10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2020
☐	TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO ___________

COMMISSION FILE NUMBER: 000-49883

PLUMAS BANCORP

(Exact Name of Registrant as Specified in Its Charter)

California	75-2987096
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
35 S. Lindan Avenue, Quincy, California	95971
(Address of Principal Executive Offices)	(Zip Code)
Registrant’s Telephone Number, Including Area Code (530) 283-7305

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒   No  ☐

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

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐  No ☒

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of April 30, 2020. 5,178,532 shares.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

	March 31,		December 31,
	2020		2019
Assets
Cash and cash equivalents	$	58,058	$	46,942
Investment securities available for sale		159,247		159,320
Loans, less allowance for loan losses of $7,804 at March 31, 2020 and $7,243 at December 31, 2019		619,487		616,036
Real estate acquired through foreclosure		707		707
Premises and equipment, net		14,774		14,629
Bank owned life insurance		13,275		13,184
Accrued interest receivable and other assets		14,023		14,373
Total assets	$	879,571	$	865,191
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing	$	336,375	$	331,619
Interest bearing		426,511		415,705
Total deposits		762,886		747,324
Repurchase agreements		8,383		16,013
Accrued interest payable and other liabilities		7,765		7,039
Junior subordinated deferrable interest debentures		10,310		10,310
Total liabilities		789,344		780,686
Commitments and contingencies (Note 5)
Shareholders’ equity:
Common stock, no par value; 22,500,000 shares authorized; issued and outstanding – 5,176,032 shares at March 31, 2020 and 5,165,760 at December 31, 2019		7,425		7,312
Retained earnings		78,460		75,144
Accumulated other comprehensive income, net		4,342		2,049
Total shareholders’ equity		90,227		84,505
Total liabilities and shareholders’ equity	$	879,571	$	865,191

See notes to unaudited condensed consolidated financial statements.

1

PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	For the Three Months Ended
	March 31,
	2020		2019
Interest Income:
Interest and fees on loans	$	8,540	$	8,510
Interest on investment securities		952		1,137
Other		107		179
Total interest income		9,599		9,826
Interest Expense:
Interest on deposits		259		297
Interest on junior subordinated deferrable interest debentures		116		140
Other		3		3
Total interest expense		378		440
Net interest income before provision for loan losses		9,221		9,386
Provision for Loan Losses		750		400
Net interest income after provision for loan losses		8,471		8,986
Non-Interest Income:
Service charges		705		650
Interchange revenue		539		513
Gain on sale of loans		464		244
Other		517		558
Total non-interest income		2,225		1,965
Non-Interest Expenses:
Salaries and employee benefits		3,529		3,200
Occupancy and equipment		865		858
Other		1,742		1,626
Total non-interest expenses		6,136		5,684
Income before provision for income taxes		4,560		5,267
Provision for Income Taxes		1,244		1,449
Net income	$	3,316	$	3,818
Basic earnings per share	$	0.64	$	0.74
Diluted earnings per share	$	0.63	$	0.73

See notes to unaudited condensed consolidated financial statements.

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PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	For the Three Months Ended
	March 31,
	2020			2019
Net income	$	3,316		$	3,818
Other comprehensive income:
Change in net unrealized gain/loss		3,254			2,599
Reclassification adjustments for net (gains) losses included in net income		-			-
Net unrealized holding gain		3,254			2,599
Related tax effect:
Change in net unrealized gain/loss		(961	)		(768	)
Reclassification of net gains (losses) included in net income		-			-
Income tax effect		(961	)		(768	)
Other comprehensive income		2,293			1,831
Total comprehensive income	$	5,609		$	5,649

See notes to unaudited condensed consolidated financial statements.

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PLUMAS BANCORP AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY 

(in thousands, except shares)

	Common Stock				Retained		Accumulated Other Comprehensive Income (Loss)			Total Shareholders’
	Shares		Amount		Earnings		(Net of Taxes)			Equity
Balance, December 31, 2018		5,137,476	$	6,944	$	62,005	$	(2,017	)	$	66,932
Net Income						3,818					3,818
Other comprehensive income								1,831			1,831
Exercise of stock options and tax effect		13,400		76							76
Stock-based compensation expense				50							50
Balance, March 31, 2019		5,150,876	$	7,070	$	65,823	$	(186	)	$	72,707
Balance, December 31, 2019		5,165,760	$	7,312	$	75,144	$	2,049		$	84,505
Net Income						3,316					3,316
Other comprehensive income								2,293			2,293
Exercise of stock options and tax effect		10,272		35							35
Stock-based compensation expense				78							78
Balance, March 31, 2020		5,176,032	$	7,425	$	78,460	$	4,342		$	90,227

See notes to unaudited condensed consolidated financial statements.  

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PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Three Months Ended
	March 31,
	2020			2019
Cash Flows from Operating Activities:
Net income	$	3,316		$	3,818
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		750			400
Change in deferred loan origination costs/fees, net		(167	)		(266	)
Depreciation and amortization		348			355
Stock-based compensation expense		78			50
Amortization of investment security premiums		221			180
Gain on sale of OREO and other vehicles		3			(9	)
Gain on sale of loans held for sale		(464	)		(244	)
Loans originated for sale		(7,539	)		(3,711	)
Proceeds from loan sales		10,495			6,048
Earnings on bank-owned life insurance		(91	)		(82	)
Increase in accrued interest receivable and other assets		(533	)		(627	)
Increase in accrued interest payable and other liabilities		726			994
Net cash provided by operating activities		7,143			6,906
Cash Flows from Investing Activities:
Proceeds from principal repayments from available-for-sale government-sponsored mortgage-backed securities		6,822			4,211
Proceeds from matured and called available-for-sale securities		380			-
Purchases of available-for-sale securities		(4,081	)		(3,500	)
Net increase in loans		(6,823	)		(9,801	)
Proceeds from sale of other vehicles		118			167
Purchase of premises and equipment		(410	)		(202	)
Net cash used in investing activities		(3,994	)		(9,125	)

Continued on next page.

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PLUMAS BANCORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

(Continued)

	For the Three Months Ended
	March 31,
	2020			2019
Cash Flows from Financing Activities:
Net increase in demand, interest bearing and savings deposits	$	16,028		$	6,707
Net decrease in time deposits		(466	)		(2,349	)
Net decrease in securities sold under agreements to repurchase		(7,630	)		(4,148	)
Proceeds from exercise of stock options		35			76
Net cash provided by financing activities		7,967			286
Increase (decrease) in cash and cash equivalents		11,116			(1,933	)
Cash and Cash Equivalents at Beginning of Year		46,942			46,686
Cash and Cash Equivalents at End of Period	$	58,058		$	44,753
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest expense	$	383		$	434
Income taxes	$	-		$	-
Non-Cash Investing Activities:
Real estate and vehicles acquired through foreclosure	$	127		$	189
Non-Cash Financing Activities:
Common stock retired in connection with the exercise of stock options	$	46		$	-

See notes to unaudited condensed consolidated financial statements.  

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PLUMAS BANCORP AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. THE BUSINESS OF PLUMAS BANCORP

During 2002, Plumas Bancorp (the "Company") was incorporated as a bank holding company for the purpose of acquiring Plumas Bank (the "Bank") in a one bank holding company reorganization. This corporate structure gives the Company and the Bank greater flexibility in terms of operation, expansion and diversification. The Company formed Plumas Statutory Trust I ("Trust I") for the sole purpose of issuing trust preferred securities on September 26, 2002. The Company formed Plumas Statutory Trust II ("Trust II") for the sole purpose of issuing trust preferred securities on September 28, 2005.

The Bank operates eleven branches in California, including branches in Alturas, Chester, Fall River Mills, Greenville, Kings Beach, Portola, Quincy, Redding, Susanville, Tahoe City, and Truckee. In December 2015 the Bank opened a branch in Reno, Nevada; its first branch outside of California and in 2018 the Bank purchased a branch located in Carson City, Nevada. The Bank’s administrative headquarters is in Quincy, California. In addition, the Bank operates a lending office specializing in government-guaranteed lending in Auburn, California, and commercial/agricultural lending offices in Chico California and Klamath Falls, Oregon. The Bank's primary source of revenue is generated from providing loans to customers who are predominately small and middle market businesses and individuals residing in the surrounding areas.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation and Basis of Presentation

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

Plumas Statutory Trust I and Trust II are not consolidated into the Company's consolidated financial statements and, accordingly, are accounted for under the equity method. The Company's investment in Trust I of $352,000 and Trust II of $180,000 are included in accrued interest receivable and other assets on the consolidated balance sheet. The junior subordinated deferrable interest debentures issued and guaranteed by the Company and held by Trust I and Trust II are reflected as debt on the consolidated balance sheet.

