $12.2 million from $12.0 million on December 31, 2024, to $24.2 million at March 31, 2025. The increase relates to several agricultural loans that migrated to the special mention category.

It is the policy of management to make additions to the allowance for credit losses so that it remains appropriate to absorb the inherent risk of loss in the portfolio. Management believes that the allowance on March 31, 2025, is appropriate. However, the determination of the amount of the allowance is judgmental and subject to economic conditions which cannot be predicted with certainty. Accordingly, the Company cannot predict whether charge-offs of loans in excess of the allowance may occur in future periods.

OREO represents real property acquired by the Bank either through foreclosure or through a deed in lieu thereof from the borrower. Repossessed assets include vehicles and other commercial assets acquired under agreements with delinquent borrowers. OREO holdings represented one property totaling $91,000 on March 31, 2025, and December 31, 2024.

Nonperforming assets as a percentage of total assets were 0.23% at March 31, 2025 and 0.27% at December 31, 2024.

The following table provides a summary of the change in the number and balance of OREO properties for the three months ended March 31, 2025 and 2024 (dollars in thousands):

	Three Months Ended March 31,
	#		2025		#		2024
Beginning Balance		1	$	91		1	$	357
Additions		-		-		-		-
Dispositions		-		-		-		-
Provision from change in OREO valuation		-		-		-		-
Ending Balance		1	$	91		1	$	357

Investment Portfolio and Federal Reserve Balances. Total investment securities were $447.3 million as of March 31, 2025, and $437.7 million at December 31, 2024. Unrealized losses on available-for-sale investment securities totaling $30.2 million were recorded, net of $8.9 million in tax benefits, as accumulated other comprehensive loss within shareholders' equity at March 31, 2025. Unrealized losses on available-for-sale investment securities totaling $35.7 million were recorded, net of $10.6 million in tax benefits, as accumulated other comprehensive loss within shareholders' equity at December 31, 2024. During the first quarter of 2024 we sold $116 million in investment securities having a weighted average tax equivalent yield of 2.24% recording a $19.8 million loss on sale. Beginning in December 2023 and ending on March 27, 2024 we purchased $120 million in investment securities having a weighted average tax equivalent yield of 5.25%. These sales and purchases were made as part of the investment restructure described earlier. No securities were sold during the three months ended March 31, 2025.

The investment portfolio at March 31, 2025, consisted of $360.3 million in securities of U.S. Government-sponsored agencies and U.S. Government agencies, and 170 municipal securities totaling $87.0 million. The investment portfolio at December 31, 2024, consisted of $350.2 million in securities of U.S. Government-sponsored agencies and U.S. Government agencies, and 170 municipal securities totaling $87.5 million.

There were no Federal funds sold at March 31 2025, and December 31, 2024; however, the Bank maintained interest earning balances at the Federal Reserve Bank totaling $53.2 million at March 31, 2025, and $47.2 million at December 31, 2024. The balance, on March 31, 2025, earns interest at the rate of 4.40%.

The Company classifies its investment securities as available-for-sale or held-to-maturity. Currently all securities are classified as available-for-sale. Securities classified as available-for-sale may be sold to implement the Company's asset/liability management strategies and in response to changes in interest rates, prepayment rates and similar factors.

Deposits. Deposits totaled $1.4 billion on March 31, 2025, an increase of $2 million from December 31, 2024. The increase in deposits includes increases of $ $22.5 million in money market accounts and $13.6 million in savings deposits. Partially offsetting these increases were declines of $22.9 million in demand deposits, and $11.2 million in time deposits. At March 31, 2025, 49% of the Company’s deposits were in the form of non-interest-bearing demand deposits. The Company has no brokered deposits.

The following table shows the distribution of deposits by type at March 31, 2025 and December 31, 2024.

