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What changed in PLUMAS BANCORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PLUMAS BANCORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+257 added−249 removedSource: 10-K (2025-03-19) vs 10-K (2024-03-20)

Top changes in PLUMAS BANCORP's 2024 10-K

257 paragraphs added · 249 removed · 185 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

31 edited+3 added−9 removed113 unchanged
Biggest changeThe Company is a California corporation incorporated in 2002 for the purpose of becoming the holding company for the Bank, which we acquired the same year. The Company's only other subsidiaries were Plumas Statutory Trust I and Plumas Statutory Trust II, which were formed in 2002 and 2005 solely to facilitate the issuance of trust preferred securities.
Biggest changeThese items are described in detail later in this Form 10-K. The Company is a California corporation incorporated in 2002 for the purpose of becoming the holding company for the Bank, which we acquired the same year. We file annual, quarterly, and other reports required under the Securities Exchange Act of 1934 with Securities and Exchange Commission (the “SEC”).
We strive to tailor these services to meet the needs of the communities served by the Company and the Bank. 3 Table of Contents We offer various loan products which encourage job growth and support community economic development. Types of loans offered range from personal and commercial loans to real estate, construction, agricultural, automobile and government-guaranteed loans.
We strive to tailor these services to meet the needs of the communities served by the Company and the Bank. 3 Table of Contents We offer various loan products which encourage job growth and support community economic development. Types of loans offered range from personal and commercial loans to real estate, construction, agricultural, and government-guaranteed loans.
As of December 31, 2023, the maximum amount available for dividend distribution under this restriction was approximately $58 million. In addition, the Bank is subject to the Basel III capital rules and the capital conservation buffer discussed above. The foregoing restrictions and limitations on dividends similarly restrict the Company’s ability to repurchase shares of its common stock. Loans-to-One Borrower.
As of December 31, 2024, the maximum amount available for dividend distribution under this restriction was approximately $58 million. In addition, the Bank is subject to the Basel III capital rules and the capital conservation buffer discussed above. The foregoing restrictions and limitations on dividends similarly restrict the Company’s ability to repurchase shares of its common stock. Loans-to-One Borrower.
On a full-time equivalent basis, we employed 175 persons. While we expect to hire additional employees as we grow or as a result of attrition, we believe our human capital resources are adequate to support our current business. None of our employees are represented by a labor union, and management considers its relations with employees to be good.
On a full-time equivalent basis, we employed 183 persons. While we expect to hire additional employees as we grow or as a result of attrition, we believe our human capital resources are adequate to support our current business. None of our employees are represented by a labor union, and management considers its relations with employees to be good.
In 2022 Plumas Bank upgraded and replaced our fleet of ATM machines, enhanced incoming wire notifications and developed electronic tracking and monitoring for ACH origination and Remote Deposit Capture services and implemented the ability for our commercial online banking clients to originate one-time ACH payments.
During 2022 Plumas Bank upgraded and replaced our fleet of ATM machines, enhanced incoming wire notifications and developed electronic tracking and monitoring for ACH origination and Remote Deposit Capture services and implemented the ability for our commercial online banking clients to originate one-time ACH payments.
Its marketing strategy stresses its local ownership and commitment to serve the banking needs of individuals living and working in the Bank’s primary service areas. The Bank primarily generates revenue from loans and investment securities in its portfolio and, to a lesser extent, service fees.
Its marketing strategy emphasizes its local ownership and commitment to serve the banking needs of individuals living and working in the Bank’s primary service areas. The Bank primarily generates revenue from loans and investment securities in its portfolio and, to a lesser extent, service fees.
Under California law, the Bank’s ability to make aggregate secured and unsecured loans-to-one-borrower is limited to 25% and 15%, respectively, of unimpaired capital and surplus. At December 31, 2023, the Bank’s limit on aggregate secured loans-to-one-borrower was $48 million and unsecured loans-to-one borrower was $29 million.
Under California law, the Bank’s ability to make aggregate secured and unsecured loans-to-one-borrower is limited to 25% and 15%, respectively, of unimpaired capital and surplus. At December 31, 2024, the Bank’s limit on aggregate secured loans-to-one-borrower was $48 million and unsecured loans-to-one borrower was $29 million.
The CFPB has examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions, including the Bank, are generally subject to rules promulgated by the CFPB but continue to be examined and supervised by their primary federal banking regulators for consumer compliance purposes. 9 Anti-Money Laundering Laws.
The CFPB has examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions, including the Bank, are generally subject to rules promulgated by the CFPB but continue to be examined and supervised by their primary federal banking regulators for consumer compliance purposes. 9 Table of Contents Anti-Money Laundering Laws.
The Bank’s principal retail lending services include consumer and home equity loans. The Bank provides land development and construction loans on a limited basis. 2 Table of Contents The Bank provides Small Business Administration (SBA) loans to qualified borrowers throughout Northern California and Northern Nevada through its government-guaranteed lending center headquartered in Auburn, California.
The Bank’s principal retail lending services include consumer and home equity loans. The Bank provides land development and construction loans on a limited basis. 2 Table of Contents The Bank provides Small Business Administration (SBA) loans to qualified borrowers mostly in Northern California, through its government-guaranteed lending center headquartered in Auburn, California.
These include cashier’s checks, bank-by-mail, ATMs, night depository, safe deposit boxes, direct deposit, electronic funds transfers and other customary banking services. We offer a Remote Deposit product that allows our business customers to make non-cash deposits remotely from their physical location.
These include cashier’s checks, bank-by-mail, ATMs, night depository, safe deposit boxes, direct deposit, electronic funds transfers, FedNow®-receive Service and other customary banking services. We offer a Remote Deposit product that allows our business customers to make non-cash deposits remotely from their physical location.
However, at December 31, 2023, approximately 77% of the Bank's total loan portfolio consisted of real estate-secured loans, including real estate mortgage loans, real estate construction loans, consumer equity lines of credit, and agricultural loans secured by real estate.
However, at December 31, 2024, approximately 77% of the Bank's total loan portfolio consisted of real estate-secured loans, including real estate mortgage loans, real estate construction loans, consumer equity lines of credit, and agricultural loans secured by real estate.
To meet the needs of customers who prefer to bank electronically, we offer telephone banking, mobile banking, remote deposit, mobile deposit, and internet banking with bill payment capabilities. This high tech and high touch approach allows customers to tailor their access to our services based on their particular preferences. Employees. At December 31, 2023, we employed 189 persons.
To meet the needs of customers who prefer to bank electronically, we offer telephone banking, mobile banking, remote deposit, mobile deposit, and internet banking with bill payment capabilities. This high tech and high touch approach allows customers to tailor their access to our services based on their particular preferences. Employees. At December 31, 2024, we employed 197 persons.
At December 31, 2023, the Bank had $1.4 million in stock of the Federal Reserve Bank of San Francisco in compliance with this requirement. Capital Adequacy.
At December 31, 2024, the Bank had $1.4 million in stock of the Federal Reserve Bank of San Francisco in compliance with this requirement. Capital Adequacy.
At December 31, 2023, the Company’s and the Bank’s capital ratios exceed the thresholds necessary to be considered “well capitalized” under the Basel III framework.
At December 31, 2024, the Company’s and the Bank’s capital ratios exceed the thresholds necessary to be considered “well capitalized” under the Basel III framework.
Tier 2 capital may consist of a limited amount of the allowance for loan and lease losses and certain other instruments with some characteristics of equity. The inclusion of elements of Tier 2 capital is subject to certain other requirements and limitations of the federal banking agencies.
Tier 2 capital may consist of a limited amount of the allowance for credit losses and certain other instruments with some characteristics of equity. The inclusion of elements of Tier 2 capital is subject to certain other requirements and limitations of the federal banking agencies.
The Deposit Insurance Fund is funded primarily by FDIC assessments paid by the insured depository institution. The amount of FDIC assessments paid by a depository institution is based on its relative risk of default as measured by regulatory capital ratios and other supervisory factors. The Bank’s FDIC insurance expense totaled $737 thousand for 2023.
The Deposit Insurance Fund is funded primarily by FDIC assessments paid by the insured depository institution. The amount of FDIC assessments paid by a depository institution is based on its relative risk of default as measured by regulatory capital ratios and other supervisory factors. The Bank’s FDIC insurance expense totaled $750 thousand for 2024.
Shareholders may request a free copy of this policy from Plumas Bancorp, Ms. Jamie Huynh, Administrative Coordinator, 5525 Kietzke Lane, Suite 100, Reno, Nevada, 89511. Supervision and Regulation General. As a banking organization, we are extensively regulated under federal and state law.
Shareholders may request a free copy of this policy from Plumas Bancorp, Ms. Jamie Huynh, Assistant Corporate Secretary, 5525 Kietzke Lane, Suite 100, Reno, Nevada, 89511. Supervision and Regulation General. As a banking organization, we are extensively regulated under federal and state law.
In addition to its branch network, the Bank operates a lending office specializing in government-guaranteed lending in Auburn, California and commercial/agricultural lending offices located in Chico, California and Klamath Falls, Oregon. The Bank’s primary business is servicing the banking needs of these communities.
In addition to its branch network, the Bank operates a lending office specializing in government-guaranteed lending in Auburn, California with additional lenders in Utah and Southern California and commercial/agricultural lending offices located in Chico, California and Klamath Falls, Oregon. The Bank’s primary business is servicing the banking needs of these communities.
Interest bearing deposits include higher yielding sweep accounts designed for our commercial customers and for public entities such as municipalities. As of December 31, 2023, the Bank ha d 39,619 d eposit accounts with balances totaling approximately $1.3 billion, compared to 39,338 deposit accounts with balances totaling approximately $1.5 billion at December 31, 2022.
Interest bearing deposits include higher yielding sweep accounts designed for our commercial customers and for public entities such as municipalities. As of December 31, 2024, the Bank ha d 38,188 d eposit accounts with balances totaling approximately $1.4 billion, compared to 39,619 deposit accounts with balances totaling approximately $1.3 billion at December 31, 2023.
In addition, competitive conditions have intensified as banks have increasingly affiliated with securities firms, insurance companies, and other financial companies. 4 Table of Contents As of June 30, 2023, within towns in which the Bank has a branch as of this same date there were 157 banking branch offices of competing institutions (excluding credit unions, but including savings banks), including 111 branches of 16 banks having assets more than $10 billion.
In addition, competitive conditions have intensified as banks have increasingly affiliated with securities firms, insurance companies, and other financial companies. 4 Table of Contents As of June 30, 2024, within towns in which the Bank had a branch as of this same date there were 137 banking branch offices of competing institutions (excluding credit unions, but including savings banks), including 105 branches of 15 banks having assets more than $10 billion.
This mix of deposit customers resulted in a relatively modest average deposit balance of approxi mately $34 thou sand at December 31, 2023.
This mix of deposit customers resulted in a relatively modest average deposit balance of approxi mately $36 thou sand at December 31, 2024.
As of December 31, 2023, the principal areas to which we have directed our lending activities, and the percentage of our total loan portfolio comprised by each, were as follows: (i) commercial real estate – 56.8%; (ii) consumer loans (including residential equity lines of credit and automobile loans) – 14.7%, (iii) agricultural loans (including agricultural real estate loans) – 13.5%, (iv); commercial and industrial loans – 7.8%; (v) construction and land development – 6.0%; and (vi) residential real estate – 1.2% .
As of December 31, 2024, the principal areas to which we have directed our lending activities, and the percentage of our total loan portfolio comprised by each, were as follows: (i) commercial real estate – 63.7%; agricultural loans (including agricultural real estate loans) – 11.7%, (iii) consumer loans (including residential equity lines of credit and automobile loans) – 10.6%, (iv); commercial and industrial loans – 7.6%; (v) construction and land development – 5.3%; and (vi) residential real estate – 1.1% .
As of June 30, 2023, the FDIC estimated the Bank’s market share of insured deposits within the communities it serves to be as follows: Greenville and Portola 100%, Quincy 85%, Alturas 69%, Chester 60%, Susanville 59%, Kings Beach 42%, Fall River Mills 39%, Tahoe City 30%, Truckee 18%, Yuba City 4%, Carson City 3%, Redding 2% and Reno and Chico less than 1%.
As of June 30, 2024, the FDIC estimated the Bank’s market share of deposits within the communities it serves to be as follows: Greenville and Portola 100%, Quincy 78%, Alturas 67%, Susanville 57%, Kings Beach 51%, Chester 49%, Fall River Mills 37%, Tahoe City 30%, Truckee 18%, Yuba City 3%, Carson City 3%, Redding 2% and Reno and Chico less than 1%.
In 2007 the Bank was granted nationwide Preferred Lender status with the U.S. Small Business Administration, and we expect government-guaranteed lending to continue to be an important part of our overall lending operation.