The accounting and reporting policies of Plumas Bancorp and subsidiary conform with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position at March 31, 2020 and the results of its operations and its cash flows for the three- month period ended March 31, 2020 and 2019. Our condensed consolidated balance sheet at December 31, 2019 is derived from audited financial statements.

The unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting on Form 10-Q. Accordingly, certain disclosures normally presented in the notes to the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2019 Annual Report to Shareholders on Form 10-K. The results of operations for the three-month period ended March 31, 2020 may not necessarily be indicative of future operating results. In preparing such financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the periods reported. Actual results could differ significantly from those estimates.

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Segment Information

Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank.

Revenue from Contracts with Customers

The Company records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods.

Most of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as the Company’s loans and investment securities. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Condensed Consolidated Statements of Income was not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after December 15, 2019, with early adoption permitted.  As ASU No. 2018-13 only revises disclosure requirements, it did not have a material impact on the Company’s Consolidated Financial Statements.

8

Pending Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does not apply to available-for-sale (“AFS”) debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU No. 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company has begun its implementation efforts by establishing an implementation team chaired by the Company’s Chief Lending Officer and composed of members of the Company’s credit administration and accounting departments. We have purchased software to support the CECL calculation of the allowance for loan losses under ASU No 2016-13 and have engaged the software vendor to assist in the transition to the CECL model. The Company’s preliminary evaluation indicates the provisions of ASU No. 2016-13 are expected to impact the Company’s Consolidated Financial Statements, in particular the level of the reserve for credit losses. However, the Company continues to evaluate the extent of the potential impact.

On October 16, 2019, the FASB approved a proposal to change the effective date of ASU No. 2016-13 for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities delaying the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods. As the Company is a smaller reporting company and has not adopted provisions of the standard early, the delay is applicable to the Company.

9

3.   INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair value of investment securities at March 31, 2020 and December 31, 2019 consisted of the following, in thousands:

Available-for-Sale	March 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	121,019	$	4,876	$	-		$	125,895
Obligations of states and political subdivisions		32,064		1,289		(1	)		33,352
	$	153,083	$	6,165	$	(1	)	$	159,247

Unrealized gain on available-for-sale investment securities totaling $6,164,000 were recorded, net of $1,822,000 in tax expense, as accumulated other comprehensive income within shareholders' equity at March 31, 2020.  No securities were sold during the three months ended March 31, 2020.

Available-for-Sale	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	123,940	$	1,924	$	(186	)	$	125,678
Obligations of states and political subdivisions		32,470		1,201		(29	)		33,642
	$	156,410	$	3,125	$	(215	)	$	159,320

Unrealized gain on available-for-sale investment securities totaling $2,910,000 were recorded, net of $861,000 in tax expense, as accumulated other comprehensive loss within shareholders' equity at December 31, 2019. No securities were sold during the three months ended March 31, 2019. 

There were no transfers of available-for-sale investment securities during the three months ended March 31, 2020 and twelve months ended December 31, 2019. There were no securities classified as held-to-maturity at March 31, 2020 or December 31, 2019.

10

Investment securities with unrealized losses at March 31, 2020 and December 31, 2019 are summarized and classified according to the duration of the loss period as follows, in thousands:

March 31, 2020	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	-	$	-	$	-	$	-	$	-	$	-
Obligations of states and political subdivisions		998		1						998		1
	$	998	$	1	$	-	$	-	$	998	$	1

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	10,319	$	31	$	19,733	$	155	$	30,052	$	186
Obligations of states and political subdivisions		2,965		29		-		-		2,965		29
	$	13,284	$	60	$	19,733	$	155	$	33,017	$	215

At March 31, 2020, the Company held 185 securities of which 2 were in a loss position. All of the securities in a loss position were in a loss position for less than twelve months. Of the 185 securities, 98 are U.S. Government-sponsored agencies collateralized by residential mortgage obligations and 87 were obligations of states and political subdivisions. The unrealized losses relate principally to market rate conditions. All of the securities continue to pay as scheduled. When analyzing an issuer’s financial condition, management considers the length of time and extent to which the market value has been less than cost; the historical and implied volatility of the security; the financial condition of the issuer of the security; and the Company’s intent and ability to hold the security to recovery. As of March 31, 2020, management does not have the intent to sell these securities nor does it believe it is more likely than not that it will be required to sell these securities before the recovery of its amortized cost basis. Based on the Company’s evaluation of the above and other relevant factors, the Company does not believe the securities that are in an unrealized loss position as of March 31, 2020 are other than temporarily impaired.

The amortized cost and estimated fair value of investment securities at March 31, 2020 by contractual maturity are shown below, in thousands.

	Amortized Cost		Estimated Fair Value
Within one year	$	-	$	-
After one year through five years		3,468		3,569
After five years through ten years		5,464		5,629
After ten years		23,132		24,154
Investment securities not due at a single maturity date:
Government-sponsored mortgage-backed securities		121,019		125,895
	$	153,083	$	159,247

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

Investment securities with amortized costs totaling $91,211,000 and $83,596,000 and estimated fair values totaling $94,906,000 and $84,625,000 at March 31, 2020 and December 31, 2019, respectively, were pledged to secure deposits and repurchase agreements. 

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4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Outstanding loans are summarized below, in thousands:

	March 31,			December 31,
	2020			2019
Commercial	$	49,246		$	47,892
Agricultural		76,044			78,785
Real estate – residential		13,820			14,530
Real estate – commercial		332,294			316,986
Real estate – construction and land development		19,674			31,181
Equity lines of credit		35,262			35,471
Auto		92,862			90,310
Other		4,541			4,563
Total loans		623,743			619,718
Deferred loan costs, net		3,548			3,561
Allowance for loan losses		(7,804	)		(7,243	)
Total net loans	$	619,487		$	616,036

Changes in the allowance for loan losses, in thousands, were as follows:

	March 31,			December 31,
	2020			2019
Balance, beginning of period	$	7,243		$	6,958
Provision charged to operations		750			1,500
Losses charged to allowance		(268	)		(1,521	)
Recoveries		79			306
Balance, end of period	$	7,804		$	7,243

The recorded investment in impaired loans totaled $2,247,000 and $2,244,000 at March 31, 2020 and December 31, 2019, respectively. The Company had specific allowances for loan losses of $154,000 on impaired loans of $538,000 at March 31, 2020 as compared to specific allowances for loan losses of $154,000 on impaired loans of $539,000 at December 31, 2019. The balance of impaired loans in which no specific reserves were required totaled $1,709,000 and $1,705,000 at March 31, 2020 and December 31, 2019, respectively. The average recorded investment in impaired loans for the three months ended March 31, 2020 and March 31, 2019 was $2,256,000 and $1,352,000, respectively. The Company recognized $15,000 and $18,000 in interest income for impaired loans during the three months ended March 31, 2020 and 2019, respectively. No interest was recognized on nonaccrual loans accounted on a cash basis during the three months ended March 31, 2020 and 2019.

Included in impairied loans are troubled debt restructurings. Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides that a qualifying loan modification or extension is exempt by law from classification as a Troubled Debt Restructuring ("TDR") pursuant to FASB ASC 340-10. In addition, FIL-36-2020 issued by the FDIC on April 7, 2020 provides more limited circumstances in which a loan modification or extension is not subject to classification as a TDR pursuant to FASB ASC 340-10.

The Company evaluates loan extensions or modifications not qualified under Section 4013 of the CARES Act or under FIL-36-2020 in accordance with FASB ASC 340-10 with respect to the classification of the loan as a TDR. Under ASC 340-10, if the Company grants a loan extension or modification to a borrower experiencing financial difficulties for other than an insignificant period of time that includes a below–market interest rate, principal forgiveness, payment forbearance or other concession intended to minimize the economic loss to the Company, the loan extension or loan modification is classified as a TDR. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal then due and payable, management measures any impairment on the restructured loan in the same manner as for impaired loans as noted above. To determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The carrying value of troubled debt restructurings at March 31, 2020 and December 31, 2019 was $1,012,000 and $1,016,000, respectively. The Company has allocated  $33,000 of specific reserves on loans to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2020 and December 31, 2019. The Company has not committed to lend additional amounts on loans classified as troubled debt restructurings at March 31, 2020 and December 31, 2019.

There were no troubled debt restructurings that occurred during the three months ending March 31, 2020 or March 31, 2019.

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There were no troubled debt restructurings for which there was a payment default within twelve months following the modification during the three months ended March 31, 2020 and 2019, respectively.

At March 31, 2020 and December 31, 2019, nonaccrual loans totaled $2,310,000 and $2,050,000, respectively. Interest foregone on nonaccrual loans totaled $33,000 and $26,000 for the three months ended March 31, 2020 and 2019, respectively.  There were no loans past due 90 days or more and on accrual status at March 31, 2020 and December 31, 2019.