			Percent of					Percent of
			Deposits in Each					Deposits in Each
	Balance at End		Category to			Balance at End		Category to
(dollars in thousands)	of Period		Total Deposits			of Period		Total Deposits
Distribution of Deposits by Type		03/31/2025		03/31/2025			12/31/2024		12/31/2024
Non-interest bearing	$	676,461		49.3	%	$	699,401		51.0	%
Money Market		290,125		21.1	%		267,582		19.5	%
Savings		323,496		23.6	%		309,929		22.6	%
Time		82,979		6.0	%		94,189		6.9	%
Total Deposits	$	1,373,061		100	%	$	1,371,101		100	%

Deposits represent the Bank's primary source of funds. Deposits are primarily core deposits in that they are demand, savings and time deposits generated from local businesses and individuals. These sources are considered to be relatively stable, long- term relationships thereby enhancing steady growth of the deposit base without major fluctuations in overall deposit balances. The Company experiences, to a small degree, some seasonality with the slower growth period between November through April, and the higher growth period from May through October. To assist in meeting any funding demands, the Company maintains several borrowing agreements as described below.

The Company estimates that it has approximately $510 million in uninsured deposits which includes uninsured deposits of Plumas Bancorp. Of this amount, $190 million represents deposits that are collateralized such as deposits of states, municipalities and tribal accounts. Uninsured amounts are estimated based on the portion of the account balances in excess of FDIC insurance limits.

The following table presents the maturity distribution of the portion of time deposits in excess of the FDIC insurance limit.

Maturity Distribution of Estimated Uninsured Time Deposits
	March 31,		December 31,
(dollars in thousands)	2025		2024
Remaining maturity:
Three months or less	$	8,024	$	11,697
After three through nine months		4,507		6,712
After six through twelve months		8,161		4,452
After twelve months		61		61
Total	$	20,753	$	22,922

Short-term Borrowing Arrangements. The Company is a member of the Federal Home Loan Bank of San Francisco (FHLB) and can borrow up to $251 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $441 million. The Company is also eligible to borrow at the FRB Discount Window. At March 31, 2025 the Company could borrow up to $115 million at the Discount Window secured by investment securities with a fair value of $119 million. In addition to its FHLB borrowing line and the Discount Window, the Company has unsecured short-term borrowing agreements with two of its correspondent banks in the amounts of $50 million and $20 million. There were no outstanding borrowings to the FHLB, FRB Discount Window or the correspondent banks at March 31, 2025, and December 31, 2024.

The Federal Reserve Board, on March 12, 2023, announced the creation of the BTFP. At March 31, 2024, the Company had outstanding borrowings under the BTFP totaling $105 million. All BTFP borrowings were paid off during 2024. Interest expense recognized on the BTFP borrowings for the three months ended March 31, 2024, was $1.2 million.

Note Payable. The Company's borrowing at March 31, 2025, and December 31, 2024, consist of a Term Note entered into on January 25, 2022, which matures on January 25, 2035, and can be prepaid at any time. The Term Note bears interest at a fixed rate of 3.85% for the first 5 years and then at a floating interest rate linked to WSJ Prime Rate for the remaining eight-year term. The Note is secured by the common stock of the Bank. The Loan Agreement contains certain financial and non-financial covenants, which include, but are not limited to, a minimum leverage ratio at the Bank, a minimum total risk-based capital ratio at the Bank, a maximum Texas Ratio at the Bank, a minimum level of Tier 1 capital at the Bank and a return on average assets needed to generate a 1.25X debt service coverage ratio. The Loan Agreement also contains customary events of default, including, but not limited to, failure to pay principal or interest, the commencement of certain bankruptcy proceedings, and certain adverse regulatory events affecting the Company or the Bank. Upon the occurrence of an event of default under the Loan Agreement, the Company’s obligations under the Loan Agreement may be accelerated. The Company was in compliance with all covenants related to the Term Note at March 31, 2025. Interest expense recognized on the Term Note for the three months ended March 31, 2025 and 2024 totaled $145,000 and $151,000, respectively.