In addition to its Auburn location the Bank has an SBA lender based in San Diego, California and an SBA lender based in South Jordan, Utah. In 2007 the Bank was granted nationwide Preferred Lender status with the U.S. Small Business Administration, and we expect government-guaranteed lending to continue to be an important part of our overall lending operation.
The Bank’s deposit accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to applicable legal limits. The Bank is a member of the Federal Reserve System.
The Bank is a California state-chartered bank that was incorporated and commenced business in 1980. The Bank’s deposit accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to applicable legal limits. The Bank is a member of the Federal Reserve System.
At December 31, 2023, the Bank had approximately $1.6 billion in assets, $949 million in net loans and $1.3 billion in deposits (including deposits of $3.6 million from the Company), other liabilities of $119 million and shareholders’ equity of $154 million. The Bank’s other liabilities include $80 million in borrowings under the BTFP and $23.1 million in repurchase agreements.
At December 31, 2024, the Bank had approximately $1.6 billion in assets, $1.0 billion in net loans and $1.4 billion in deposits (including deposits of $12.3 million from the Company), other liabilities of $59 million and shareholders’ equity of $181 million. The Bank’s other liabilities include $24.5 million in lease liabilities and $22.1 million in repurchase agreements.
It is the policy of the Company to periodically distribute excess retained earnings to the shareholders through the payment of cash dividends, subject to the approval of the Board of Directors. During 2023 the Company paid quarterly cash dividends of $0.25 per share on each of November 15, 2023, August 15, 2023, May 15, 2023 and February 15, 2023.
It is the policy of the Company to periodically distribute excess retained earnings to the shareholders through the payment of cash dividends, subject to the approval of the Board of Directors.
These reports are also available through the SEC’s website at www.sec.gov . The address of our headquarters is 5525 Kietzke Lane, Suite 100, Reno, Nevada, 89511. The Bank. The Bank is a California state-chartered bank that was incorporated and commenced business in 1980.
These reports are available at no cost on our website, www.plumasbank.com , as soon as reasonably practicable after filing with the SEC. These reports are also available through the SEC’s website at www.sec.gov . The address of our headquarters is 5525 Kietzke Lane, Suite 100, Reno, Nevada, 89511. The Bank.
Additionally, the SBA 7(a) loan product that is salable in the open market is variable rate tied to prime and we have seen a significant decline in interest in this product given the recent increases in the prime rate.
The SBA 7(a) loan product in which the guaranteed portion is salable in the secondary market is variable rate tied to prime and we have seen a significant decline in interest in this product during the last two years. However, we have successfully pivoted to producing fixed rate SBA 7(a) loans. We portfolio the entire fixed rate SBA 7(a) loan.
During 2022 the Company paid quarterly cash dividends of $0.16 per share on each of November 15, 2022, August 15, 2022, May 16, 2022 and February 15, 2022. During 2021 the Company paid quarterly cash dividends of $0.14 per share on each of November 15, 2021, August 16, 2021, May 17, 2021 and February 15, 2021. Interest Rate Swaps.
The Company paid a quarterly cash dividend of $0.27 per share on November 15, 2024, August 15, 2024, May 15, 2024, and February 15, 2024, and a quarterly cash dividend of $0.25 per share on November 15, 2023, August 15, 2023, May 15, 2023, and February 15, 2023. Business Concentrations.
At December 31, 2023, the Company had consolidated assets of $1.6 billion, deposits of $1.3 billion, other liabilities of $129 million and shareholders’ equity of $147 million.
At December 31, 2024, the Company had consolidated assets of $1.6 billion, deposits of $1.4 billion, other liabilities of $74 million and shareholders’ equity of $178 million. The Company’s other liabilities include a $15 million borrowing from one of the Company's correspondent banks, $24.8 million in lease liabilities and $22.1 million in repurchase agreements.
Removed
The Company’s other liabilities include a $10 million borrowing from one of the Company's correspondent banks, $80 million in borrowings under the Federal Reserve's Bank Term Funding Program (BTFP) and $23.1 million in repurchase agreements. These items are described in detail later in this Form 10-K.
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At December 31, 2024 fixed rate SBA 7(a) loans totaling $70 million with guaranteed portions totaling $52 million were included in our commercial and commercial real estate loan portfolio. The weighted rate of these loans was 8.3%.
Removed
In March 2023 the Trusts were dissolved. We file annual, quarterly, and other reports required under the Securities Exchange Act of 1934 with Securities and Exchange Commission (the “SEC”). These reports are available at no cost on our website, www.plumasbank.com , as soon as reasonably practicable after filing with the SEC.
Added
Once demand for variable rate SBA 7(a) loans returns to an acceptable level, we will likely move most of our production efforts back to this product.
Removed
During the fourth quarter of 2022 and continuing into 2023 we experienced a significant decline in premiums received on the sale of SBA loans; in response we chose to portfolio SBA 7(a) loans which do not meet a minimum premium on sale.
Added
In 2024, we upgraded our branch deposit acceptance system, entered real-time payments by implementing FedNow®-receive, optimized our outgoing wire transfer capabilities, and launched Payee Match for Positive Pay to aid in combatting the rising trend of check fraud. Additionally, beginning in 2024 we began accepting through our website applications for our Business Exxpress product.
Removed
During 2023 we chose not to sell $4.1 million in salable guaranteed portions of SBA 7(a) loans as they did not meet our minimum premium on sale.
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While we continue to produce SBA 7(a) loans for sale at a greatly reduced rate, we have had success in funding fixed rate SBA 7(a) loans which we portfolio. At December 31, 2023 fixed rate SBA 7(a) loans totaled $23 million.
Removed
During 2021 we increased our online banking product offerings for commercial clients including enhanced security controls. Additionally, we created a streamlined login process for our consumer clients to instantly access their accounts once enrolled in online banking.
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From time to time, we may use interest rate swaps or other instruments to manage our interest rate exposure and reduce the impact of future interest rate changes. These financial instruments are not used for trading or speculative purposes.
Removed
On May 26, 2020 we entered into two separate interest rate swap agreements effectively converting the $10 million in floating rate subordinated debentures issued in connection with our trust preferred securities to fixed rated obligations. The swaps have a 10-year maturity and are structured to effectively fix the LIBOR rate on the Subordinated Debentures at approximately 75 basis points.
Removed
These agreements have been designated and qualify as cash flow hedging instruments and, as such, changes in the fair value are recorded in accumulated other comprehensive income/loss to the extent the agreements are effective hedges. In January, 2023 we terminated these agreements receiving $1.7 million in proceeds on termination. Business Concentrations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

21 edited+24 added−2 removed108 unchanged
Biggest changePreviously, during the last ten years we completed two branch purchase and assumption transactions, the establishment of a new branch office in Reno, Nevada and a loan production office in Klamath Falls, Oregon. We may engage in additional acquisition activity and open additional offices in the future to expand our markets and further our growth strategy.
Biggest changeIn July 2021 we completed the acquisition of Bank of Feather River and in 2023 we opened a new branch in Chico California. Previously, during the last ten years we completed two branch purchase and assumption transactions, the establishment of a new branch office in Reno, Nevada and a loan production office in Klamath Falls, Oregon.
As a result, a significant majority of the loans in our loan portfolios as of December 31, 2023, were secured by properties and collateral located within these regions. As of such date, approximately 92% of the loans in our loan portfolio were made to borrowers who primarily conduct business or live in Northern California or Northern Nevada.
As a result, a significant majority of the loans in our loan portfolios as of December 31, 2024, were secured by properties and collateral located within these regions. As of such date, approximately 92% of the loans in our loan portfolio were made to borrowers who primarily conduct business or live in Northern California or Northern Nevada.
Inflation began to rise sharply at the end of 2021 and has remained at an elevated level through 2023. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
Inflation began to rise sharply at the end of 2021 and has remained at an elevated level through 2024. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. 14 The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. 14 Table of Contents The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.
Decreases in the fair value of securities available for sale resulting from increases in interest rates could have an adverse effect on shareholders’ equity. 12 A lack of liquidity could adversely affect our operations and jeopardize our business, financial condition and results of operations. Liquidity is essential to our business.
Decreases in the fair value of securities available for sale resulting from increases in interest rates could have an adverse effect on shareholders’ equity. 12 Table of Contents A lack of liquidity could adversely affect our operations and jeopardize our business, financial condition and results of operations. Liquidity is essential to our business.
If we fail to maintain capital to meet regulatory requirements, our financial condition, liquidity and results of operations would be materially and adversely affected. 13 The markets in which we operate are subject to the risks of drought, fires, earthquakes and other natural disasters.
If we fail to maintain capital to meet regulatory requirements, our financial condition, liquidity and results of operations would be materially and adversely affected. 13 Table of Contents The markets in which we operate are subject to the risks of drought, fires, earthquakes and other natural disasters.
A significant portion of our borrowers are involved in or are dependent on the agricultural industry in California, which requires water. As of December 31, 2023, approximately 13% of our loans were categorized as agricultural loans. As a result of the drought, there have been governmental proposals concerning the distribution or rationing of water.
A significant portion of our borrowers are involved in or are dependent on the agricultural industry in California, which requires water. As of December 31, 2024, approximately 13% of our loans were categorized as agricultural loans. As a result of the drought, there have been governmental proposals concerning the distribution or rationing of water.
Declines in real estate market values or increases in commercial and consumer delinquency levels could require increased net charge-offs which could adversely affect our financial condition, results of operations and cash flows. 11 Inflationary pressures and rising prices may affect our results of operations and financial condition.
Declines in real estate market values or increases in commercial and consumer delinquency levels could require increased net charge-offs which could adversely affect our financial condition, results of operations and cash flows. 11 Table of Contents Inflationary pressures and rising prices may affect our results of operations and financial condition.
As of December 31, 2023, approximately 77% of our total loan portfolio is secured by real estate, the majority of which is commercial real estate. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the area in which the real estate is located.
As of December 31, 2024, approximately 77% of our total loan portfolio is secured by real estate, the majority of which is commercial real estate. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the area in which the real estate is located.
For these reasons, the amount and frequency of dividends that we pay to shareholders may vary from time to time. 15 Damage to our reputation could significantly harm our business and prospects. Our reputation is an important asset.
For these reasons, the amount and frequency of dividends that we pay to shareholders may vary from time to time. 15 Table of Contents Damage to our reputation could significantly harm our business and prospects. Our reputation is an important asset.
As of December 31, 2023, our CRE loans for purposes of this guidance represented 242% of our total risk-based capital. As of December 31, 2023, total loans secured by CRE under construction and land development represented 54% of our total risk-based capital.
As of December 31, 2024, our CRE loans for purposes of this guidance represented 242% of our total risk-based capital. As of December 31, 2024, total loans secured by CRE under construction and land development represented 54% of our total risk-based capital.
This includes, but is not limited to, operational or systems failures, disruption of client operations and activities, ineffectiveness or exposure due to interruption in third party support as well as the loss of key colleagues or failure on the part of key colleagues to perform properly. We face risks relating to our reliance on third party vendors.
This includes, but is not limited to, operational or systems failures, disruption of client operations and activities, ineffectiveness or exposure due to interruption in third party support as well as the loss of key colleagues or failure on the part of key colleagues to perform properly.
If we pursue our growth strategy too aggressively or fail to attract qualified personnel, control costs or maintain asset quality, or if factors beyond management’s control divert attention away from our business operations, our pursuit of growth could have a material adverse impact on our business. Our accounting estimates and risk management processes rely on analytical and forecasting models.
If we pursue our growth strategy too aggressively or fail to attract qualified personnel, control costs or maintain asset quality, or if factors beyond management’s control divert attention away from our business operations, our pursuit of growth could have a material adverse impact on our business.
Any of these risks could have an adverse effect on our business, consolidated financial condition and consolidated results of operations. 16 General Risk Factors The trading price of our common stock may be volatile or may decline.
Any of these risks could have an adverse effect on our business, consolidated financial condition and consolidated results of operations. General Risk Factors The trading price of our common stock may be volatile or may decline. The trading price of our common stock may fluctuate as a result of a number of factors, many of which are outside our control.
A significant decline in the trading price of our common stock price could result in substantial losses for individual shareholders and could lead to costly and disruptive securities litigation. 17 The trading volume of our common stock is limited. Although our common stock is traded on the Nasdaq Stock Market, trading volume to date has been relatively modest.
A significant decline in the trading price of our common stock price could result in substantial losses for individual shareholders and could lead to costly and disruptive securities litigation. 17 Table of Contents The trading volume of our common stock is limited.
Regulatory policies regarding loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability. The federal banking agencies have issued guidance regarding concentrations in commercial real estate (“CRE”) lending for banks that are deemed to have particularly high concentrations of CRE loans within their lending portfolios.