Salaries and employee benefits totaling $496,000 and $598,000 have been deferred as loan origination costs during the three months ended March 31, 2020 and 2019, respectively.

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

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

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

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

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

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

13

The following table shows the loan portfolio allocated by management's internal risk ratings at the dates indicated, in thousands:

March 31, 2020	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
Grade:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Pass	$	48,784	$	73,909	$	13,553	$	326,468	$	19,592	$	34,688	$	516,994
Special Mention		415		2,135		-		4,935		-		-		7,485
Substandard		47		-		267		891		82		574		1,861
Doubtful		-		-		-		-		-		-		-
Total	$	49,246	$	76,044	$	13,820	$	332,294	$	19,674	$	35,262	$	526,340

December 31, 2019	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
Grade:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Pass	$	47,334	$	76,620	$	14,253	$	309,785	$	31,097	$	34,855	$	513,944
Special Mention		478		2,165		-		4,954		-		-		7,597
Substandard		80		-		277		2,247		84		616		3,304
Doubtful		-		-		-		-		-		-		-
Total	$	47,892	$	78,785	$	14,530	$	316,986	$	31,181	$	35,471	$	524,845

	Consumer Credit Exposure						Consumer Credit Exposure
	Credit Risk Profile Based on Payment Activity						Credit Risk Profile Based on Payment Activity
	March 31, 2020						December 31, 2019
	Auto		Other		Total		Auto		Other		Total
Grade:
Performing	$	92,448	$	4,506	$	96,954	$	90,128	$	4,559	$	94,687
Non-performing		414		35		449		182		4		186
Total	$	92,862	$	4,541	$	97,403	$	90,310	$	4,563	$	94,873

14

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

Three Months Ended March 31, 2020:	Commercial			Agricultural			Real Estate-Residential			Real Estate-Commercial		Real Estate-Construction			Equity LOC			Auto			Other			Total
Allowance for Loan Losses
Beginning balance	$	617		$	653		$	163		$	3,426	$	481		$	393		$	1,409		$	101		$	7,243
Charge-offs		(131	)		-			-			-		-			-			(134	)		(3	)		(268	)
Recoveries		2			-			1			1		-			1			70			4			79
Provision		226			(31	)		7			403		(84	)		28			196			5			750
Ending balance	$	714		$	622		$	171		$	3,830	$	397		$	422		$	1,541		$	107		$	7,804
Three Months Ended March 31, 2019:
Allowance for Loan Losses
Beginning balance	$	914		$	538		$	214		$	2,686	$	758		$	464		$	1,289		$	95		$	6,958
Charge-offs		(16	)		-			-			-		-			-			(312	)		(23	)		(351	)
Recoveries		9			-			1			-		-			1			47			2			60
Provision		(111	)		4			(20	)		283		(117	)		(15	)		360			16			400
Ending balance	$	796		$	542		$	195		$	2,969	$	641		$	450		$	1,384		$	90		$	7,067
March 31, 2020:
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	-		$	-		$	28		$	121	$	5		$	-		$	-		$	-		$	154
Ending balance: collectively evaluated for impairment		714			622			143			3,709		392			422			1,541			107			7,650
Ending balance	$	714		$	622		$	171		$	3,830	$	397		$	422		$	1,541		$	107		$	7,804
Loans
Ending balance: individually evaluated for impairment	$	-		$	247		$	656		$	805	$	109		$	430		$	-		$	-		$	2,247
Ending balance: collectively evaluated for impairment		49,246			75,797			13,164			331,489		19,565			34,832			92,862			4,541			621,496
Ending balance	$	49,246		$	76,044		$	13,820		$	332,294	$	19,674		$	35,262		$	92,862		$	4,541		$	623,743

15

December 31, 2019:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Auto		Other		Total
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	-	$	-	$	28	$	121	$	5	$	-	$	-	$	-	$	154
Ending balance: collectively evaluated for impairment		617		653		135		3,305		476		393		1,409		101		7,089
Ending Balance	$	617	$	653	$	163	$	3,426	$	481	$	393	$	1,409	$	101	$	7,243
Loans
Ending balance: individually evaluated for impairment	$	25	$	248	$	612	$	815	$	110	$	434	$	-	$	-	$	2,244
Ending balance: collectively evaluated for impairment		47,867		78,537		13,918		316,171		31,071		35,037		90,310		4,563		617,474
Ending balance	$	47,892	$	78,785	$	14,530	$	316,986	$	31,181	$	35,471	$	90,310	$	4,563	$	619,718

16

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

							Total
March 31, 2020			90 Days				Past Due
	30-89 Days		and Still				and
	Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial	$	213	$	-	$	47	$	260	$	48,986	$	49,246
Agricultural		130		-		-		130		75,914		76,044
Real estate – residential		111		-		267		378		13,442		13,820
Real estate – commercial		828		-		891		1,719		330,575		332,294
Real estate - construction & land		-		-		82		82		19,592		19,674
Equity Lines of Credit		326		-		574		900		34,362		35,262
Auto		1,275		-		414		1,689		91,173		92,862
Other		40		-		35		75		4,466		4,541
Total	$	2,923	$	-	$	2,310	$	5,233	$	618,510	$	623,743

							Total
December 31, 2019			90 Days				Past Due
	30-89 Days		and Still				and
	Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial	$	333	$	-	$	58	$	391	$	47,501	$	47,892
Agricultural		199		-		-		199		78,586		78,785
Real estate – residential		-		-		277		277		14,253		14,530
Real estate - commercial		1,467		-		830		2,297		314,689		316,986
Real estate - construction & land		-		-		83		83		31,098		31,181
Equity Lines of Credit		288		-		616		904		34,567		35,471
Auto		1,281		-		182		1,463		88,847		90,310
Other		87		-		4		91		4,472		4,563
Total	$	3,655	$	-	$	2,050	$	5,705	$	614,013	$	619,718

17

The following tables show information related to impaired loans at March 31, 2020, in thousands:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
As of March 31, 2020:	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		247		247		-		248		5
Real estate – residential		479		489		-		480		7
Real estate – commercial		553		611		-		558		-
Real estate – construction & land		-		-		-		-		-
Equity Lines of Credit		430		458		-		432		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		-		-		-		-		-
Real estate – residential		177		176		28		177		2
Real estate – commercial		252		265		121		252		-
Real estate – construction & land		109		109		5		109		1
Equity Lines of Credit		-		-		-		-		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		247		247		-		248		5
Real estate – residential		656		665		28		657		9
Real estate – commercial		805		876		121		810		0
Real estate – construction & land		109		109		5		109		1
Equity Lines of Credit		430		458		-		432		0
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total	$	2,247	$	2,355	$	154	$	2,256	$	15

18

The following tables show information related to impaired loans at December 31, 2019, in thousands:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
As of December 31, 2019:	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	25	$	85	$	-	$	23	$	-
Agricultural		248		248		-		249		19
Real estate – residential		435		447		-		385		29
Real estate – commercial		563		614		-		476		-
Real estate – construction & land		-		-		-		-		-
Equity Lines of Credit		434		457		-		213		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		-		-		-		-		-
Real estate – residential		177		177		28		178		7
Real estate – commercial		252		261		121		139		-
Real estate – construction & land		110		110		5		114		7
Equity Lines of Credit		-		-		-		-		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total:
Commercial	$	25	$	85	$	-	$	23	$	-
Agricultural		248		248		-		249		19
Real estate – residential		612		624		28		563		36
Real estate – commercial		815		875		121		615		-
Real estate – construction & land		110		110		5		114		7
Equity Lines of Credit		434		457		-		213		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total	$	2,244	$	2,399	$	154	$	1,777	$	62

5. COMMITMENTS AND CONTINGENCIES

The Company is party to claims and legal proceedings arising in the ordinary course of business. In the opinion of the Company’s management, the amount of ultimate liability with respect to such proceedings will not have a material adverse effect on the financial condition or result of operations of the Company taken as a whole.

In the normal course of business, there are various outstanding commitments to extend credit, which are not reflected in the financial statements, including loan commitments of $104.5 million and $111.4 million and stand-by letters of credit of $126 thousand and $126 thousand at March 31, 2020 and December 31, 2019, respectively.

Of the loan commitments outstanding at March 31, 2020, $7.1 million are real estate construction loan commitments that are expected to fund within the next twelve months. The remaining commitments primarily relate to revolving lines of credit or other commercial loans, and many of these are expected to expire without being drawn upon. Therefore, the total commitments do not necessarily represent future cash requirements. Each loan commitment and the amount and type of collateral obtained, if any, are evaluated on an individual basis. Collateral held varies, but may include real property, bank deposits, debt or equity securities or business assets.