Repurchase Agreements. The Bank offers a repurchase agreement product for its larger customers which use securities sold under agreements to repurchase as an alternative to interest-bearing deposits. Securities sold under agreements to repurchase totaling $18.7 million and $22.1 million at March 31, 2025, and December 31, 2024, respectively, are secured by U.S. Government agency securities with a carrying amount of $38.8 million and $38.5 million at March 31, 2025, and December 31, 2024, respectively. Interest paid on this product is similar to, but less than, that which is paid on the Bank’s money market accounts; however, these are not deposits and are not FDIC insured. Interest expense recognized on repurchase agreements for the three months ended March 31, 2025 and 2024 totaled $10,000 during both periods.

Shareholders’ Equity. Shareholders’ equity increased by $9.7 million from $177.9 million at December 31, 2024 to $187.6 million at March 31, 2025. The $9.7 million increase was related to net income during the current quarter of $7.2 million, a decline in accumulated other comprehensive loss of $3.9 million and stock option and restricted stock activity of $411,000 partially offset by shareholder dividends of $1.8 million.

It is the policy of the Company to periodically distribute excess retained earnings to the shareholders through the payment of cash dividends. Such dividends help promote shareholder value and capital adequacy by enhancing the marketability of the Company’s stock. All authority to provide a return to the shareholders in the form of a cash or stock dividend or split rests with the Board of Directors. The Board will periodically, but on no regular schedule, review the appropriateness of a cash dividend payment. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. The Company paid a quarterly cash dividend of $0.30 per share on February 17, 2025 and a quarterly cash dividend of $0.27 per share on February 15, 2024, May 15, 2024, August 15, 2024, and November 15, 2024.

Capital Standards. The Company uses a variety of measures to evaluate its capital adequacy. Management reviews these capital measurements on a monthly basis and takes appropriate action to ensure that they are within established internal and external guidelines. The FDIC has promulgated risk-based capital guidelines for all state non-member banks such as the Bank. These guidelines establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures.

In July, 2013, the federal bank regulatory agencies adopted rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. depository organizations, sometimes called “Basel III,” that increased the minimum regulatory capital requirements for bank holding companies and depository institutions and implemented strict eligibility criteria for regulatory capital instruments. The Basel III capital rules include a minimum common equity Tier 1 ratio of 4.5%, a Tier 1 capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a minimum leverage ratio of 4.0% (calculated as Tier 1 capital to average consolidated assets). The minimum capital levels required to be considered “well capitalized” include a common equity Tier 1 ratio of 6.5%, a Tier 1 risk-based capital ratio of 8.0%, a total risk-based capital ratio of 10.0% and a leverage ratio of 5.0%. In addition, the Basel III capital rules require that banking organizations maintain a capital conservation buffer of 2.5% above the minimum capital requirements in order to avoid restrictions on their ability to pay dividends, repurchase stock or pay discretionary bonuses. Including the capital conservation buffer of 2.5%, the Basel III capital rules require the following minimum ratios for a bank holding company or bank to be considered well capitalized: a common equity Tier 1 capital ratio of 7.0%, a Tier 1 capital ratio of 8.5%, and a total capital ratio of 10.5%. At March 31, 2025, the Company’s and the Bank’s capital ratios exceeded the thresholds necessary to be considered “well capitalized” under the Basel III framework.

Under the FRB’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (the “Policy Statement”), qualifying bank holding companies with less than $3 billion in consolidated assets are exempt from the Basel III consolidated capital rules. The Company qualifies for treatment under the Policy Statement and is not currently subject to the Basel III consolidated capital rules at the bank holding company level. The Basel III capital rules continue to apply to the Bank.