The federal banking agencies have issued guidance regarding concentrations in commercial real estate (“CRE”) lending for banks that are deemed to have particularly high concentrations of CRE loans within their lending portfolios.
Acquiring other banks or branches involves various other risks commonly associated with acquisitions including difficulty in estimating the value of the business to be acquired, integrating the operations, and retaining key employees and customers. We cannot assure that future acquisitions or new offices will be successful.
We may engage in additional acquisition activity and open additional offices in the future to expand our markets and further our growth strategy. Acquiring other banks or branches involves various other risks commonly associated with acquisitions including difficulty in estimating the value of the business to be acquired, integrating the operations, and retaining key employees and customers.
Further, some legal/regulatory frameworks provide for the imposition of fines, restitution, or penalties for noncompliance even though the noncompliance was inadvertent or unintentional and even though there were in place at the time systems and procedures designed to ensure compliance.
Further, some legal/regulatory frameworks provide for the imposition of fines, restitution, or penalties for noncompliance even though the noncompliance was inadvertent or unintentional and even though there were in place at the time systems and procedures designed to ensure compliance. 16 Table of Contents Regulatory policies regarding loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability.
Further, growth may strain our administrative, managerial, financial and operational resources and increase demands on our systems and controls.
We cannot assure that future acquisitions or new offices will be successful. Further, growth may strain our administrative, managerial, financial and operational resources and increase demands on our systems and controls.
Ultimately, competition can reduce our profitability, as well as make it more difficult to increase the size of our loan portfolio and deposit base. Our growth strategy involves risks. In July 2021 we completed the acquisition of Bank of Feather River and in 2023 we opened a new branch in Chico California.
Ultimately, competition can reduce our profitability, as well as make it more difficult to increase the size of our loan portfolio and deposit base. Our growth strategy involves risks. In January 2025, we announced our proposed merger with Cornerstone Community Bancorp.
The limited trading market for our common stock may lead to exaggerated fluctuations in market prices and possible market inefficiencies compared to more actively traded securities. It may also make it more difficult for investors to sell our common stock at desired prices, especially for holders seeking to dispose of a large number of shares of stock.
It may also make it more difficult for investors to sell our common stock at desired prices, especially for holders seeking to dispose of a large number of shares of stock. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
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The trading price of our common stock may fluctuate as a result of a number of factors, many of which are outside our control.
Added
See “Risks Related to Our Proposed Acquisition of Cornerstone Community Bancorp.” Our accounting estimates and risk management processes rely on analytical and forecasting models.
Removed
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Added
The continued evolution and increased use of artificial intelligence technologies may further increase these risks. Technology is changing rapidly and may put us at a competitive disadvantage. The banking industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. Effective use of technology increases efficiency and enables banks to better serve customers.
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Our future success depends, in part, on our ability and the ability of our third-party partners to effectively implement new technology.
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The widespread adoption of new technologies, including mobile banking services, artificial intelligence, cryptocurrencies and payment systems, could require us in the future to make substantial expenditures to modify or adapt our existing products and services as we grow and develop new products to satisfy our customers’ expectations and comply with regulatory guidance.
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Many of our larger competitors have substantially greater resources than we do to invest in technological improvements. As a result, they may be able to offer, or more quickly offer, additional or superior products that could put us at a competitive disadvantage.
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The use of artificial intelligence in our marketplace may result in reputational harm or liability, or could otherwise adversely affect our business. Artificial intelligence, including generative artificial intelligence, is or may be enabled by or integrated into our products and services or those developed by our third-party partners.
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As with many developing technologies, artificial intelligence presents risks and challenges that could affect its further development, adoption, and use, and therefore our business.
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Artificial intelligence algorithms may be flawed, for example datasets may contain biased information or otherwise be insufficient; and inappropriate or controversial data practices could impair the acceptance of artificial intelligence solutions and result in burdensome new regulations.
Added
If the analyses that products incorporating artificial intelligence assist in producing for us or our third-party partners are deficient, biased or inaccurate, we could be subject to competitive harm, potential legal liability and brand or reputational harm. The use of artificial intelligence may also present ethical issues.
Added
If we or our third-party partners offer artificial intelligence enabled products that are controversial because of their purported or real impact on human rights, privacy, or other issues, we may experience competitive harm, potential legal liability and brand or reputational harm.
Added
In addition, we expect that governments will continue to assess and implement new laws and regulations concerning the use of artificial intelligence, which may affect or impair the usability or efficiency of our products and services and those developed by our third-party partners. We face risks relating to our reliance on third party vendors.
Added
Risks Related to Our Proposed Acquisition of Cornerstone Community Bancorp Our failure to manage our proposed acquisition of Cornerstone Community Bancorp may have a material adverse effect on our financial condition and results of operations.
Added
In January 2025, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Cornerstone Community Bancorp (“Cornerstone”), which is the holding company for Cornerstone Community Bank based in Red Bluff, California.
Added
The Merger Agreement provides that, subject to the terms and conditions in the agreement, Cornerstone will merge with and into the Company, with the Company as the surviving corporation (the “Merger”).
Added
Acquiring other banks involves risks commonly associated with acquisitions generally, including, among other things, the risk that acquisition activity may divert our management’s attention from other aspects of our business, the difficulty in estimating the value of a target company, and the risk that an acquired business may not perform in accordance with our expectations.
Added
Our future results of operations will depend in large part on our ability to successfully integrate Cornerstone’s operations with our own and retain Cornerstone’s customers.
Added
If we are unable to successfully manage the risks related to the Merger and the integration of the separate business, customers, employees and operating systems of Cornerstone with our own, our financial condition and results of operations may be adversely affected. We may fail to realize the anticipated benefits of the proposed merger with Cornerstone.
Added
The success of the Merger will depend on, among other things, our ability to combine and integrate the business of Cornerstone into our business. If we are unable to successfully achieve this objective, the anticipated benefits of the Merger may not be realized fully, or at all, or may take longer to realize than expected.
Added
The Company and Cornerstone operate independently and will continue to do so until the Merger is completed. It is possible that the integration process or other factors could result in the loss or departure of key employees, the disruption of the ongoing business of the Company or Cornerstone or inconsistencies in standards, controls, procedures and policies.
Added
It is also possible that clients, customers, depositors and counterparties of Cornerstone could choose to discontinue their relationships with the Company after the Merger, which would adversely affect the future anticipated performance of the Company.
Added
It is also possible that we may not realize all or some of the anticipated cost savings of the Merger, or that the realization of cost savings may be delayed. These risks could have an adverse effect on the Company, its financial condition, prospects and results of operations following the consummation of the Merger.
Added
We will incur substantial costs related to the Merger. We have incurred and expect to incur a number of significant non-recurring costs associated with the Merger. These costs include legal, financial advisory, accounting, consulting, and other advisory fees, severance/employee benefit-related costs and other related costs. Some of these costs are payable regardless of whether the Merger is completed.
Added
We may incur additional costs to maintain employee morale and retain key employees during the pendency of the Merger. There can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction costs over time.
Added
Although our common stock is traded on the Nasdaq Stock Market, trading volume to date has been relatively modest. The limited trading market for our common stock may lead to exaggerated fluctuations in market prices and possible market inefficiencies compared to more actively traded securities.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed7 unchanged
Biggest changeWe have developed processes to identify and oversee risks from cybersecurity threats associated with third-party service providers, which include the information security team assessing cybersecurity robustness during vendor onboarding, the inclusion of protective provisions in vendor agreements, and risk-based monitoring of vendors on an ongoing basis.
Biggest changeWe have developed processes to identify and oversee risks from cybersecurity threats associated with third-party service providers, which include the information security team assessing cybersecurity robustness during third-party vendor onboarding, the inclusion of protective provisions in third-party vendor agreements, and risk-based monitoring of third-party vendors on an ongoing basis.
The Company also engages with key vendors, industry participants, government agencies, and intelligence and law enforcement communities as part of our efforts, which are reported to the Technology Steering Committee and Board of Directors.
The Company also engages with key third-party vendors, industry participants, government agencies, and intelligence and law enforcement communities as part of our efforts, which are reported to the Technology Steering Committee and Board of Directors.

Item 2. Properties

Properties — owned and leased real estate

5 edited+2 added−2 removed2 unchanged
Biggest changeLake Boulevard 336 West Main Street 120 North Pine Street Tahoe City, California Quincy, California (5) Portola, California (5) 43163 Highway 299 E 121 Crescent Street 255 Main Street Fall River Mills, California (5) Greenville, California (5) Chester, California (5) 510 North Main Street 3000 Riverside Drive 8475 North Lake Boulevard Alturas, California (5) Susanville, California (5) Kings Beach, California 11638 Donner Pass Road 5050 Meadowood Mall Circle 1280 Bridge St.
Biggest changeCarson St. 107 S. 7 th Street 5525 Kietzke Lane, Suite 100 Carson City, Nevada Klamath Falls, Oregon (3) Reno, Nevada (1) 5050 Meadowood Mall Circle 336 West Main Street 120 North Pine Street Reno, Nevada Quincy, California Portola, California 11638 Donner Pass Road 43163 Highway 299 E 121 Crescent Street Truckee, California Fall River Mills, California Greenville, California 255 Main Street 510 North Main Street 3000 Riverside Drive Chester, California Alturas, California Susanville, California (1) Non-branch administrative or credit administrative offices.
ITEM 2. PROPERTIES Of the Company’s fifteen depository branches, thirteen are owned and two are leased. 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 three administrative offices and owns three administrative facilities. Owned Properties 35 South Lindan Avenue 32 Central Avenue 80 W.
ITEM 2. PROPERTIES Of the Company’s fifteen depository branches, four are owned and eleven are leased. 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 four administrative offices and owns three administrative facilities. Owned Properties 35 South Lindan Avenue 32 Central Avenue 80 W.
Future minimum lease payments at December 31, 2023 for operating leases having initial or remaining noncancelable lease terms in excess of one year are as follows: Year Ending December 31, 2024 $ 481,000 2025 385,000 2026 263,000 2027 232,000 2028 146,000 Thereafter 2,684,000 $ 4,191,000 The Company maintains insurance coverage on its premises, leaseholds and equipment, including business interruption and record reconstruction coverage.
Future minimum lease payments at December 31, 2024 for operating leases having initial or remaining noncancelable lease terms in excess of one year are as follows: Year Ending December 31, 2025 $ 2,910,000 2026 2,838,000 2027 2,764,000 2028 2,710,000 2029 2,765,000 Thereafter 29,076,000 $ 43,063,000 The Company maintains insurance coverage on its premises, leaseholds and equipment, including business interruption and record reconstruction coverage.
Truckee, California (5) Reno, Nevada (5) Yuba City, California (4) 900 Mangrove Avenue 315 Birch St. Chico, California Westwood, California (1) (5) Leased Properties 495 Idaho Street #102 1335 Hilltop Drive 11641 Blocker Dr. Suite 140 Elko, Nevada (1) Redding, California Auburn, California (2) 1101 N.
Main Street Quincy, California (1) Quincy, California (1) Quincy, California (1) 215 North Lake Boulevard 900 Mangrove Avenue 315 Birch Street Tahoe City, California Chico, California Westwood, California (1) 1280 Bridge Street 8475 North Lake Boulevard Yuba City, California (4) Kings Beach, California Leased Properties 495 Idaho Street #102 1335 Hilltop Drive 11641 Blocker Drive.
(5) These properties were sold and leased backed during the first quarter of 2024. Including variable lease expense, total rent expense for the years ended December 31, 2023, 2022 and 2021 were $635,000, $611,000 and $507,000, respectively. The expiration dates of the leases vary, with the first such lease expiring during 2024 and the last such lease expiring during 2044.
(2) SBA lending office. (3) Commercial lending office. (4) Branch subject to long term land lease. Including variable lease expense, total rent expense for the years ended December 31, 2024, 2023 and 2022 were $3,064,000, $635,000 and $611,000, respectively.
Removed
Main St. Quincy, California (1) (5) Quincy, California (1) (5) Quincy, California (1) 215 N.
Added
Suite 140 Elko, Nevada (1) Redding, California Auburn, California (2) 1101 N.
Removed
Carson St. 107 S. 7 th St. 5525 Kietzke Lane, Suite 100 Carson City, Nevada Klamath Falls, Oregon (3) Reno, Nevada (1) 424 N. Mill Creek Quincy, California (1) (1) Non-branch administrative or credit administrative offices. (2) SBA lending office. (3) Commercial lending office. (4) Branch subject to long term land lease.