Stand-by letters of credit are conditional commitments written to guarantee the performance of a customer to a third party. These guarantees are primarily related to the purchases of inventory by commercial customers and are typically short-term in nature. Credit risk is similar to that involved in extending loan commitments to customers and accordingly, evaluation and collateral requirements similar to those for loan commitments are used. The deferred liability related to the Company’s stand-by letters of credit was not significant at March 31, 2020 or December 31, 2019.

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6. EARNINGS PER SHARE

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

	For the Three Months Ended
	March 31,
(In thousands, except per share data)	2020		2019
Net Income:
Net income	$	3,316	$	3,818
Earnings Per Share:
Basic earnings per share	$	0.64	$	0.74
Diluted earnings per share	$	0.63	$	0.73
Weighted Average Number of Shares Outstanding:
Basic shares		5,171		5,144
Diluted shares		5,231		5,225

Shares of common stock issuable under stock options for which the exercise prices were greater than the average market prices were not included in the computation of diluted earnings per share due to their antidilutive effect.  Stock options not included in the computation of diluted earnings per share, due to shares not being in-the-money and having an antidilutive effect, were approximately 208,000 and 71,000 for the three-month periods ended March 31, 2020 and 2019, respectively.

7. STOCK-BASED COMPENSATION

In May 2013, the Company established the 2013 Stock Option Plan for which 396,835 shares of common stock are reserved and 101,500 shares are available for future grants as of March 31, 2020. The 2013 Plan requires that the option price may not be less than the fair market value of the stock at the date the option is granted, and that the stock must be paid in full at the time the option is exercised. Payment in full for the option price must be made in cash, with Company common stock previously acquired by the optionee and held by the optionee for a period of at least nine months, in options of the Optionee that are fully vested and exercisable or in any combination of the foregoing. The options expire on dates determined by the Board of Directors, but not later than ten years from the date of grant.

During the three months ended March 31, 2019the Company granted options to purchase 5,000 shares of common stock.  No options were granted during the three months ended March 31, 2019.

The fair value of each option was estimated on the date of grant using the following assumptions. 

	2020
Expected life of stock options (in years)		5.1
Risk free interest rate		1.68	%
Daily Volatility		26.0	%
Dividend yields		1.29	%
Weighted-average fair value of options granted during the three months ended March 31, 2020	$	5.92

The Company determines the fair value of options on the date of grant using a Black-Scholes-Merton option pricing model that uses assumptions based on expected option life, expected stock volatility and the risk-free interest rate. The expected volatility assumptions used by the Company are based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options. The Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock options it grants to employees. The risk-free rate is based on the U.S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of the grant.

A summary of the activity within the 2013 Plan follows: 

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
Options outstanding at January 1, 2020		302,385		$	17.73
Options granted		5,000		$	26.42
Options exercised		(12,050	)		6.68
Options outstanding at March 31, 2020		295,335		$	18.33		6.0	$	899,000
Options exercisable at March 31, 2020		122,785		$	12.89		4.2	$	899,000
Expected to vest after March 31, 2020		152,897		$	22.20		7.2	$	-

As of March 31, 2020, there was $768,000 of total unrecognized compensation cost related to non-vested, share-based compensation. That cost is expected to be recognized over a weighted average period of 3.2 years.

The total fair value of options vested during the three months ended March 31, 2020 and 2019 was $189,000 and $197,000, respectively. The total intrinsic value of options at time of exercise was $235,000 and $251,000 for the three months ended March 31, 2020 and 2019, respectively.

Compensation cost related to stock options recognized in operating results under the stock option plans was $78,000 and $50,000 for the three months ended March 31, 2020 and 2019, respectively. The associated income tax benefit recognized was $6,000 and $3,000 for the three months ended March 31, 2020 and March 31, 2019, respectively.

Cash received from option exercises under the plans for the three months ended March 31, 2020 and 2019 were $35,000 and 76,000, respectively. The tax benefit realized for the tax deductions from option exercise totaled $10,000 and $0 for the three months ended March 31, 2020 and 2019, respectively. 

20

8. INCOME TAXES

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

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

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

Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statements of income. There have been no significant changes to unrecognized tax benefits or accrued interest and penalties for the three months ended March 31, 2020.

9. FAIR VALUE MEASUREMENT

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

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

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

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

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

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

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

21

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments, at March 31, 2020 follows, in thousands:

			Fair Value Measurements at March 31, 2020, Using:
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	58,058	$	58,058	$	-	$	-	$	58,058
Investment securities		159,247		-		159,247		-		159,247
Loans, net		619,487		-		-		662,368		662,368
FHLB stock		3,517		-		-		-		N/A
Accrued interest receivable		2,995		1		559		2,435		2,995
Financial liabilities:
Deposits		762,886		725,158		39,242		-		764,400
Repurchase agreements		8,383		-		8,383		-		8,383
Junior subordinated deferrable interest debentures		10,310		-		-		7,080		7,080
Accrued interest payable		91		11		60		20		91

The carrying amounts and estimated fair values of financial instruments, at December 31, 2019 follows, in thousands:

			Fair Value Measurements at December 31, 2019 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	46,942	$	46,942	$	-	$	-	$	46,942
Investment securities		159,320		-		159,320		-		159,320
Loans, net		616,036		-		-		626,795		626,795
FHLB stock		3,517		-		-		-		N/A
Accrued interest receivable		3,398		15		574		2,809		3,398
Financial liabilities:
Deposits		747,324		709,130		38,202		-		747,332
Repurchase agreements		16,013		-		16,013		-		16,013
Junior subordinated deferrable interest debentures		10,310		-		-		7,661		7,661
Accrued interest payable		96		13		60		23		96

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

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

22

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of March 31, 2020 and December 31, 2019, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and liabilities measured at fair value on a recurring basis at March 31, 2020 are summarized below, in thousands:

			Fair Value Measurements at
			March 31, 2020 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	125,895	$	-	$	125,895	$	-
Obligations of states and political subdivisions		33,352				33,352
	$	159,247	$	-	$	159,247	$	-

 Assets and liabilities measured at fair value on a recurring basis at December 31, 2019 are summarized below, in thousands:

			Fair Value Measurements at
			December 31, 2019 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	125,678	$	-	$	125,678	$	-
Obligations of states and political subdivisions		33,642				33,642
	$	159,320	$	-	$	159,320	$	-

The fair value of securities available-for-sale equals quoted market price, if available. If quoted market prices are not available, fair value is determined using quoted market prices for similar securities or matrix pricing. There were no changes in the valuation techniques used during 2020 or 2019. Transfers between hierarchy measurement levels are recognized by the Company as of the beginning of the reporting period. Changes in fair market value are recorded in other comprehensive income.

23

Assets and liabilities measured at fair value on a non-recurring basis at March 31, 2020 are summarized below, in thousands:

			Fair Value Measurements at
			March 31, 2020 Using
			Quoted
			Prices in						Total
			Active		Significant				Losses
			Markets for		Other		Significant		Three Months
			Identical		Observable		Unobservable		Ended
			Assets		Inputs		Inputs		March 31,
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)		2020
Assets:
Impaired loans:
Real estate – commercial	$	130	$	-	$	-	$	130	$	-
Other real estate:
Real estate – commercial		347		-		-		347		-
Construction and land		360		-		-		360		-
Total other real estate		707		-		-		707		-
Total	$	837	$	-	$	-	$	837	$	-

Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2019 are summarized below, in thousands:

			Fair Value Measurements at
			December 31, 2019 Using
			Quoted
			Prices in						Total
			Active		Significant				Losses
			Markets for		Other		Significant		Three Months
			Identical		Observable		Unobservable		Ended
			Assets		Inputs		Inputs		March 31,
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)		2019
Assets:
Impaired loans:
Real estate – commercial	$	130	$	-	$	-	$	130	$	61
Other real estate:
Real estate – commercial		347		-		-		347		-
Construction and land		360		-		-		360		-
Total other real estate		707		-		-		707		-
Total	$	837	$	-	$	-	$	837	$	61

The Company has no liabilities which are reported at fair value.

The following methods were used to estimate fair value.

Collateral-Dependent Impaired Loans: The Bank does not record loans at fair value on a recurring basis. However, from time to time, fair value adjustments are recorded on these loans to reflect partial write-downs, through charge-offs or specific reserve allowances, that are based on fair value estimates of the underlying collateral. The fair value estimates for collateral-dependent impaired loans are generally based on recent real estate appraisals or broker opinions, obtained from independent third parties, which are frequently adjusted by management to reflect current conditions and estimated selling costs (Level 3).   Net losses of $61,000 represent impairment charges recognized during the three months ended March 31, 2019 related to the above impaired loans. No impairment charges were incurred during the three months ended March 31, 2020.