In 2019, the federal bank regulators issued a rule establishing a “community bank leverage ratio” (the ratio of a bank’s tier 1 capital to average total consolidated assets) that qualifying institutions with less than $10 billion in assets may elect to use in lieu of the generally applicable leverage and risk-based capital requirements under Basel III. A qualifying banking organization that elects to use the new ratio will be considered to have met all applicable federal regulatory capital and leverage requirements, including the minimum capital levels required to be considered “well capitalized,” if it maintains a community bank leverage ratio exceeding 9%. The new rule became effective on January 1, 2020. Plumas Bank has chosen not to opt into the community bank leverage ratio at this time.

The following table sets forth the Bank's actual capital amounts and ratios (dollar amounts in thousands):

						Minimum Amount of Capital Required
											To be Well-Capitalized
						For Capital					Under Prompt
	Actual					Adequacy Purposes (1)					Corrective Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2025
Common Equity Tier 1 Ratio	$	204,310		17.8	%	$	51,717		4.5	%	$	74,703		6.5	%
Tier 1 Leverage Ratio		204,310		12.3	%		66,234		4.0	%		82,792		5.0	%
Tier 1 Risk-Based Capital Ratio		204,310		17.8	%		68,956		6.0	%		91,942		8.0	%
Total Risk-Based Capital Ratio		218,249		19.0	%		91,942		8.0	%		114,927		10.0	%

December 31, 2024
Common Equity Tier 1 Ratio	$	199,308		17.3	%	$	51,981		4.5	%	$	75,084		6.5	%
Tier 1 Leverage Ratio		199,308		11.9	%		66,856		4.0	%		83,570		5.0	%
Tier 1 Risk-Based Capital Ratio		199,308		17.3	%		69,308		6.0	%		92,411		8.0	%
Total Risk-Based Capital Ratio		213,124		18.5	%		92,411		8.0	%		115,514		10.0	%

(1) Does not include amounts required to maintain the capital conservation buffer under the new capital rules.

Management believes that Plumas Bank currently meets all its capital adequacy requirements.

The current and projected capital positions of the Bank and the impact of capital plans and long-term strategies are reviewed regularly by management. The Company policy is to maintain the Bank’s ratios above the prescribed well-capitalized ratios at all times.

Off-Balance Sheet Arrangements

Loan Commitments. In the normal course of business, there are various commitments outstanding to extend credits that are not reflected in the financial statements. Commitments to extend credit and letters of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Annual review of commercial credit lines, letters of credit and ongoing monitoring of outstanding balances reduces the risk of loss associated with these commitments. As of March 31, 2025, the Company had $157.9 million in unfunded loan commitments and no letters of credit. This compares to $155.4 million in unfunded loan commitments at December 31, 2024. Of the $157.9 million in unfunded loan commitments, $94.1 million and $63.8 million represent commitments to commercial and consumer customers, respectively. Of the total unfunded commitments at March 31, 2025, $87.9 million were secured by real estate, of which $32.9 million was secured by commercial real estate and $55.0 million was secured by residential real estate mostly in the form of equity lines of credit. The commercial loan commitments not secured by real estate primarily represent business lines of credit, while the consumer loan commitments not secured by real estate primarily represent revolving credit card lines and overdraft protection lines. Since some of the commitments are expected to expire without being drawn upon the total commitment amounts do not necessarily represent future cash requirements.

Operating Leases. The Company’s leases eleven branches. Our Yuba City branch is classified as owned; however, it is subject to a long-term land lease. The Company also leases two lending offices and two administrative offices and owns three administrative facilities. The expiration dates of the leases vary, with the first such lease expiring during 2025 and the last such lease expiring during 2044. Including variable lease expense, total rent expense for the three months ended March 31, 2025, and 2024 was $852,000 and $514,000, respectively.

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 and satisfy maturity of short-term borrowings. The Company’s liquidity needs are managed using assets or liabilities, or both. On the asset side, in addition to cash and due from banks, the Company maintains an investment portfolio which includes unpledged U.S. Government-sponsored agency securities that are classified as available-for-sale. On the liability side, liquidity needs are managed by offering competitive rates on deposit products and the use of established lines of credit.