Added
The expiration dates of the leases vary, with the first such lease expiring during 2025 and the last such lease expiring during 2044.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed1 unchanged
Biggest changeAt or for the year ended December 31, 2023 2022 2021 2020 2019 (dollars in thousands except per share information) Statement of Income Interest income $ 74,592 $ 59,758 $ 48,070 $ 39,624 $ 39,302 Interest expense 4,798 1,249 1,136 1,228 1,747 Net interest income 69,794 58,509 46,934 38,396 37,555 Provision for credit losses 2,775 1,300 1,125 3,175 1,500 Non-interest income 10,722 11,050 8,716 8,463 8,135 Non-interest expense 37,530 32,590 26,038 23,732 22,810 Net income before income taxes 40,211 35,669 28,487 19,952 21,380 Provision for income taxes 10,435 9,225 7,478 5,477 5,868 Net income $ 29,776 $ 26,444 $ 21,009 $ 14,475 $ 15,512 Total assets $ 1,610,416 $ 1,621,044 $ 1,614,074 $ 1,111,576 $ 865,191 Total gross loans $ 958,564 $ 911,949 $ 838,587 $ 709,246 $ 617,561 Loans held for sale $ - $ 2,301 $ 31,277 $ 693 $ 2,123 Allowance for credit losses $ 12,867 $ 10,717 $ 10,352 $ 9,902 $ 7,243 Total deposits $ 1,333,655 $ 1,457,809 $ 1,438,999 $ 973,974 $ 747,324 Total shareholders’ equity $ 147,617 $ 119,004 $ 134,082 $ 100,154 $ 84,505 Balance sheet (period average) Total assets $ 1,587,149 $ 1,642,895 $ 1,386,028 $ 1,015,297 $ 852,664 Total gross loans $ 933,464 $ 856,728 $ 785,527 $ 695,024 $ 586,672 Loans held for sale $ 533 $ 8,771 $ 15,258 $ 4,231 $ 2,186 Total deposits $ 1,403,957 $ 1,487,346 $ 1,231,618 $ 886,515 $ 747,196 Total shareholders’ equity $ 126,984 $ 120,868 $ 117,967 $ 93,152 $ 76,737 Asset quality ratios Nonperforming loans/total loans 0.50 % 0.13 % 0.58 % 0.36 % 0.33 % Nonperforming assets/total assets 0.33 % 0.07 % 0.33 % 0.27 % 0.33 % Allowance for credit losses/total loans 1.34 % 1.18 % 1.23 % 1.40 % 1.17 % Net loan charge-offs $ 954 $ 935 $ 675 $ 516 $ 1,215 Performance ratios Return on average assets 1.88 % 1.61 % 1.52 % 1.43 % 1.82 % Return on average equity 23.4 % 21.9 % 17.8 % 15.5 % 20.2 % Net interest margin 4.71 % 3.82 % 3.63 % 4.02 % 4.75 % Loans to deposits 71.9 % 62.6 % 58.3 % 72.9 % 82.6 % Efficiency ratio (1) 46.6 % 46.9 % 46.8 % 50.6 % 49.9 % Per share information Basic earnings $ 5.08 $ 4.53 $ 3.82 $ 2.80 $ 3.01 Diluted earnings $ 5.02 $ 4.47 $ 3.76 $ 2.77 $ 2.97 Common cash dividends $ 1.00 $ 0.64 $ 0.56 $ 0.36 $ 0.46 Book value per common share $ 25.09 $ 20.34 $ 23.05 $ 19.33 $ 16.36 Common shares outstanding at period end 5,871,523 5,850,216 5,816,991 5,182,232 5,165,760 Capital ratios – Plumas Bank Leverage ratio 10.8 % 9.2 % 8.4 % 9.2 % 10.4 % Tier 1 risk-based capital 15.7 % 14.7 % 14.4 % 14.2 % 13.1 % Total risk-based capital 16.9 % 15.7 % 15.5 % 15.4 % 14.2 % (1) The efficiency ratio is defined as non-interest expense divided by total revenue (net interest income and non-interest income)
Biggest changeAt or for the year ended December 31, 2024 2023 2022 2021 2020 (dollars in thousands except per share information) Statement of Income Interest income $ 84,325 $ 74,592 $ 59,758 $ 48,070 $ 39,624 Interest expense 10,634 4,798 1,249 1,136 1,228 Net interest income 73,691 69,794 58,509 46,934 38,396 Provision for credit losses 1,196 2,775 1,300 1,125 3,175 Non-interest income 8,780 10,722 11,050 8,716 8,463 Non-interest expense 42,274 37,530 32,590 26,038 23,732 Net income before income taxes 39,001 40,211 35,669 28,487 19,952 Provision for income taxes 10,382 10,435 9,225 7,478 5,477 Net income $ 28,619 $ 29,776 $ 26,444 $ 21,009 $ 14,475 Total assets $ 1,623,326 $ 1,610,416 $ 1,621,044 $ 1,614,074 $ 1,111,576 Total gross loans $ 1,015,424 $ 958,564 $ 911,949 $ 838,587 $ 709,246 Loans held for sale $ - $ - $ 2,301 $ 31,277 $ 693 Allowance for credit losses $ 13,196 $ 12,867 $ 10,717 $ 10,352 $ 9,902 Total deposits $ 1,371,101 $ 1,333,655 $ 1,457,809 $ 1,438,999 $ 973,974 Total shareholders’ equity $ 177,899 $ 147,317 $ 119,004 $ 134,082 $ 100,154 Balance sheet (period average) Total assets $ 1,649,341 $ 1,587,149 $ 1,642,895 $ 1,386,028 $ 1,015,297 Total gross loans $ 989,313 $ 933,997 $ 865,499 $ 800,785 $ 699,255 Total deposits $ 1,331,412 $ 1,403,957 $ 1,487,346 $ 1,231,618 $ 886,515 Total shareholders’ equity $ 166,255 $ 126,984 $ 120,868 $ 117,967 $ 93,152 Asset quality ratios Nonperforming loans/total loans 0.40 % 0.50 % 0.13 % 0.58 % 0.36 % Nonperforming assets/total assets 0.27 % 0.33 % 0.07 % 0.33 % 0.27 % Allowance for credit losses/total loans 1.30 % 1.34 % 1.18 % 1.23 % 1.40 % Net loan charge-offs $ 1,046 $ 954 $ 935 $ 675 $ 516 Performance ratios Return on average assets 1.74 % 1.88 % 1.61 % 1.52 % 1.43 % Return on average equity 17.2 % 23.4 % 21.9 % 17.8 % 15.5 % Net interest margin 4.79 % 4.71 % 3.82 % 3.63 % 4.02 % Loans to deposits 74.1 % 71.9 % 62.6 % 58.3 % 72.9 % Efficiency ratio (1) 51.3 % 46.6 % 46.9 % 46.8 % 50.6 % Per share information Basic earnings $ 4.85 $ 5.08 $ 4.53 $ 3.82 $ 2.80 Diluted earnings $ 4.80 $ 5.02 $ 4.47 $ 3.76 $ 2.77 Common cash dividends $ 1.08 $ 1.00 $ 0.64 $ 0.56 $ 0.36 Book value per common share $ 30.14 $ 25.09 $ 20.34 $ 23.05 $ 19.33 Common shares outstanding at period end 5,903,368 5,871,523 5,850,216 5,816,991 5,182,232 Capital ratios – Plumas Bank Leverage ratio 11.9 % 10.8 % 9.2 % 8.4 % 9.2 % Tier 1 risk-based capital 17.3 % 15.7 % 14.7 % 14.4 % 14.2 % Total risk-based capital 18.5 % 16.9 % 15.7 % 15.5 % 15.4 % (1) The efficiency ratio is defined as non-interest expense divided by total revenue (net interest income and non-interest income).
We did not repurchase any shares of our common stock during the quarterly period ended December 31, 2023. 22 Table of Contents The following table presents a summary of selected financial data and should be read in conjunction with the Company’s consolidated financial statements and notes thereto included under Item 8 – Financial Statements and Supplementary Data.
We did not repurchase any shares of our common stock during the quarterly period ended December 31, 2024. 22 Table of Contents The following table presents a summary of selected financial data and should be read in conjunction with the Company’s consolidated financial statements and notes thereto included under Item 8 – Financial Statements and Supplementary Data.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCK HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. The Company’s common stock is traded on the NASDAQ Capital Market under the ticker symbol "PLBC". As of December 31, 2023, there wer e 5,871,523 shares of the Company’s common stock outstanding held by approximatel y 2,500 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCK HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. The Company’s common stock is traded on the NASDAQ Capital Market under the ticker symbol "PLBC". As of December 31, 2024, there wer e 5,903,368 shares of the Company’s common stock outstanding held by approximatel y 1,800 shareholders of record.
The payment of future dividends is at the discretion of the Board. The Board generally considers the payment of dividends each quarter based on a number of factors, including our results of operations, general business conditions, growth, financial condition, anticipated capital needs and other factors deemed relevant by the Board.
The Board generally considers the payment of dividends each quarter based on a number of factors, including our results of operations, general business conditions, growth, financial condition, anticipated capital needs and other factors deemed relevant by the Board. Further, the Company is subject to various restrictions on the payment of dividends.
Further, the Company is subject to various restrictions on the payment of dividends. See Note 13 “Shareholders’ Equity – Dividend Restrictions” of the Company’s Consolidated Financial Statements in Item 8 – Financial Statements and Supplementary Data of this report. Issuer Purchases of Equity Securities.
See Note 13 “Shareholders’ Equity – Dividend Restrictions” of the Company’s Consolidated Financial Statements in Item 8 – Financial Statements and Supplementary Data of this report. Issuer Purchases of Equity Securities.
The Company paid a quarterly cash dividend of $0.25 per share on November 15, 2023, August 15, 2023, May 15, 2023 and February 15, 2023 and a quarterly cash dividend of $0.16 per share on February 15, 2022, May 16, 2022, August 15, 2022, and November 15, 2022, and a quarterly cash dividend of $0.14 per share on February 15, 2021, May 17, 2021, August 16, 2021, and November 15, 2021.
The Company paid a quarterly cash dividend of $0.27 per share on November 15, August 15, 2024, May 15, 2024 and February 15, 2024, and a quarterly cash dividend of $0.25 per share on November 15, 2023, August 15, 2023, May 15, 2023, and February 15, 2023. The payment of future dividends is at the discretion of the Board.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

120 edited+43 added−51 removed78 unchanged
Biggest changeUnder CECL the ACL on unfunded loan commitments remains in Other Liabilities while the related provision expense is included in the provision for credit loss expense. 35 Table of Contents The following table provides selected credit ratios as of December 31, 2023, 2022 and 2021: (dollars in thousands) As of and for the Year Ended December 31, 2023 2022 2021 Allowance for credit losses to total loans outstanding 1.34 % 1.18 % 1.23 % Allowance for credit losses $ 12,867 $ 10,717 $ 10,352 Total loans outstanding $ 961,471 $ 911,949 $ 838,587 Nonaccrual loans to total loans outstanding 0.50 % 0.13 % 0.58 % Nonaccrual loans $ 4,820 $ 1,172 $ 4,863 Total loans outstanding $ 961,471 $ 911,949 $ 838,587 Allowance for credit losses to nonaccrual loans 266.95 % 914.42 % 212.87 % Allowance for credit losses $ 12,867 $ 10,717 $ 10,352 Nonaccrual loans $ 4,820 $ 1,172 $ 4,863 Net charge-offs during the period to average loans outstanding: Commercial 0.10 % 0.21 % 0.09 % Net charge-off during the period $ 79 $ 180 $ 116 Average amount outstanding $ 75,760 $ 85,460 $ 133,433 Agricultural 0.00 % 0.00 % 0.00 % Net charge-off during the period $ - $ - $ - Average amount outstanding $ 124,798 $ 124,389 $ 99,598 Real estate - residential (0.02 %) (0.02 %) (0.03 %) Net charge-off during the period $ (3 ) $ (3 ) $ (3 ) Average amount outstanding $ 14,223 $ 15,680 $ 11,236 Real estate - commercial 0.00 % 0.00 % 0.00 % Net charge-off during the period $ (1 ) $ 17 $ (8 ) Average amount outstanding $ 520,498 $ 445,348 $ 376,048 Real estate - construction & land development 0.00 % 0.00 % 0.00 % Net charge-off during the period $ - $ - $ - Average amount outstanding $ 55,034 $ 57,367 $ 36,446 Equity lines of credit (0.00 %) (0.00 %) (0.01 %) Net charge-off during the period $ - $ - $ (4 ) Average amount outstanding $ 36,371 $ 34,458 $ 33,662 Auto 0.79 % 0.80 % 0.63 % Net charge-off during the period $ 804 $ 713 $ 567 Average amount outstanding $ 101,800 $ 89,442 $ 90,651 Other 1.36 % 0.61 % 0.16 % Net charge-off during the period $ 75 $ 28 $ 7 Average amount outstanding $ 5,513 $ 4,584 $ 4,453 Total Loans 0.10 % 0.11 % 0.09 % Net charge-off during the period $ 954 $ 935 $ 675 Average amount outstanding $ 933,997 $ 856,728 $ 785,527 The allowance for credit losses totaled $12.9 million at December 31, 2023, and $10.7 million at December 31, 2022.