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

24

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

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2020 and December 31, 2019 (dollars in thousands): 

							Range		Range
	Fair Value		Fair Value		Valuation		(Weighted Average)		(Weighted Average)
Description	3/31/2020		12/31/2019		Technique	Significant Unobservable Input	3/31/2020		12/31/2019
Impaired Loans:
RE – Commercial	$	130	$	130	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	10%	(10.0)%	10%	(10.0)%
Other Real Estate:
RE – Commercial	$	347	$	347	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	16% - 17%	(16.0)%	16% - 17%	(16.0)%
Construction and Land	$	360	$	360	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	10%	(10.0)%	10%	(10.0)%

25

PART I – FINANCIAL INFORMATION

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

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

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

INTRODUCTION

The following discussion and analysis sets forth certain statistical information relating to the Company as of March 31, 2020 and December 31, 2019 and for the three- month period ended March 31, 2020 and 2019. This discussion should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto included in Plumas Bancorp’s Annual Report filed on Form 10-K for the year ended December 31, 2019.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES 

There have been no changes to the Company’s critical accounting policies from those disclosed in the Company’s 2019 Annual Report to Shareholders on Form 10-K.

This discussion should be read in conjunction with our unaudited condensed consolidated financial statements, including the notes thereto, appearing elsewhere in this report.

COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a global pandemic, which continues to spread throughout the United States and around the world. The declaration of a global pandemic indicates that almost all public commerce and related business activities must be, to varying degrees, curtailed with the goal of decreasing the rate of new infections. The outbreak of COVID-19 could adversely impact a broad range of industries in which the Company’s customers operate and impair their ability to fulfill their financial obligations to the Company. On March 3, 2020, the Federal Open Market Committee reduced the target federal funds rate by 50 basis points to 1.00% to 1.25%. This rate was further reduced to a target range of 0% to 0.25% on March 16, 2020. These reductions in interest rates and other effects of the COVID-19 outbreak may adversely affect the Company’s financial condition and results of operations. As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact net interest income, the provision for loan losses and non-interest income. Other financial impact could occur though such potential impact is unknown at this time.

COVID-19 Loan Forbearance Programs

Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides that a qualified loan modification is exempt by law from classification as a Troubled Debt Restructuring pursuant to U.S. Generally Accepted Accounting Principles (GAAP).  In addition, FIL -36-2020 issued by the FDIC on April 7, 2020 encourages financial institutions to work constructively with borrowers affected by COVID-19; states that the FDIC will not criticize institutions for prudent loan modifications; and views prudent loan modification programs to financial institution customers affected by COVID-19 as positive actions that can effectively manage or mitigate adverse impacts on borrowers due to COVID-19, and lead to improved loan performance and reduced credit risk.  Pursuant to this new guidance, we have instituted loan forbearance programs to assist borrowers with managing cash flows disrupted due to COVID-19.  As of April 30, 2020, we have entered into 357 loan forbearance agreements which allow for the deferral of up to 6 months in payments representing approximately $90 million in loan balances.

U.S. Small Business Administration Paycheck Protection Program

The CARES Act also provided for the Paycheck Protection Program (PPP) and we are actively participating in this program.   In order to best service our customers we have limited applications to clients who had an active business relationship with us prior to February 15, 2020.  As of April 30, 2020 we funded 365 PPP loans with a total principal balance of over $60 million and have approved an additional $51 million in loans which are expected to fund in May.

26

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED March 31, 2020

Net Income. The Company recorded net income of $3.3 million for the three months ended March 31, 2020  down $502 thousand from net income of $3.8 million for the three months ended March 31, 2019.  An increase of $260 thousand in non-interest income  and a decline in income tax expense of  $205 thousand were offset by a reduction in net interest income of $165 thousand and increases in the provision for loan losses of $350 thousand and non-interest expense of $452 thousand.

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

Net interest income before provision for loan losses. Net interest income was $9.2 million for the three months ended March 31, 2020  a decrease of $165 thousand, or 2%, from $9.4 million for the same period in 2019. The decrease in net interest income includes a decrease of $227 thousand in interest income partially offset by a decrease in interest expense of $62 thousand We attribute the decrease in interest income to a decline in market interest rates during the period.  The average prime rate for the 3 months ending March 31, 2019 was 5.50% while for the current quarter the average prime rate declined to 4.42%.  Net interest margin for the three months ended March 31, 2020 decreased by 38 basis points from 4.95% during the first quarter of 2019 to 4.57% during the current quarter.

Interest and fees on loans increased by $30 thousand as an increase in average loan balances of $52 million was offset by a decline in yield on loans of 54 basis points from 6.09% during the 2019 quarter to 5.55% during the current quarter. Included in interest and fees on loans during the quarter ended March 31, 2019 was $433 thousand in prepayment fees related to the payoff of loans from one client.  This client prepaid a total of $11.6 million in loans; some which had significant prepayment penalties associated with them. Excluding the effect of the $433 thousand in prepayments fees, yield on loans would have been 5.78% for the three months ended March 31, 2019.  Net loan fees/costs decreased by $381 thousand from net fees of  $133 thousand during the first quarter of 2019 to net costs of  $248 thousand during the current quarter.

Interest on investment securities decreased by $185 thousand related to a decrease in average balance from $171.3 million in 2019 to $158.1 million in 2020 and a decline in yield  from 2.69% during the three months ended March 31, 2019 to 2.42% during the current quarter.

Interest expense on deposits decreased by $38 thousand to $259 thousand for the three months ended March 31, 2020, down from $297 thousand during the 2019 quarter.  Interest expense on time deposit decreased by $58 thousand mostly related to a decrease in average balance in time deposits in our Carson City branch. The Carson City branch was acquired in October 2018; we have experienced a decrease in deposits at this branch mostly related to the maturity of time deposits which were yielding significantly higher rates than our offering rates. In total, time deposits at the Carson City Branch declined by $13.4 million from $15.8 million at March 31, 2019 to $2.4 million at March 31, 2020.   Partialy offsetting the decrease in interest on time deposits was a $15 thousand interest in interest expense on money market accounts. Average money market accounts increased by $10.1 million from $83.3 million during the three months ended March 31, 2019 to $93.4 million during the current quarter. The average rate paid on money market accounts increased by 2 basis points to 0.43 during the three-months ended March 31, 2020 . 

Interest expense on other interest-bearing liabilities decreased by $24 thousand from $143 thousand during the three months ended March 31, 2019 to $119 thousand during the current quarter related to a decrease in rate paid on junior subordinated debentures.  Interest on the debentures, which totaled $116 thousand during the first quarter of 2020, fluctuates with changes in the 3-month London Interbank Offered Rate (LIBOR) rate.

27

The following table presents for the three-month periods indicated the distribution of consolidated average assets, liabilities and shareholders' equity. It also presents the amounts of interest income from interest earning assets and the resultant annualized yields expressed in both dollars and annualized yield percentages, as well as the amounts of interest expense on interest bearing liabilities and the resultant cost expressed in both dollars and annualized rate percentages. Average balances are based on daily averages. Nonaccrual loans are included in the calculation of average loans while nonaccrued interest thereon is excluded from the computation of yields earned:

	For the Three Months Ended							For the Three Months Ended
	March 31, 2020							March 31, 2019
	Average							Average
	Balance		Interest		Yield/			Balance		Interest		Yield/
	(in thousands)		(in thousands)		Rate			(in thousands)		(in thousands)		Rate
Interest-earning assets:
Loans (1) (2) (3)	$	618,961	$	8,540		5.55	%	$	566,806	$	8,510		6.09	%
Investment securities (1)		158,112		952		2.42	%		171,268		1,137		2.69	%
Interest-bearing deposits		34,984		107		1.23	%		30,226		179		2.40	%
Total interest-earning assets		812,057		9,599		4.75	%		768,300		9,826		5.19	%
Cash and due from banks		22,007							21,435
Other assets		39,234							39,927
Total assets	$	873,298						$	829,662
Interest-bearing liabilities:
NOW deposits	$	107,667		26		0.10	%	$	104,053		24		0.09	%
Money market deposits		93,436		99		0.43	%		83,288		84		0.41	%
Savings deposits		186,084		76		0.16	%		179,324		73		0.17	%
Time deposits		37,698		58		0.62	%		55,669		116		0.85	%
Total deposits		424,885		259		0.25	%		422,334		297		0.29	%
Junior subordinated debentures		10,310		116		4.53	%		10,310		140		5.51	%
Other interest-bearing liabilities		12,596		3		0.10	%		12,638		3		0.10	%
Total interest-bearing liabilities		447,791		378		0.34	%		445,282		440		0.40	%
Non-interest-bearing deposits		330,588							307,533
Other liabilities		7,186							7,228
Shareholders' equity		87,733							69,619
Total liabilities & equity	$	873,298						$	829,662
Cost of funding interest-earning assets (4)						0.18	%						0.24	%
Net interest income and margin (5)			$	9,221		4.57	%			$	9,386		4.95	%

(1) Not computed on a tax-equivalent basis.