The Company is a member of the FHLB and can borrow up to $251 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $441 million. The Company is also eligible to borrow at the FRB Discount Window. At March 31, 2025 the Company could borrow up to $115 million at the Discount Window secured by investment securities with a fair value of $119 million. In addition to its FHLB borrowing line and the Discount Window, the Company has unsecured short-term borrowing agreements with two of its correspondent banks in the amounts of $50 million and $20 million. There were no outstanding borrowings to the FHLB, FRB Discount Window or the correspondent banks at March 31, 2025, and December 31, 2024.

Customer deposits are the Company’s primary source of funds. Deposits totaled $1.4 billion on March 31, 2025, an increase of $2 million from December 31, 2024. Deposits are held in various forms with varying maturities. The Company estimates that it has approximately $510 million in uninsured deposits which includes uninsured deposits of Plumas Bancorp. Of this amount, $190 million represents deposits that are collateralized such as deposits of states, municipalities and tribal accounts. Uninsured amounts are estimated based on the portion of the account balances in excess of FDIC insurance limits.

The Company’s securities portfolio, Discount Window advances, FHLB advances, 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 cash held at the FRB 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 borrowings, will provide adequate liquidity for its operations in the foreseeable future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of March 31, 2025. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2025 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company and/or its subsidiary 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 1A. RISK FACTORS

In addition to the other information set forth in this Form 10-Q you should carefully consider the risk factors that appeared under Item 1A, “Risk Factors” in the Company’s 2024 Annual Report. There are no material changes from the risk factors included within the Company’s 2024 Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) None.

(b) None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following documents are included or incorporated by reference in this Quarterly Report on Form 10Q:

2.1	Agreement and Plan of Merger and Reorganization dated as of January 28, 2025, by and between Plumas Bancorp and Cornerstone Community Bancorp included as Exhibit 2.1 to the Registrant's 8-K filed on January 29, 2025, which is incorporated by this reference herein.

3.1	Articles of Incorporation as amended of Registrant included as Exhibit 3.1 to the Registrant’s Form S-4, File No. 333-84534, which is incorporated by reference herein.

3.2	Bylaws of Registrant as amended on August 16, 2023 included as Exhibit 3.1 to the Registrant’s Form 8-K for August 17, 2023, which is incorporated by reference herein.

3.3	Amendment of the Articles of Incorporation of Registrant dated November 1, 2002, is included as Exhibit 3.3 to the Registrant’s 10-Q for September 30, 2005, which is incorporated by this reference herein.

3.4	Amendment of the Articles of Incorporation of Registrant dated August 17, 2005, is included as Exhibit 3.4 to the Registrant’s 10-Q for September 30, 2005, which is incorporated by this reference herein.

4	Specimen form of certificate for Plumas Bancorp included as Exhibit 4 to the Registrant’s Form S-4, File No. 333-84534, which is incorporated by reference herein.

4.1	Description of Securities of Plumas Bancorp Registered Under Section 12 of the Exchange Act, is included as Exhibit 4.1 to the Registrant's 10-K for December 31, 2023, which is incorporated by this reference herein.

10.1	Real Estate Purchase and Sale Agreement by and between Plumas Bank and Brookline Real Estate Services, LLC dated as of March 28, 2025 is included as Exhibit 10.1 to the Registrant's 8-K filed on April 1, 2025.

31.1*	Rule 13a-14(a) [Section 302] Certification of Principal Financial Officer dated May 7, 2025.

31.2*	Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated May 7, 2025.

32.1*	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 7, 2025.

32.2*	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 7, 2025.

101.INS*	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH*	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PLUMAS BANCORP
(Registrant)
Date: May 7, 2025
	/s/ Richard L. Belstock
	Richard L. Belstock
	Chief Financial Officer

	/s/ Andrew J. Ryback
	Andrew J. Ryback
	Director, President and Chief Executive Officer