Biggest changeThe Company's policy is that nonaccrual loans also represent the subset of loans in which borrowers are experiencing financial difficulty such that an evaluation of the source of repayment is required to determine if the nonaccrual loans should be categorized as collateral dependent. 34 Table of Contents The following table provides selected credit ratios as of December 31, 2024, 2023 and 2022: (dollars in thousands) As of and for the Year Ended December 31, 2024 2023 2022 Allowance for credit losses to total loans outstanding 1.30 % 1.34 % 1.18 % Allowance for credit losses $ 13,196 $ 12,867 $ 10,717 Total loans outstanding $ 1,015,424 $ 958,564 $ 911,949 Nonaccrual loans to total loans outstanding 0.40 % 0.50 % 0.13 % Nonaccrual loans $ 4,105 $ 4,820 $ 1,172 Total loans outstanding $ 1,015,424 $ 958,564 $ 911,949 Allowance for credit losses to nonaccrual loans 321.46 % 266.95 % 914.42 % Allowance for credit losses $ 13,196 $ 12,867 $ 10,717 Nonaccrual loans $ 4,105 $ 4,820 $ 1,172 Net charge-offs during the period to average loans outstanding: Commercial 0.35 % 0.10 % 0.21 % Net charge-off during the period $ 277 $ 79 $ 180 Average amount outstanding $ 78,279 $ 75,760 $ 85,460 Agricultural 0.00 % 0.00 % 0.00 % Net charge-off during the period $ - $ - $ - Average amount outstanding $ 122,871 $ 124,798 $ 124,389 Real estate - residential (0.03 %) (0.02 %) (0.02 %) Net charge-off during the period $ (4 ) $ (3 ) $ (3 ) Average amount outstanding $ 11,692 $ 14,223 $ 15,680 Real estate - commercial 0.00 % 0.00 % 0.00 % Net charge-off during the period $ (1 ) $ (1 ) $ 17 Average amount outstanding $ 589,551 $ 520,498 $ 445,348 Real estate - construction & land development 0.00 % 0.00 % 0.00 % Net charge-off during the period $ - $ - $ - Average amount outstanding $ 63,399 $ 55,034 $ 57,367 Equity lines of credit (0.00 %) (0.00 %) (0.00 %) Net charge-off during the period $ - $ - $ - Average amount outstanding $ 37,620 $ 36,371 $ 34,458 Auto 0.88 % 0.79 % 0.80 % Net charge-off during the period $ 715 $ 804 $ 713 Average amount outstanding $ 80,828 $ 101,800 $ 89,442 Other 1.16 % 1.36 % 0.61 % Net charge-off during the period $ 59 $ 75 $ 28 Average amount outstanding $ 5,073 $ 5,513 $ 4,584 Total Loans 0.11 % 0.10 % 0.11 % Net charge-off during the period $ 1,046 $ 954 $ 935 Average amount outstanding $ 989,313 $ 933,997 $ 856,728 The allowance for credit losses totaled $13.2 million at December 31, 2024, and $12.9 million at December 31, 2023.
To estimate expected losses the Company generally utilizes historical loss trends and the remaining contractual lives of the loan portfolios to determine estimated credit losses through a reasonable and supportable forecast period.
To estimate expected losses the Company generally utilizes historical loss trends and the remaining contractual lives of the loan portfolios to determine estimated credit losses through a reasonable and supportable forecast period.
In total interest paid on deposits increased by $2.9 million broken down by product type as follows: Money market accounts - $1.1 million, Savings accounts - $0.4 million and Time deposits - $1.4 million. During March we redeemed our junior subordinated debentures with funding provided by a $10 million borrowing on Plumas Bancorp's line of credit/term loan facility.
In total interest paid on deposits increased by $2.9 million broken down by product type as follows: Money market accounts - $1.1 million, Savings accounts - $0.4 million and Time deposits - $1.4 million. During March 2023 we redeemed our junior subordinated debentures with funding provided by a $10 million borrowing on Plumas Bancorp's line of credit/term loan facility.
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.
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.
At both January 1, 2023, the adoption and implementation date of ASC Topic 326, and December 31, 2023, the Company utilized a reasonable and supportable forecast period of approximately four quarters and obtained the forecast data from publicly available sources.
At both January 1, 2023, the adoption and implementation date of ASC Topic 326, 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.
These agreements have been designated and qualify as cash flow hedging instruments and, as such, changes in the fair value are recorded in accumulated other comprehensive income/loss to the extent the agreements are effective hedges. The swaps were determined to be fully effective during all periods presented. As such, no amount of ineffectiveness has been included in net income.
These agreements had been designated and qualify as cash flow hedging instruments and, as such, changes in the fair value are recorded in accumulated other comprehensive income/loss to the extent the agreements are effective hedges. The swaps were determined to be fully effective during all periods presented. As such, no amount of ineffectiveness has been included in net income.
Management believes that the Bank met all its capital adequacy requirements as of December 31, 2023. 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.
Management believes that the Bank met all its capital adequacy requirements as of December 31, 2024. 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.
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, Federal funds sold and investment securities, to serve as a source of funding for future loan growth.
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.
Based upon the analysis of available evidence, management has determined that it is "more likely than not" that all deferred income tax assets as of December 31, 2023 and 2022 will be fully realized and therefore no valuation allowance was recorded.
Based upon the analysis of available evidence, management has determined that it is "more likely than not" that all deferred income tax assets as of December 31, 2024 and 2023 will be fully realized and therefore no valuation allowance was recorded.
(2) Average nonaccrual loan balances of $3.0 million for 2023, $2.8 million for 2022 and $4.4 million for 2021 are included in average loan balances for computational purposes. (3) Loan origination fees and costs are included in interest income as adjustments of the loan yields over the life of the loan using the interest method.
(2) Average nonaccrual loan balances of $4.4 million for 2024, $3.0 million for 2023 and $2.8 million for 2022 are included in average loan balances for computational purposes. (3) Loan origination fees and costs are included in interest income as adjustments of the loan yields over the life of the loan using the interest method.
Terminating this program also improved our consumer compliance risk profile. 32 Table of Contents As shown in the following table the Company's largest lending categories are commercial real estate loans, auto loans, agricultural loans and commercial loans.
Terminating this program also improved our consumer compliance risk profile. 31 Table of Contents As shown in the following table the Company's largest lending categories are commercial real estate loans, auto loans, agricultural loans and commercial loans.
(2) The rate change in net interest income represents the change in rate multiplied by the previous year’s average balance. (3) The mix change in net interest income represents the change in average balance multiplied by the change in rate. 27 Table of Contents 2023 compared to 2022. Net interest income is the difference between interest income and interest expense.
(2) The rate change in net interest income represents the change in rate multiplied by the previous year’s average balance. (3) The mix change in net interest income represents the change in average balance multiplied by the change in rate. 27 Table of Contents 2024 compared to 2023. Net interest income is the difference between interest income and interest expense.
Individual loan credit quality indicators including loan grade and borrower repayment performance have been statistically correlated with historical credit losses and various economic metrics in cluding California unemployment rates, California Housing Prices and California gross domestic product.
Individual loan credit quality indicators including loan grade and borrower repayment performance have been statistically correlated with historical credit losses and various economic metrics including California unemployment rates, California Housing Prices and California gross domestic product.
In addition, both the fiscal and regulatory policies of the federal and state government and regulatory authorities that govern financial institutions and market interest rates also impact the Bank’s financial condition, results of operations and cash flows. U.S.
In addition, both the fiscal and regulatory policies of the federal and state government and regulatory authorities that govern financial institutions and market interest rates also impact the Bank’s financial condition, results of operations and cash flows.
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 December 31, 2023 is appropriate.
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 December 31, 2024, is appropriate.
At December 31, 2023, the Company’s and the Bank’s capital ratios exceeded the thresholds necessary to be considered “well capitalized” under the Basel III framework. 41 Table of Contents 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.
At December 31, 2024, the Company’s and the Bank’s capital ratios exceeded the thresholds necessary to be considered “well capitalized” under the Basel III framework. 40 Table of Contents 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.
It pertains to the Company's financial condition, changes in financial condition and results of operations as of December 31, 2023 and 2022 and for each of the three years in the period ended December 31, 2023.
It pertains to the Company's financial condition, changes in financial condition and results of operations as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024.
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. 38 Table of Contents The following table summarizes the maturities of the Company's securities at their carrying value, which represents fair value, and their weighted average tax equivalent yields at December 31, 2023.
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. 37 Table of Contents The following table summarizes the maturities of the Company's securities at their carrying value, which represents fair value, and their weighted average tax equivalent yields at December 31, 2024.
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. 33 Table of Contents The following table sets forth the maturity of gross loan categories as of December 31, 2023.
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. 32 Table of Contents The following table sets forth the maturity of gross loan categories as of December 31, 2024.
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. Loans Held for Sale.
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.
Interest Rate Swaps . On May 26, 2020 we entered into two separate interest rate swap agreements with notional amounts totaling $10 million, effectively converting the $10 million in Subordinated Debentures to fixed obligations. The swaps have a 10 year maturity and fix the labor rate on the Subordinated Debentures at approximately 75 basis points.
On May 26, 2020 we entered into two separate interest rate swap agreements with notional amounts totaling $10 million, effectively converting the $10 million in Subordinated Debentures to fixed obligations. The swaps had a 10-year maturity and fix the libor rate on the Subordinated Debentures at approximately 75 basis points.
The Company is a member of the Federal Home Loan Bank of San Francisco (FHLB) and can borrow up to $215 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $396 million. The Company is required to hold FHLB stock as a condition of membership.
The Company is a member of the Federal Home Loan Bank of San Francisco (FHLB) and can borrow up to $248 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $433 million. The Company is required to hold FHLB stock as a condition of membership.
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 are individually evaluated for reserves.
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.
Loan interest income includes net (costs)/ loan fees of ($1.3 million), $234 thousand and $5.7 million for 2023, 2022 and 2021, respectively. (4) Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities.
Loan interest income includes net (costs)/ loan fees of ($1.4 million), ($1.3 million) and $234 thousand for 2024, 2023 and 2022, respectively. (4) Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities.
The Subordinated Debentures represent the sole assets of Trusts I and II. 40 Table of Contents On February 9, 2023, Plumas Bancorp submitted redemption notices to redeem $6,000,000 of trust preferred securities of Plumas Statutory Trust I (“Trust I”) and $4,000,000 of trust preferred securities of Plumas Statutory Trust II (“Trust II”).
The Subordinated Debentures represented the sole assets of Trusts I and II. 39 Table of Contents On February 9, 2023, Plumas Bancorp submitted redemption notices to redeem $6,000,000 of trust preferred securities of Plumas Statutory Trust I (“Trust I”) and $4,000,000 of trust preferred securities of Plumas Statutory Trust II (“Trust II”).
The Company also considered the impact of portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, and other risk factors that might influence its loss estimation process. Management believes that the allowance for credit losses at December 31, 2023, appropriately reflected expected credit losses inherent in the loan portfolio at that date.
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 December 31, 2024, appropriately reflected expected credit losses inherent in the loan portfolio at that date.
The Company also considered the impact of portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, and other risk factors that might influence its loss estimation process. Management believes that the allowance for credit losses at December 31, 2023, appropriately reflected expected credit losses inherent in the loan portfolio at that date.
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 December 31, 2024, appropriately reflected expected credit losses inherent in the loan portfolio at that date.
During the current period we chose not to sell $4.1 million in salable guaranteed portions of SBA 7(a) loans as they did not meet our minimum premium on sale.
During 2023 we chose not to sell $4.1 million in salable guaranteed portions of SBA 7(a) loans as they did not meet our minimum premium on sale.
Funding for the redemption was provided from borrowings on our Term Note as described above. Interest expense, net of the effect of interest rate swaps, recognized by the Company for the years ended December 31, 2023, 2022 and 2021 related to the subordinated debentures was $141,000, $359,000 and $348,000, respectively. See the following paragraph for a description of the swaps.
Funding for the redemption was provided from borrowings on our Term Note as described above. Interest expense, net of the effect of interest rate swaps, recognized by the Company for the years ended December 31, 2023 and 2022 related to the subordinated debentures was $141,000 and $359,000, respectively. Interest Rate Swaps .
In addition to its FHLB borrowing line and the BTFP, 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, or the correspondent banks at December 31, 2023, and December 31, 2022.
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 December 31, 2024, and December 31, 2023.
Interest incurred on this borrowing totaled $527,000 during 2023. Net interest margin is net interest income expressed as a percentage of average interest-earning assets. Net interest margin for the twelve months ended December 31, 2023, increased by 89 basis points to 4.71%, up from 3.82% in 2022. 2022 compared to 2021.