(2) Average nonaccrual loan balances of $2.1 million for 2020 and $1.1 million for 2019 are included in average loan balances for computational purposes.

(3) Net (costs) fees included in loan interest income for the three-month periods ended March 31, 2020 and 2019 were ($248,000) and $133,000, respectively.

(4) Total annualized interest expense divided by the average balance of total earning assets.

(5) Annualized net interest income divided by the average balance of total earning assets.

28

The following table sets forth changes in interest income and interest expense for the three-month periods indicated and the amount of change attributable to variances in volume, rates and the combination of volume and rates based on the relative changes of volume and rates:

	2020 over 2019 change in net interest income
	for the three months ended March 31,
	(in thousands)
	Volume (1)			Rate (2)			Mix (3)			Total
Interest-earning assets:
Loans	$	789		$	(760	)	$	1		$	30
Investment securities		(88	)		(115	)		18			(185	)
Interest bearing deposits		29			(88	)		(13	)		(72	)
Total interest income		730			(963	)		6			(227	)
Interest-bearing liabilities:
NOW deposits		1			1			-			2
Money market deposits		10			3			2			15
Savings deposits		3			-			-			3
Time deposits		(38	)		(31	)		11			(58	)
Junior subordinated debentures		-			(24	)		-			(24	)
Other		-			-			-			-
Total interest expense		(24	)		(51	)		13			(62	)
Net interest income	$	754		$	(912	)	$	(7	)	$	(165	)

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

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

(3) The mix change in net interest income represents the change in average balance multiplied by the change in rate.

Provision for loan losses. During the three months ended March 31, 2020 and 2019 we recorded a provision for loan losses of $750 thousand and $400 thousand, respectively. See “Analysis of Asset Quality and Allowance for Loan Losses” for a discussion of loan quality trends and the provision for loan losses.

Non-interest income. During the three months ended March 31, 2020, non-interest income totaled $2.2 million, an increase of $260 thousand from the three months ended March 31, 2019. The largest component of this increase was an increase in gains on sale of SBA loans of $220 thousand from $244 thousand during the three months ended March 31, 2019 to $464 thousand during the current quarter. Proceeds from SBA loan sales totaled $10.5 million during the current quarter and $6.0 million during the 2019 quarter.  Loans originated for sale totaled $7.5 million during the three months ended March 31, 2020 and $3.7 million during the three months ended March 31, 2019. We attribute some of the decline in originations and sales during the 2019 quarter to the government shutdown beginning on December 22, 2018 and continuing until January 25, 2019.  During the shutdown we were unable provide SBA guaranteed loans.  

29

The following table describes the components of non-interest income for the three-month periods ended March 31, 2020 and 2019, dollars in thousands: 

	For the Three Months Ended
	March 31,
	2020		2019		Dollar Change			Percentage Change
Service charges on deposit accounts	$	705	$	650	$	55			8.5	%
Interchange income		539		513		26			5.1	%
Gain on sale of loans, net		464		244		220			90.2	%
Loan servicing fees		169		193		(24	)		-12.4	%
Earnings on life insurance policies		91		82		9			11.0	%
Other		257		283		(26	)		-9.2	%
Total non-interest income	$	2,225	$	1,965	$	260			13.2	%

Non-interest expense. During the three months ended March 31, 2020, total non-interest expense increased by $452 thousand, or 8%, to $6.1 million, up from $5.7 million for the comparable period in 2019. The largest components of this increase were increases of $329 in salary and benefit expense and $120 thousand in outside service fees. Salary expense increased by $264 thousand largely related to an increase in staffing levels and merit and promotional increases during the second quarter of 2019. In addition, deferred loan origination costs declined by $102 thousand, commission expense related to SBA loan sales and originations increased by $122 thousand, payroll taxes increased by $57 thousand and we increased our accrued vacation liability by $30 thousand related to increased staffing levels. These increases were partially offset by a decline in accrued bonus expense of $275 thousand from $383 thousand in the first quarter of 2019 to $108 thousand in the current quarter.  The reduction in the bonus accrual includes the effect of the decline in market interest rates as well as the impact of the higher loan loss provision related to the pandemic.

The increase in outside service fees include costs associated with growth in our debit card transactions, an increase in costs related to the management of our computer network including the installation of a new advanced backup and recovery system and a $26 thousand employee recruitment fee. 

The following table describes the components of non-interest expense for the three-month periods ended March 31, 2020 and 2019, dollars in thousands: 

	For the Three Months Ended
	March 31,
	2020		2019		Dollar Change			Percentage Change
Salaries and employee benefits	$	3,529	$	3,200	$	329			10.3	%
Occupancy and equipment		865		858		7			0.8	%
Outside service fees		724		604		120			19.9	%
Telephone and data communication		143		120		23			19.2	%
Director compensation and expense		119		107		12			11.2	%
Advertising and shareholder relations		118		82		36			43.9	%
Professional fees		117		121		(4	)		-3.3	%
Business development		100		106		(6	)		-5.7	%
Armored car and courier		99		89		10			11.2	%
Loan collection expenses		60		53		7			13.2	%
Deposit insurance		58		65		(7	)		-10.8	%
Amortization of Core Deposit Intangible		51		69		(18	)		-26.1	%
Stationery and supplies		27		26		1			3.8	%
OREO expenses		4		23		(19	)		-82.6	%
Other		122		161		(39	)		-24.2	%
Total non-interest expense	$	6,136	$	5,684	$	452			8.0	%

Provision for income taxes. The Company recorded an income tax provision of $1.2 million, or 27.3% of pre-tax income for the three months ended March 31, 2020. This compares to an income tax provision of $1.4 million, or 27.5% of pre-tax income for the three months ended March 31, 2019. The percentages for 2020 and 2019 differ from statutory rates as tax exempt items of income such as earnings on Bank owned life insurance and municipal loan and securities interest decrease taxable income.

30

FINANCIAL CONDITION

Loan Portfolio. Gross loans balances increased by $4.0 million, from $620 million at December 31, 2019 to $624 million at March 31, 2020. The increase in loan balances includes increases of $15.3 million in commercial real estate loans, $2.5 million in automobile loans and $1.3 million in commercial loans. These increases were partially offset by declines of $11.5 million in construction loans, $2.7 million in agricultural loans, $0.7 million in residential real estate loans and $0.2 million in equity lines of credit.  The Company continues to manage the mix of its loan portfolio consistent with its identity as a community bank serving the financing needs of all sectors of the area it serves. Although the Company offers a broad array of financing options, it continues to concentrate its focus on small to medium sized commercial businesses. These 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.  Plumas Bank is participating in the SBA's Paycheck Protection Program (PPP) and expects to fund a significant amount of loans under this program.   During April 2020 loans totaling $60.5 million were funded by the Bank under the PPP.

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

			Percent of					Percent of
			Loans in Each					Loans in Each
	Balance at End		Category to			Balance at End		Category to
(dollars in thousands)	of Period		Total Loans			of Period		Total Loans
	03/31/2020		03/31/2020			12/31/2019		12/31/2019
Commercial	$	49,246		7.9	%	$	47,892		7.7	%
Agricultural		76,044		12.2	%		78,785		12.7	%
Real estate – residential		13,820		2.2	%		14,530		2.3	%
Real estate – commercial		332,294		53.3	%		316,986		51.2	%
Real estate – construction & land		19,674		3.2	%		31,181		5.0	%
Equity Lines of Credit		35,262		5.6	%		35,471		5.7	%
Auto		92,862		14.9	%		90,310		14.6	%
Other		4,541		0.7	%		4,563		0.8	%
Total Gross Loans	$	623,743		100	%	$	619,718		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 71% of the total loan portfolio at March 31, 2020. Moreover, the business activities of the Company currently are focused in the California counties of Plumas, Nevada, Placer, Lassen, Modoc, Shasta, and Sierra and in Washoe and Carson City Counties in Northern Nevada. Consequently, the results of operations and financial condition of the Company are dependent upon the general trends in these economies and, in particular, the residential and commercial real estate markets. In addition, the concentration of the Company's operations in these areas of Northeastern California and Northwestern Nevada exposes it to greater risk than other banking companies with a wider geographic base in the event of catastrophes, such as earthquakes, fires and floods in these regions.