Interest incurred on this borrowing totaled $527,000 during 2023. Net interest margin is net interest income expressed as a percentage of average interest-earning assets. Net interest margin for the twelve months ended December 31, 2023, increased by 89 basis points to 4.71%, up from 3.82% in 2022. 28 Table of Contents Provision for credit losses.
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 $28,000 on December 31, 2023. There were no specific reserves related to collateral dependent loans on December 31, 2022.
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 and $28,000 at December 31, 2024, and December 31, 2023, respectively.
The Federal Reserve Board, on March 12, 2023, announced the creation of a new BTFP. The BTFP offers loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets are valued at par.
The Federal Reserve Board, on March 12, 2023, announced the creation of the Bank Term Funding Program (BTFP). The BTFP offered loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets where valued at par.
At December 31, 2023, 52% of the Company’s deposits were in the form of non-interest-bearing demand deposits. The Company has no brokered deposits.
At December 31, 2024, 51% of the Company’s deposits were in the form of non-interest-bearing demand deposits. The Company has no brokered deposits.
At December 31, (dollars in thousands) 2023 2022 2021 Nonaccrual loans $ 4,820 $ 1,172 $ 4,863 Loans past due 90 days or more and still accruing - - - Total nonperforming loans 4,820 1,172 4,863 Other real estate owned 357 0 487 Other vehicles owned 138 18 47 Total nonperforming assets $ 5,315 $ 1,190 $ 5,397 Interest income forgone on nonaccrual loans $ 257 $ 121 $ 381 Interest income recorded on a cash basis on nonaccrual loans $ - $ - $ - Nonperforming loans to total loans 0.50 % 0.13 % 0.58 % Nonperforming assets to total assets 0.33 % 0.07 % 0.33 % 37 Table of Contents 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.
At December 31, (dollars in thousands) 2024 2023 2022 Nonaccrual loans $ 4,105 $ 4,820 $ 1,172 Loans past due 90 days or more and still accruing - - - Total nonperforming loans 4,105 4,820 1,172 Other real estate owned 91 357 0 Other vehicles owned 111 138 18 Total nonperforming assets $ 4,307 $ 5,315 $ 1,190 Interest income forgone on nonaccrual loans $ 301 $ 257 $ 121 Interest income recorded on a cash basis on nonaccrual loans $ - $ - $ - Nonperforming loans to total loans 0.40 % 0.50 % 0.13 % Nonperforming assets to total assets 0.27 % 0.33 % 0.07 % 36 Table of Contents 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.
Allowance for Credit Losses December 31, 2023 December 31, 2022 Balance, beginning of period $ 10,717 $ 10,352 Impact of CECL adoption 529 - Provision charged to operations 2,575 1,300 Losses charged to allowance (1,802 ) (1,461 ) Recoveries 848 526 Balance, end of period $ 12,867 $ 10,717 Reserve for Unfunded Commitments December 31, 2023 December 31, 2022 Balance, beginning of period $ 341 $ 341 Impact of CECL adoption 258 - Provision charged to operations 200 - Balance, end of period $ 799 $ 341 These estimates are reviewed periodically and, as adjustments become necessary, they are reported in earnings in the periods in which they become known.
Allowance for Credit Losses December 31, 2024 December 31, 2023 Balance, beginning of period $ 12,867 $ 10,717 Impact of CECL adoption - 529 Provision charged to operations 1.375 2,575 Losses charged to allowance (2,039 ) (1,802 ) Recoveries 993 848 Balance, end of period $ 13,196 $ 12,867 Reserve for Unfunded Commitments December 31, 2024 December 31, 2023 Balance, beginning of period $ 799 $ 341 Impact of CECL adoption - 258 Provision charged to operations (179 ) 200 Balance, end of period $ 620 $ 799 These estimates are reviewed periodically and, as adjustments become necessary, they are reported in earnings in the periods in which they become known.
This compares to an income tax provision of $9.2 million, or 25.9% of pre-tax income during 2022. The percentages for 2023 and 2022 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.
This compares to an income tax provision of $10.4 million, or 26.0% of pre-tax income during 2023. The percentages for 2024 and 2023 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.
Nonperforming assets as a percentage of total assets were 0.33% at December 31, 2023 and 0.07% at December 31, 2022.
Nonperforming assets as a percentage of total assets were 0.27% at December 31, 2024 and 0.33% at December 31, 2023.
The following table provides a summary of the change in the number and balance of OREO properties for the years ended December 31, 2023 and 2022, dollars in thousands: Year Ended December 31, Number 2023 Number 2022 Beginning Balance - $ - 3 $ 487 Additions 2 440 - - Dispositions (1 ) (83 ) (3 ) (487 ) Ending Balance 1 $ 357 - $ - Investment Portfolio and Federal Reserve Balances.
The following table provides a summary of the change in the number and balance of OREO properties for the years ended December 31, 2024 and 2023, dollars in thousands: Year Ended December 31, Number 2024 Number 2023 Beginning Balance 1 $ 357 - $ - Additions 1 141 2 440 Dispositions (1 ) (357 ) (1 ) (83 ) Provision from change in OREO valuation - (50 ) - - Ending Balance 1 $ 91 $ 1 $ 357 Investment Portfolio and Federal Reserve Balances.
Net interest income increased by $11.3 million to $69.8 million during 2023 from $58.5 million for the year ended ​December 31, 2022. This increase in net interest income resulted from an increase in interest income of $14.8 million partially offset by an increase in interest expense of $3.5 million.
Net interest income increased by $3.9 million to $73.7 million during 2024 from $69.8 million for the year ended ​December 31, 2023. This increase in net interest income resulted from an increase in interest income of $9.7 million partially offset by an increase in interest expense of $5.8 million.
Securities sold under agreements to repurchase totaling $23.1 million and $18.6 million at December 31, 2023, and December 31, 2022, respectively are secured by U.S. Government agency securities with a carrying amount of $34.1 million and $29.6 million at December 31, 2023, and December 31, 2022, respectively.
Securities sold under agreements to repurchase totaling $22.1 million and $23.1 million at December 31, 2024 and December 31, 2023, respectively, are secured by U.S. Government agency securities with a carrying amount of $38.5 million and $34.1 million at December 31, 2024 and December 31, 2023, respectively.
During 2023, non-interest income totaled $10.7 million, a decrease of $328,000 from $11.0 million during the twelve months ended December 31, 2022. The largest component of this decrease was a decline in gain on sale of SBA 7(a) loans of $2.5 million from $2.7 million during the twelve months ended December 31, 2022 to $234,000 during the current period.
The largest component of this decrease was a decline in gain on sale of SBA 7(a) loans of $2.5 million from $2.7 million during the twelve months ended December 31, 2022, to $234,000 during the current period.
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 $357 thousand at December 31, 2023. There were no OREO holdings at December 31, 2022.
OREO represent 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 December 31, 2024, and one property totaling $357,000 at December 31, 2023.
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 December 31, 2023, the Company had $174.6 million in unfunded loan commitments and $108 thousand in letters of credit.
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 December 31, 2024, the Company had $155.4 million in unfunded loan commitments and no letters of credit.
The allowance for credit losses as a percentage of total loans was 1.34% on December 31, 2023 and 1.18% on December 31, 2022. 36 Table of Contents The following table provides a breakdown of the allowance for credit losses: Percent of Percent of Loans in Loans in Balance at Each Balance at Each End of Category to End of Category to (dollars in thousands) Period Total Loans Period Total Loans 12/31/2023 12/31/2023 12/31/2022 12/31/2022 Commercial $ 1,134 7.8 % $ 892 8.4 % Agricultural 1,738 13.5 % 1,086 13.5 % Real estate – residential 137 1.2 % 138 1.7 % Real estate – commercial 6,678 56.8 % 4,980 56.6 % Real estate – construction & land development 797 6.0 % 1,500 4.8 % Equity Lines of Credit 439 4.0 % 687 3.9 % Auto 1,865 10.2 % 1,289 10.6 % Other 79 0.5 % 145 0.5 % Total $ 12,867 100 % $ 10,717 100 % 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.
The allowance for credit losses as a percentage of total loans was 1.30% on December 31, 2024, and 1.34% on December 31, 2023. 35 Table of Contents The following table provides a breakdown of the allowance for credit losses: Percent of Percent of Loans in Loans in Balance at Each Balance at Each End of Category to End of Category to (dollars in thousands) Period Total Loans Period Total Loans 12/31/2024 12/31/2024 12/31/2023 12/31/2023 Commercial $ 1,265 7.6 % $ 1,134 7.8 % Agricultural 1,802 11.7 % 1,738 13.5 % Real estate – residential 102 1.1 % 137 1.2 % Real estate – commercial 7,459 63.7 % 6,678 56.8 % Real estate – construction & land development 815 5.3 % 797 6.0 % Equity Lines of Credit 460 3.7 % 439 4.0 % Auto 1,215 6.4 % 1,865 10.2 % Other 78 0.5 % 79 0.5 % Total $ 13,196 100 % $ 12,867 100 % 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.
Total investment securities were $489.2 million as of December 31, 2023 and $444.7 million as of December 31, 2022. Net unrealized losses on available-for-sale investment securities totaling $46.1 million were recorded, net of $13.6 million in tax benefit, as accumulated other comprehensive loss within shareholders' equity at December 31, 2023.
Total investment securities were $437.7 million as of December 31, 2024, and $489.2 million at December 31, 2023. 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 2023, non-interest expense increased by $4.9 million to $37.5 million. The largest components of this increase were $2.9 million in salary and benefit expense, $692,000 in occupancy and equipment costs, $439,000 in outside service fees and $268,000 in advertising and shareholder relations.
The largest components of this increase were $2.9 million in salary and benefit expense, $692,000 in occupancy and equipment costs, $439,000 in outside service fees and $268,000 in advertising and shareholder relations.
Treasury securities, $235.9 million in securities of U.S. Government-sponsored agencies, $116.0 million in securities of U.S. Government-agencies and 244 municipal securities totaling $130.4 million. The investment portfolio at December 31, 2022 consisted of $9.7 million in U.S. Treasury securities, $214.4 million in securities of U.S. Government-sponsored agencies, $99.6 million in securities of U.S.
The investment portfolio at December 31, 2023 consisted of $6.9 million in U.S. Treasury securities, $351.9 million in securities of U.S. Government-sponsored agencies and U.S. Government agencies and 244 municipal securities totaling $130.4 million.
We derive our income primarily from interest received on real estate related, commercial, automobile and consumer loans and, to a lesser extent, interest on investment securities and cash balances, fees received in connection with servicing deposit and loan customers and gains from the sale of government guaranteed loans.
We derive our income primarily from interest received on real estate related, commercial, automobile and consumer loans and, to a lesser extent, interest on investment securities and cash balances and fees received in connection with servicing deposit and loan customers. Our major operating expenses are the interest we pay on deposits and borrowings and general operating expenses.
We are subject to competition from other financial institutions and our operating results, like those of other financial institutions operating in California and Northern Nevada, are significantly influenced by economic conditions in California and Northern Nevada, including the strength of the real estate market.
We rely on locally-generated deposits to provide us with funds for making loans. We are subject to competition from other financial institutions and our operating results, like those of other financial institutions operating in California and Northern Nevada, are significantly influenced by economic conditions in California and Northern Nevada, including the strength of the real estate market.
While we continue to produce SBA 7(a) loans for sale at a greatly reduced rate, we have had success in funding fixed rate SBA 7(a) loans which we portfolio. At December 31, 2023, fixed rate SBA 7(a) loans totaled $23 million. 2022 compared to 2021.
While we continue to produce SBA 7(a) loans for sale at a greatly reduced rate, we have had success in funding fixed rate SBA 7(a) loans which we portfolio.
Return on average equity increased to 23.4% for the twelve months ended December 31, 2023, up from 21.9% during 2022. 25 Table of Contents Results of Operations Net Interest Income The following table presents, for the years indicated, the distribution of consolidated average assets, liabilities and shareholders' equity. Average balances are based on average daily balances.
The return on average equity decreased from 23.4% during 2023 to 17.2% during 2024. 25 Table of Contents Results of Operations Net Interest Income The following table presents, for the years indicated, the distribution of consolidated average assets, liabilities and shareholders' equity. Average balances are based on average daily balances.
The Company is a member of the Federal Home Loan Bank of San Francisco (FHLB) and can borrow up to $215 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $396 million. The Company is also eligible to participate in the Bank Term Lending Program.
The Company is a member of the Federal Home Loan Bank of San Francisco (FHLB) and can borrow up to $248 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $433 million. The Company is also eligible to borrow at the FRB Discount Window.