The rates of interest charged on variable rate loans are set at specific increments in relation to the Company's lending rate or other indexes such as the published prime interest rate or U.S. Treasury rates and vary with changes in these indexes. The frequency in which variable rate loans reprice can vary from one day to several years. At March 31, 2020 and December 31, 2019, approximately 74%  of the Company's loan portfolio was comprised of variable rate loans. Loans indexed to the prime interest rate or an equivalent rate totaled approximately 24% of the Company’s loan portfolio; these loans reprice within one day to three months of a change in the prime rate. At March 31, 2020 and December 31, 2019, 37% and 32%, respectively of the variable loans were at their respective floor rate. While real estate mortgage, 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. The most significant change has been an increase in indirect auto lending with automobile loans increasing from 2.5% of gross loans at December 31, 2011 to 14.9% of gross loans at March 31, 2020. The automobile portfolio provides diversification to the loan portfolio in terms of rate, term and balance as these loans tend to have a much shorter term and balance than commercial real-estate loans and are fixed rate. In addition, the Company remains committed to the agricultural industry and will continue to pursue high quality agricultural loans. Agricultural loans include both commercial and commercial real estate loans. The Company’s agricultural loan balances totaled $76 million at March 31, 2020 and $79 million at December 31, 2019.

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

The allowance for loan losses is established through charges to earnings in the form of the provision for loan losses. Loan losses are charged to and recoveries are credited to the allowance for loan losses. The allowance for loan losses is maintained at a level deemed appropriate by management to provide for known and inherent risks in the loan portfolio. The adequacy of the allowance for loan losses is based upon management's continuing assessment of various factors affecting the collectability of loans including current economic conditions, maturity of the portfolio, size of the portfolio, industry concentrations, borrower credit history, collateral, the existing allowance for loan losses, independent credit reviews, current charges and recoveries to the allowance for loan losses and the overall quality of the portfolio as determined by management, regulatory agencies, and independent credit review consultants retained by the Company. There is no precise method of predicting specific losses or amounts which may ultimately be charged off on particular segments of the loan portfolio. The collectability of a loan is subjective to some degree, but must relate to the borrower’s financial condition, cash flow, quality of the borrower’s management expertise, collateral and guarantees, and state of the local economy.

Formula allocations are calculated by applying loss factors to outstanding loans with similar characteristics. Loss factors are based on the Company’s historical loss experience as adjusted for changes in the business cycle and may be adjusted for significant factors that, in management's judgment, affect the collectability of the portfolio as of the evaluation date. Historical loss data from the beginning of the latest business cycle are incorporated in the loss factors. 

The discretionary allocation is based upon management’s evaluation of various loan segment conditions that are not directly measured in the determination of the formula and specific allowances. The conditions may include, but are not limited to, general economic and business conditions affecting the key lending areas of the Company, credit quality trends, collateral values, loan volumes and concentrations, and other business conditions.   We have added a new specific pandemic qualitative factor to our allowance for loan loss calculation and have increased the qualitative factor related to economic conditions, these changes resulted in the need for an additional loan loss provision during the current quarter. See page 26 and Item 1A - Risk Factors for a discussion of the COVID-19 global pandemic and its potential affect on the Company's current and future financial position and results of operations.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. We have purchased software to support the CECL calculation of the allowance for loan losses under ASU No 2016-13 and have engaged the software vendor to assist in the transition to the CECL model. The Company’s preliminary evaluation indicates the provisions of ASU No. 2016-13 are expected to impact the Company’s Consolidated Financial Statements, in particular the level of the reserve for credit losses. However, the Company continues to evaluate the extent of the potential impact.  On October 16, 2019, the FASB approved a proposal to change the effective date of ASU No. 2016-13 for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities delaying the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods.  As the Company is a smaller reporting company and has not adopted provisions of the standard early, the delay is applicable to the Company.

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

	For the Three Months Ended						For the Year Ended
(dollars in thousands)	March 31,						December 31,
	2020			2019			2019			2018			2017
Balance at beginning of period	$	7,243		$	6,958		$	6,958		$	6,669		$	6,549
Charge-offs:
Commercial and agricultural		131			16			587			325			202
Real estate mortgage		-			-			-			25			48
Real estate construction & land		-			-			-			-			-
Consumer (includes equity LOC & Auto)		137			335			934			841			629
Total charge-offs		268			351			1,521			1,191			879
Recoveries:
Commercial and agricultural		2			9			26			83			89
Real estate mortgage		2			1			7			114			118
Real estate construction & land		-			-			-			3			-
Consumer (includes equity LOC & Auto)		75			50			273			280			192
Total recoveries		79			60			306			480			399
Net charge-offs		189			291			1,215			711			480
Provision for loan losses		750			400			1,500			1,000			600
Balance at end of period	$	7,804		$	7,067		$	7,243		$	6,958		$	6,669
Net charge-offs during the period to average loans (annualized for the nine-month periods)		0.12	%		0.25	%		0.21	%		0.14	%		0.10	%
Allowance for loan losses to total loans		1.25	%		1.23	%		1.17	%		1.23	%		1.37	%

During the three months ended March 31, 2020 and 2019 we recorded a provision for loan losses of $750 thousand and $400 thousand, respectively. The increase relates to an increase in the economic qualitative factor and the addition of a separate pandemic qualitative factor.  Net charge-offs totaled $189 thousand during the three months ended March 31, 2020, a decrease of $102 thousand from $291 thousand during the three months ended March 31, 2019.

The following table provides a breakdown of the allowance for loan losses at March 31, 2020 and December 31, 2019:

			Percent of					Percent of
			Loans in Each					Loans in Each
	Balance at End		Category to			Balance at End		Category to
(dollars in thousands)	of Period		Total Loans			of Period		Total Loans
	2020		2020			2019		2019
Commercial and agricultural	$	1,336		20.1	%	$	1,270		20.4	%
Real estate mortgage		4,001		55.5	%		3,589		53.5	%
Real estate construction & land		397		3.2	%		481		5.0	%
Consumer (includes equity LOC & Auto)		2,070		21.2	%		1,903		21.1	%
Total	$	7,804		100.0	%	$	7,243		100.0	%

The allowance for loan losses totaled $7.8 million at March 31, 2020 and $7.2 million at December 31, 2019. 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. General reserves were $7.7 million at March 31, 2020 and $7.1 million at December 31, 2019. The allowance for loan losses as a percentage of total loans was 1.25% at March 31, 2020 and 1.17% at December 31, 2019. The percentage of general reserves to unimpaired loans totaled 1.23% at March 31, 2020 and 1.15% at December 31, 2019.

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

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Impaired loans are measured based on the present value of the expected future cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent. The amount of impaired loans is not directly comparable to the amount of nonperforming loans disclosed later in this section. The primary difference between impaired loans and nonperforming loans is that impaired loan recognition considers not only loans 90 days or more past due, restructured loans and nonaccrual loans but also may include identified problem loans other than delinquent loans where it is considered probable that we will not collect all amounts due to us (including both principal and interest) in accordance with the contractual terms of the loan agreement.

A restructuring of a debt constitutes a troubled debt restructuring (TDR) if the Company, for economic or legal reasons related to the debtor's financial difficulties, grants a concession to the debtor that it would not otherwise consider. Restructured workout loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above.

Loans restructured (TDRs) and not included in nonperforming loans in the following table totaled $0.9 million, $0.9 million, $1.0 million, $1.1 million and $2.6 million at March 31, 2020 and December 31, 2019, 2018, 2017, and 2016, respectively. For additional information related to restructured loans see Note 4 to the condensed consolidated financial statements contained within this Form 10-Q.

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

	At
	March 31,			At December 31,
	2020			2019			2018			2017			2016
	(dollars in thousands)
Nonaccrual loans	$	2,310		$	2,050		$	1,117		$	1,226		$	2,724
Loans past due 90 days or more and still accruing		-			-			-			1,796			-
Total nonperforming loans		2,310			2,050			1,117			3,022			2,724
Other real estate owned		707			707			1,170			1344			735
Other vehicles owned		62			56			53			35			12
Total nonperforming assets	$	3,079		$	2,813		$	2,340		$	4,401		$	3,471
Interest income forgone on nonaccrual loans	$	33		$	158		$	46		$	50		$	164
Interest income recorded on a cash basis on nonaccrual loans	$	-		$	-		$	-		$	-		$	29.00
Nonperforming loans to total loans		0.37	%		0.33	%		0.20	%		0.62	%		0.59	%
Nonperforming assets to total assets		0.35	%		0.33	%		0.28	%		0.59	%		0.53	%

Nonperforming loans at March 31, 2020 were $2.3 million, an increase of $260 thousand from the $2.1 million balance at December 31, 2019. Specific reserves on nonaccrual loans totaled $121 thousand at March 31, 2020 and  December 31, 2019. Performing loans past due thirty to eighty-nine days were $2.9 million at March 31, 2020 down from $3.7 million at December 31, 2019.