As of December 31, 2023 the Bank's nonaccrual loans comprised the entire population of loans individually evaluated. The Company's policy is that nonaccrual loans 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.
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.
Maturity Distribution of Estimated Uninsured Time Deposits December 31, December 31, (dollars in thousands) 2023 2022 Remaining maturity: Three months or less $ 6,044 $ 1,790 After three through six months 10,097 257 After six through twelve months 5,428 1,688 After twelve months 757 76 Total $ 22,326 $ 3,811 Short-term Borrowing Arrangements.
Maturity Distribution of Estimated Uninsured Time Deposits December 31, December 31, (dollars in thousands) 2024 2023 Remaining maturity: Three months or less $ 11,697 6,044 After three through six months 6,712 10,097 After six through twelve months 4,452 5,428 After twelve months 61 757 Total $ 22,922 $ 22,326 Short-term Borrowing Arrangements.
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.
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.
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 December 31, 2023 Common Equity Tier 1 Ratio $ 179,194 15.7 % $ 51,294 4.5 % $ 74,092 6.5 % Tier 1 Leverage Ratio 179,194 10.8 % 66,348 4.0 % 82,935 5.0 % Tier 1 Risk-Based Capital Ratio 179,194 15.7 % 68,392 6.0 % 91,190 8.0 % Total Risk-Based Capital Ratio 192,860 16.9 % 91,190 8.0 % 113,987 10.0 % December 31, 2022 Common Equity Tier 1 Ratio $ 157,361 14.7 % $ 48,218 4.5 % $ 69,648 6.5 % Tier 1 Leverage Ratio 157,361 9.2 % 68,078 4.0 % 85,098 5.0 % Tier 1 Risk-Based Capital Ratio 157,361 14.7 % 64,291 6.0 % 85,721 8.0 % Total Risk-Based Capital Ratio 168,419 15.7 % 85,721 8.0 % 107,151 10.0 % (1) Does not include amounts required to maintain the capital conservation buffer under the new capital rules.
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 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 % December 31, 2023 Common Equity Tier 1 Ratio $ 179,194 15.7 % $ 51,294 4.5 % $ 74,092 6.5 % Tier 1 Leverage Ratio 179,194 10.8 % 66,348 4.0 % 82,935 5.0 % Tier 1 Risk-Based Capital Ratio 179,194 15.7 % 68,392 6.0 % 91,190 8.0 % Total Risk-Based Capital Ratio 192,860 16.9 % 91,190 8.0 % 113,987 10.0 % (1) Does not include amounts required to maintain the capital conservation buffer under the new capital rules.
Years Ended December 31, Change during Year 2023 2022 2021 2023 2022 (dollars in thousands) Salaries and employee benefits $ 20,320 $ 17,451 $ 12,792 $ 2,869 $ 4,659 Occupancy and equipment 5,302 4,610 3,983 692 627 Outside service fees 4,496 4,057 3,753 439 304 Professional fees 1,258 1,282 1,311 (24 ) (29 ) Advertising and promotion 941 673 431 268 242 Telephone and data communications 806 770 746 36 24 Armored car and courier 767 675 498 92 177 Director compensation, education and retirement 763 606 498 157 108 Deposit insurance 737 528 455 209 73 Business development 615 506 343 109 163 Loan collection costs 423 274 284 149 (10 ) Amortization of Core Deposit Intangible 237 284 246 (47 ) 38 Other operating expense 865 874 698 (9 ) 176 Total non-interest expense $ 37,530 $ 32,590 $ 26,038 $ 4,940 $ 6,552 2023 compared to 2022.
Years Ended December 31, Change during Year 2024 2023 2022 2024 2023 (dollars in thousands) Salaries and employee benefits $ 21,744 $ 20,320 $ 17,451 $ 1,424 $ 2,869 Occupancy and equipment 7,606 5,302 4,610 2,304 692 Outside service fees 4,576 4,496 4,057 80 439 Professional fees 1,407 1,258 1,282 149 (24 ) Advertising and promotion 1,030 941 673 89 268 Armored car and courier 876 767 675 109 92 Telephone and data communications 780 806 770 (26 ) 36 Deposit insurance 750 737 528 13 209 Director compensation, education and retirement 728 763 606 (35 ) 157 Business development 680 615 506 65 109 Loan collection costs 388 423 274 (35 ) 149 Amortization of Core Deposit Intangible 201 237 284 (36 ) (47 ) Other operating expense 1,508 865 874 643 (9 ) Total non-interest expense $ 42,274 $ 37,530 $ 32,590 $ 4,744 $ 4,940 2024 compared to 2023.
Percent of Percent of Loans in Loans in Balance at Each Balance at Each End of Category to End of Category to (dollars in thousands) Period Total Loans Period Total Loans 12/31/2023 12/31/2023 12/31/2022 12/31/2022 Commercial $ 74,271 7.8 % $ 76,680 8.4 % Agricultural 129,389 13.5 % 122,873 13.5 % Real estate – residential 11,914 1.2 % 15,324 1.7 % Real estate – commercial 544,339 56.8 % 516,107 56.6 % Real estate – construction & land development 57,717 6.0 % 43,420 4.8 % Equity Lines of Credit 37,871 4.0 % 35,891 3.9 % Auto 98,132 10.2 % 96,750 10.6 % Other 4,931 0.5 % 4,904 0.5 % Total $ 958,564 100 % $ 911,949 100 % 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 77% of the total loan portfolio at December 31, 2023.
Percent of Percent of Loans in Loans in Balance at Each Balance at Each End of Category to End of Category to (dollars in thousands) Period Total Loans Period Total Loans 12/31/2024 12/31/2024 12/31/2023 12/31/2023 Commercial $ 77,444 7.6 % $ 74,271 7.8 % Agricultural 118,866 11.7 % 129,389 13.5 % Real estate – residential 11,539 1.1 % 11,914 1.2 % Real estate – commercial 646,378 63.7 % 544,339 56.8 % Real estate – construction & land development 53,503 5.3 % 57,717 6.0 % Equity Lines of Credit 37,888 3.7 % 37,871 4.0 % Auto 64,734 6.4 % 98,132 10.2 % Other 5,072 0.5 % 4,931 0.5 % Total $ 1,015,424 100 % $ 958,564 100 % 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 82% of the total loan portfolio at December 31, 2024.
The Company paid a quarterly cash dividend of $0.25 per share on November 15, 2023, August 15, 2023, May 15, 2023 and February 15, 2023 and a quarterly cash dividend of $0.16 per share on February 15, 2022, May 16, 2022, August 15, 2022, and November 15, 2022, and a quarterly cash dividend of 14 cents per share on February 15, 2021, May 17, 2021, August 16, 2021, and November 15, 2021.
The Company paid a quarterly cash dividend of $0.27 per share on November 15, 2024, August 15, 2024, May 15, 2024 and February 15, 2024, and a quarterly cash dividend of $0.25 per share on November 15, 2023, August 15, 2023, May 15, 2023, and February 15, 2023. Capital Standards.
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’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.
Return on average assets was 1.88% during the twelve months ended December 31, 2023, up from 1.61% during 2022.
The return on average assets was 1.74% for the twelve months ended December 31, 2024, down from 1.88% for the twelve months ended December 31, 2023.
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.
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. 33 Table of Contents The allowance for credit losses is established through charges to earnings in the form of the provision for credit losses.
Of the total unfunded commitments at December 31, 2023, $114.3 million were secured by real estate, of which $60.2 million was secured by commercial real estate and $54.1 million was secured by residential real estate mostly in the form of equity lines of credit.
Of the total unfunded commitments at December 31, 2024, $91.7 million were secured by real estate, of which $37.8 million was secured by commercial real estate and $53.9 million was secured by residential real estate mostly in the form of equity lines of credit.
The Lease Agreements will provide for an annual rent of approximately $3.1 million in the aggregate for all Properties; increased by two percent (2%) per annum for each year during the initial Term.
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.
The following tables show the distribution of deposits by type at December 31, 2023 and 2022 and the average balance and rates paid on deposits for the three years ending December 31, 2023: Percent of Percent of Deposits in Deposits in Each Category Each Category Balance at End to Total Balance at End to Total of Period Deposits of Period Deposits (dollars in thousands) 12/31/2023 12/31/2023 12/31/2022 12/31/2022 Non-interest bearing $ 692,768 51.9 % $ 766,549 52.6 % Money Market 214,185 16.1 % 237,924 16.3 % Savings 335,050 25.1 % 404,150 27.7 % Time 91,652 6.9 % 49,186 3.4 % Total Deposits $ 1,333,655 100 % $ 1,457,809 100 % Average Balance Yields/Rates Average Balance Yields/Rates Average Balance Yields/Rates (dollars in thousands) 12/31/2023 12/31/2023 12/31/2022 12/31/2022 12/31/2021 12/31/2021 Non-interest bearing $ 726,191 $ 773,293 $ 645,955 Money Market 227,819 0.60 % 254,723 0.11 % 224,776 0.14 % Savings 375,377 0.21 % 400,314 0.09 % 306,911 0.09 % Time 74,570 2.10 % 59,016 0.28 % 53,976 0.36 % Total interest bearing $ 677,766 0.55 % $ 714,053 0.12 % $ 585,663 0.13 % 39 Table of Contents Deposits represent the Bank's primary source of funds.
The following tables show the distribution of deposits by type at December 31, 2024 and 2023 and the average balance and rates paid on deposits for the three years ending December 31, 2024: Percent of Percent of Deposits in Deposits in Each Category Each Category Balance at End to Total Balance at End to Total of Period Deposits of Period Deposits (dollars in thousands) 12/31/2024 12/31/2024 12/31/2023 12/31/2023 Non-interest bearing $ 699,401 51.0 % $ 692,768 51.9 % Money Market 267,582 19.5 % 214,185 16.1 % Savings 309,929 22.6 % 335,050 25.1 % Time 94,189 6.9 % 91,652 6.9 % Total Deposits $ 1,371,101 100 % $ 1,333,655 100 % Average Balance Yields/Rates Average Balance Yields/Rates Average Balance Yields/Rates (dollars in thousands) 12/31/2024 12/31/2024 12/31/2023 12/31/2023 12/31/2022 12/31/2022 Non-interest bearing $ 684,909 $ 726,191 $ 773,293 Money Market 226,372 1.09 % 227,819 0.60 % 254,723 0.11 % Savings 324,000 0.22 % 375,377 0.21 % 400,314 0.09 % Time 96,131 2.85 % 74,570 2.10 % 59,016 0.28 % Total interest bearing $ 646,503 0.92 % $ 677,766 0.55 % $ 714,053 0.12 % 38 Table of Contents Deposits represent the Bank's primary source of funds.
This compares to $178.7 million in unfunded loan commitments and no letters of credit at December 31, 2022. Of the $174.6 million in unfunded loan commitments, $111.2 million and $63.4 million represented commitments to commercial and consumer customers, respectively.
This compares to $174.6 million in unfunded loan commitments and $108,000 in letters of credit at December 31, 2023. Of the $155.4 million in unfunded loan commitments, $92.7 million and $62.7 million represent commitments to commercial and consumer customers, respectively.
In March 2023 the Company borrowed $10 million on this note and used the proceeds to redeem its Trust Preferred securities as described below. The Company was in compliance with all covenants related to the Term Note at December 31, 2023. Interest expense recognized on the Term Note for the twelve months ended December 31, 2023, totaled $369 thousand.
In March 2023 the Company borrowed $10 million on this note and used the proceeds to redeem its Trust Preferred securities as described below. During January of 2024 the Company borrowed an additional $5 million under this note for general corporate purposes. The Company was in compliance with all covenants related to the Term Note at December 31, 2024.
See “Analysis of Asset Quality and Allowance for Credit Losses” for a discussion of loan quality trends and the provision for credit losses. The following tables present the activity in the allowance for credit losses and the reserve for unfunded commitments during the twelve months ended December 31, 2023, and 2022 (in thousands).
The following tables present the activity in the allowance for credit losses and the reserve for unfunded commitments during the twelve months ended December 31, 2024, and 2023 (in thousands).
Years Ended December 31, Change during Year 2023 2022 2021 2023 2022 (dollars in thousands) Interchange revenue $ 3,419 $ 3,401 $ 3,279 $ 18 $ 122 Service charges on deposit accounts 2,789 2,464 2,349 325 115 Gain on termination of swaps 1,707 - - 1,707 - Loan servicing fees 900 893 852 7 41 FHLB Dividends 418 293 233 125 60 Earnings on bank owned life insurance policies 417 391 380 26 11 Gain on sale of loans, net 234 2,696 1,008 (2,462 ) 1,688 Loss on sale of investments - - (209 ) - 209 Other income 838 912 824 (74 ) 88 Total non-interest income $ 10,722 $ 11,050 $ 8,716 $ (328 ) $ 2,334 2023 compared to 2022.
Years Ended December 31, Change during Year 2024 2023 2022 2024 2023 (dollars in thousands) Gain on sale of buildings $ 19,854 $ - $ - $ 19,854 $ - Interchange revenue 3,130 3,419 3,401 (289 ) 18 Service charges on deposit accounts 2,988 2,789 2,464 199 325 Loan servicing fees 756 872 893 (116 ) (21 ) FHLB Dividends 546 418 293 128 125 Earnings on bank owned life insurance policies, net 409 417 391 (8 ) 26 Gain on sale of loans 37 234 2,696 (197 ) (2,462 ) Gain on termination of swaps - 1,707 - (1,707 ) 1,707 Loss on sale of investments (19,817 ) - - (19,817 ) - Other income 877 866 912 11 (46 ) Total non-interest income $ 8,780 $ 10,722 $ 11,050 $ (1,942 ) $ (328 ) 2024 compared to 2023.
Year ended December 31, 2023 2022 2021 Interest Rates Interest Rates Interest Rates Average income/ earned/ Average income/ earned/ Average income/ earned/ balance expense paid balance expense paid balance expense paid (dollars in thousands) Assets Interest-bearing cash and due from banks and deposits in banks $ 86,897 $ 4,387 5.05 % $ 305,095 $ 4,923 1.61 % $ 253,023 $ 345 0.14 % Taxable investment securities 338,941 11,525 3.40 % 258,732 6,409 2.48 % 164,199 2,746 1.67 % Non-taxable investment securities (1) 123,002 3,681 2.99 % 103,366 2,722 2.63 % 75,673 1,666 2.20 % Loans held for sale 533 49 9.19 % 8,771 510 5.81 % 15,258 826 5.41 % Total loans (2)(3) 933,464 54,950 5.89 % 856,728 45,194 5.28 % 785,527 42,487 5.41 % Total earning assets 1,482,837 74,592 5.03 % 1,532,692 59,758 3.90 % 1,293,680 48,070 3.72 % Cash and due from banks 26,100 40,520 44,396 Other assets 78,212 69,683 47,952 Total assets $ 1,587,149 $ 1,642,895 $ 1,386,028 Liabilities and shareholders’ equity Money market deposits $ 227,819 $ 1,367 0.60 % 254,723 $ 284 0.11 % $ 224,776 $ 307 0.14 % Savings deposits 375,377 795 0.21 % 400,314 376 0.09 % 306,911 280 0.09 % Time deposits 74,570 1,568 2.10 % 59,016 163 0.28 % 53,976 193 0.36 % Other borrowings 17,945 896 4.99 % - - 0.00 % - - 0.00 % Junior subordinated debentures 2,268 141 6.22 % 10,310 359 3.48 % 10,310 348 3.38 % Repurchase agreements and other 18,576 31 0.17 % 12,327 67 0.54 % 13,419 8 0.06 % Total interest-bearing liabilities 716,555 4,798 0.67 % 736,690 1,249 0.17 % 609,392 1,136 0.19 % Noninterest bearing demand deposits 726,191 773,293 645,955 Other liabilities 17,419 12,044 12,714 Shareholders’ equity 126,984 120,868 117,967 Total liabilities and shareholders’ equity $ 1,587,149 $ 1,642,895 $ 1,386,028 Net interest income $ 69,794 $ 58,509 $ 46,934 Net interest spread (4) 4.36 % 3.73 % 3.53 % Net interest margin (5) 4.71 % 3.82 % 3.63 % (1) Interest income is reflected on an actual basis and is not computed on a tax-equivalent basis.
Year ended December 31, 2024 2023 2022 Interest Rates Interest Rates Interest Rates Average income/ earned/ Average income/ earned/ Average income/ earned/ balance expense paid balance expense paid balance expense paid (dollars in thousands) Assets Interest-bearing cash and due from banks and deposits in banks $ 93,122 $ 4,993 5.36 % $ 86,897 $ 4,387 5.05 % $ 305,095 $ 4,923 1.61 % Taxable investment securities 370,228 15,308 4.13 % 338,941 11,525 3.40 % 258,732 6,409 2.48 % Non-taxable investment securities (1) 84,369 2,574 3.05 % 123,002 3,681 2.99 % 103,366 2,722 2.63 % Total loans (2)(3) 989,313 61,450 6.21 % 933,997 54,999 5.89 % 865,499 45,704 5.28 % Total earning assets 1,537,032 84,325 5.49 % 1,482,837 74,592 5.03 % 1,532,692 59,758 3.90 % Cash and due from banks 27,077 26,100 40,520 Other assets 85,232 78,212 69,683 Total assets $ 1,649,341 $ 1,587,149 $ 1,642,895 Liabilities and shareholders’ equity Money market deposits $ 226,372 $ 2,472 1.09 % $ 227,819 $ 1,367 0.60 % 254,723 $ 284 0.11 % Savings deposits 324,000 705 0.22 % 375,377 795 0.21 % 400,314 376 0.09 % Time deposits 96,131 2,739 2.85 % 74,570 1,568 2.10 % 59,016 163 0.28 % Other borrowings 97,691 4,676 4.79 % 17,945 896 4.99 % - - 0.00 % Junior subordinated debentures - - 0.00 % 2,268 141 6.22 % 10,310 359 3.48 % Repurchase agreements and other 19,119 42 0.22 % 18,576 31 0.17 % 12,327 67 0.54 % Total interest-bearing liabilities 763,313 10,634 1.39 % 716,555 4,798 0.67 % 736,690 1,249 0.17 % Noninterest bearing demand deposits 684,909 726,191 773,293 Other liabilities 34,864 17,419 12,044 Shareholders’ equity 166,255 126,984 120,868 Total liabilities and shareholders’ equity $ 1,649,341 $ 1,587,149 $ 1,642,895 Net interest income $ 73,691 $ 69,794 $ 58,509 Net interest spread (4) 4.09 % 4.36 % 3.73 % Net interest margin (5) 4.79 % 4.71 % 3.82 % (1) Interest income is reflected on an actual basis and is not computed on a tax-equivalent basis.
Loans held for sale at December 31, 2022 and 2021 totaling $2.3 million and $31.3 million, respectively, consist of the guaranteed portion of SBA 7(a) loans. 30 Table of Contents Non-Interest Expense The following table sets forth the components of other non-interest expense for the years ended December 31, 2023, 2022 and 2021.
At December 31, 2023, fixed rate SBA 7(a) loans totaled $23 million. 29 Table of Contents Non-Interest Expense The following table sets forth the components of other non-interest expense for the years ended December 31, 2024, 2023 and 2022.
Overview The Company recorded net income of $29.8 million for the year ended December 31, 2023, an increase of $3.4 million or 13% from net income of $26.4 million during the year ended December 31, 2022. Pretax income increased by $4.5 million, or 13%, to $40.2 million in 2023 from $35.7 million during the year ended December 31, 2022.
Overview The Company recorded net income of $28.6 million for the year ended December 31, 2024, a decrease of $1.2 million or 4% from net income of $29.8 million during the year ended December 31, 2023. Pretax income decreased by $1.2 million, or 3%, to $39.0 million in 2024 from $40.2 million during the year ended December 31, 2023.
The balance, on December 31, 2023, earns interest at the rate of 5.40%. The Company classifies its investment securities as available-for-sale or held-to-maturity. Currently all securities are classified as available-for-sale.
The Company classifies its investment securities as available-for-sale or held-to-maturity. Currently all securities are classified as available-for-sale.
(5) Net interest margin is computed by dividing net interest income by total average earning assets. 26 Table of Contents The following table sets forth changes in interest income and interest expense, for the years indicated and the amount of change attributable to variances in volume, rates and the combination of volume and rates based on the relative changes of volume and rates: 2023 compared to 2022 2022 compared to 2021 Increase (decrease) due to change in: Increase (decrease) due to change in: Average Average Average Average Volume(1) Rate(2) Mix(3) Total Volume(1) Rate(2) Mix(3) Total (dollars in thousands) Interest-earning assets: Interest-bearing cash and due from banks and deposits in banks $ (3,521 ) $ 10,480 $ (7,495 ) $ (536 ) $ 71 $ 3,738 $ 769 $ 4,578 Taxable investment securities 1,987 2,389 740 5,116 1,581 1,321 761 3,663 Non-taxable investment securities 517 371 71 959 610 327 119 1,056 Loans held for sale (479 ) 296 (278 ) (461 ) (351 ) 61 (26 ) (316 ) Loans 4,048 5,239 469 9,756 3,851 (1,049 ) (95 ) 2,707 Total interest income 2,552 18,775 (6,493 ) 14,834 5,762 4,398 1,528 11,688 Interest-bearing liabilities: Money market deposits (30 ) 1,244 (131 ) 1,083 41 (56 ) (8 ) (23 ) Savings deposits (24 ) 472 (29 ) 419 85 8 3 96 Time deposits 43 1,078 284 1,405 18 (44 ) (4 ) (30 ) Other borrowings - - 896 896 - - - - Junior subordinated debentures (280 ) 282 (220 ) (218 ) - 11 - 11 Repurchase agreements and other 34 (46 ) (24 ) (36 ) (1 ) 65 (5 ) 59 Total interest expense (257 ) 3,030 776 3,549 143 (16 ) (14 ) 113 Net interest income $ 2,809 $ 15,745 $ (7,269 ) $ 11,285 $ 5,619 $ 4,414 $ 1,542 $ 11,575 (1) The volume change in net interest income represents the change in average balance multiplied by the previous year’s rate.
(5) Net interest margin is computed by dividing net interest income by total average earning assets. 26 Table of Contents The following table sets forth changes in interest income and interest expense, for the years indicated and the amount of change attributable to variances in volume, rates and the combination of volume and rates based on the relative changes of volume and rates: 2024 compared to 2023 2023 compared to 2022 Increase (decrease) due to change in: Increase (decrease) due to change in: Average Average Average Average Volume(1) Rate(2) Mix(3) Total Volume(1) Rate(2) Mix(3) Total (dollars in thousands) Interest-earning assets: Interest-bearing cash and due from banks and deposits in banks $ 314 $ 272 $ 20 $ 606 $ (3,521 ) $ 10,480 $ (7,495 ) $ (536 ) Taxable investment securities 1,064 2,489 230 3,783 1,987 2,389 740 5,116 Non-taxable investment securities (1,156 ) 72 (23 ) (1,107 ) 517 371 71 959 Loans 3,257 3,015 179 6,451 3,569 5,535 191 9,295 Total interest income 3,479 5,848 406 9,733 2,552 18,775 (6,493 ) 14,834 Interest-bearing liabilities: Money market deposits (9 ) 1,121 (7 ) 1,105 (30 ) 1,244 (131 ) 1,083 Savings deposits (109 ) 22 (3 ) (90 ) (24 ) 472 (29 ) 419 Time deposits 454 556 161 1,171 43 1,078 284 1,405 Other borrowings 3,981 (37 ) (164 ) 3,780 - - 896 896 Junior subordinated debentures (141 ) - - (141 ) (280 ) 282 (220 ) (218 ) Repurchase agreements and other 1 10 - 11 34 (46 ) (24 ) (36 ) Total interest expense 4,177 1,672 (13 ) 5,836 (257 ) 3,030 776 3,549 Net interest income $ (698 ) $ 4,176 $ 419 $ 3,897 $ 2,809 $ 15,745 $ (7,269 ) $ 11,285 (1) The volume change in net interest income represents the change in average balance multiplied by the previous year’s rate.
Of this amount, $85 million represents deposits that are collateralized such as deposits of states, municipalities and tribal accounts. The Company’s securities portfolio, Federal funds sold, 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.
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 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 branch portion of the sale was completed on February 14, 2024.
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.
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 auto loan program.
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.
Government-agencies and 239 municipal securities totaling $121.0 million. There were no Federal funds sold at December 31, 2023 and December 31, 2022; however, the Bank maintained interest earning balances at the Federal Reserve Bank totaling $52.9 million at December 31, 2023 and $154.4 million at December 31, 2022.
There were no Federal funds sold at December 31, 2024, and December 31, 2023; however, the Bank maintained interest earning balances at the Federal Reserve Bank totaling $47.2 million at December 31, 2024 and $52.9 million at December 31, 2023. The balance, on December 31, 2024, earns interest at the rate of 4.40%.
The $28.3 million increase was related to net income during 2023, of $29.8 million, a decline in accumulated other comprehensive loss of $4.3 million and stock option and restricted stock activity of $661,000 partially offset by shareholder dividends of $5.9 million and $554,000 related to the cumulative change from adoption of ASU 2016-13.
The $30.6 million increase was related to net income during 2024, of $28.6 million, a decline in accumulated other comprehensive loss of $7.3 million and stock option and restricted stock activity of $1.0 million partially offset by shareholder dividends of $6.3 million.

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