A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any. Total substandard loans decreased by $1.4 million from $3.3 million at December 31, 2019 to $1.9 million at March 31, 2020. Loans classified as special mention decreased by $112 thousand from $7.6 million at December 31, 2019 to $7.5 million at March 31, 2020.

At March 31, 2020 and December 31, 2019, the Company's recorded investment in impaired loans totaled $2.2 million. The specific allowance for loan losses related to impaired loans totaled $154 thousand  at March 31, 2020 and December 31, 2019. Additionally, $11 thousand had been charged off against the impaired loans at March 31, 2020 and December 31, 2019.

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It is the policy of management to make additions to the allowance for loan losses so that it remains appropriate to absorb the inherent risk of loss in the portfolio. Management believes that the allowance at March 31, 2020 is appropriate. However, the determination of the amount of the allowance is judgmental and subject to economic conditions which cannot be predicted with certainty. Accordingly, the Company cannot predict whether charge-offs of loans in excess of the allowance may occur in future periods.

OREO represents real property acquired by the Bank either through foreclosure or through a deed in lieu thereof from the borrower. Repossessed assets include vehicles and other commercial assets acquired under agreements with delinquent borrowers. OREO holdings represented three properties totaling $0.7 million at March 31, 2020 and  December 31, 2019. Nonperforming assets as a percentage of total assets were 0.35% at March 31, 2020 and 0.33% at December 31, 2019.

The following table provides a summary of the change in the number and balance of OREO properties for the three months ended March 31, 2020 and 2019 (dollars in thousands): 

	Three Months Ended March 31,
	#		2020		#		2019
Beginning Balance		3	$	707		6	$	1,170
Additions		-		-		-		0
Dispositions		-		-		-		0
Ending Balance		3		707		6		1,170

Investment Portfolio and Federal Funds Sold. Total investment securities were $159.2 million as of March 31, 2020 and $159.3 million as of December 31, 2019. Unrealized gain on available-for-sale investment securities totaling $6,164,000 were recorded, net of $1,822,000 in tax expense, as accumulated other comprehensive income within shareholders' equity at March 31, 2020. Unrealized gain on available-for-sale investment securities totaling $2,910,000 were recorded, net of $861,000 in tax expense, as accumulated other comprehensive loss within shareholders' equity at December 31, 2019.  No investment securities were sold during the three months ended March 31, 2020 and 2019.

The investment portfolio at March 31, 2020 consisted of $125.9 million in securities of U.S. Government-sponsored agencies and 87 municipal securities totaling $33.3 million. The investment portfolio at December 31, 2019 consisted of $125.7 million in securities of U.S. Government-sponsored agencies and 89 municipal securities totaling $33.6 million.

There were no Federal funds sold at March 31, 2020 and December 31, 2019; however, the Bank maintained interest earning balances at the Federal Reserve Bank totaling $32.1 million at March 31, 2020 and $20.5 million at December 31, 2019. The balance, at March 31, 2020, earns interest at the rate of 0.10%.

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

Deposits. Total deposits increased by $15.6 million from $747 million at December 31, 2019 to $763 million at March 31, 2020. Increases of $4.8 million in non-interest-bearing demand deposits, $2.6 million in interest bearing demand deposits and $8.7 million in money market and savings accounts were partially offset by a decline in time deposits of $0.5 million.  The Company continues to manage the mix of its deposits consistent with its identity as a community bank serving the financial needs of its customers.

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The following table shows the distribution of deposits by type at March 31, 2020 and December 31, 2019.

			Percent of					Percent of
			Deposits in Each					Deposits in Each
	Balance at End		Category to			Balance at End		Category to
(dollars in thousands)	of Period		Total Deposits			of Period		Total Deposits
	03/31/2020		03/31/2020			12/31/2019		12/31/2019
Non-interest bearing	$	336,375		44.1	%	$	331,619		44.4	%
NOW		105,271		13.8	%		102,724		13.7	%
Money Market		93,427		12.2	%		90,853		12.2	%
Savings		190,085		24.9	%		183,934		24.6	%
Time		37,728		4.9	%		38,194		5.1	%
Total Deposits	$	762,886		100	%	$	747,324		100	%

Deposits represent the Bank's primary source of funds. Deposits are primarily core deposits in that they are demand, savings and time deposits generated from local businesses and individuals. These sources are considered to be relatively stable, long-term relationships thereby enhancing steady growth of the deposit base without major fluctuations in overall deposit balances. The Company experiences, to a small degree, some seasonality with the slower growth period between November through April, and the higher growth period from May through October. To assist in meeting any funding demands, the Company maintains a secured borrowing arrangement with the Federal Home Loan Bank of San Francisco (“FHLB”). There were no brokered deposits at March 31, 2020 or December 31, 2019.

Short-term Borrowing Arrangements. The Company is a member of the FHLB and can borrow up to $214 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $377 million. The Company is required to hold FHLB stock as a condition of membership. At March 31, 2020 and December 31, 2019, the Company held $3.5 million and of FHLB stock which is recorded as a component of other assets. Based on this level of stock holdings at March 31, 2020, the Company can borrow up to $130.2 million. To borrow the $214 million in available credit the Company would need to purchase $2.3 million in additional FHLB stock. In addition to its FHLB borrowing line, the Company has unsecured short-term borrowing agreements with three of its correspondent banks in the amounts of $20 million, $11 million and $10 million. There were no outstanding borrowings to the FHLB or the correspondent banks under these agreements at March 31, 2020 and December 31, 2019.

Note Payable. On   March 9, 2020 the Company entered into a Renewal, Extension, and Modification of Loan Agreement (the “Agreement”) related to its promissory note dated October 24, 2013 (the “Note”) payable to TIB The Independent Bankersbank, N. A. an unrelated third party.  This Agreement provides for the following:

1. Revision of the maturity date of the Note from October 1, 2020 to March 2, 2021.

2. An increase in the maximum amount of the Note from $5 million to $15 million.

3. Elimination of the “Unused Portion” fee.

4. A reduction in the Rate from the U. S. “Prime Rate” plus one-quarter of a percent to the U. S. “Prime Rate”.  

There were no borrowings on the Note during the three months ended March 31, 2020 or the year ended December 31, 2019. The Note is secured by 100 shares of Plumas Bank stock representing the Company's 100% ownership interest in Plumas Bank. Under the Note, the Bank is subject to several negative and affirmative covenants including, but not limited to providing timely financial information, maintaining specified levels of capital, restrictions on additional borrowings, and meeting or exceeding certain capital and asset quality ratios. The Bank was in compliance with all such covenants related to the Note at March 31, 2020 and December 31, 2019.

Repurchase Agreements. The Bank offers a repurchase agreement product for its larger business customers which use securities sold under agreements to repurchase as an alternative to interest-bearing deposits. Securities sold under agreements to repurchase totaling $8.4 million and $16.0 million at March 31, 2020 and December 31, 2019, respectively are secured by U.S. Government agency securities with a carrying amount of $21.2 million and $22.0 million at March 31, 2020 and December 31, 2019, respectively. Interest paid on this product is similar to that which is paid on the Bank’s premium interest-bearing transaction accounts; however, these are not deposits and are not FDIC insured.

Junior Subordinated Deferrable Interest Debentures. Plumas Statutory Trust I and II are business trust subsidiaries formed by the Company with capital of $352,000 and $180,000, respectively, for the sole purpose of issuing trust preferred securities fully and unconditionally guaranteed by the Company.

During 2002, Trust I issued 6,000 Floating Rate Capital Trust Pass-Through Securities ("Trust Preferred Securities"), with a liquidation value of $1,000 per security, for gross proceeds of $6,000,000. During 2005, Trust II issued 4,000 Trust Preferred Securities with a liquidation value of $1,000 per security, for gross proceeds of $4,000,000. The entire proceeds were invested by Trust I in the amount of $6,186,000 and Trust II in the amount of $4,124,000 in Floating Rate Junior Subordinated Deferrable Interest Debentures (the "Subordinated Debentures") issued by the Company, with identical maturity, repricing and payment terms as the Trust Preferred Securities. The Subordinated Debentures represent the sole assets of Trusts I and II.

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Trust I’s Subordinated Debentures mature on September 26, 2032, bear a current interest rate of 4.63% (based on 3-month LIBOR plus 3.40%), with repricing and payments due quarterly. Trust II’s Subordinated Debentures mature on September 28, 2035, bear a current interest rate of 2.22% (based on 3-month LIBOR plus 1.48%), with repricing and payments due quarterly. The interest rate of the Trust Preferred Securities issued by Trust I adjust on each quarterly anniversary date to equal the 3-month LIBOR plus 3.40%. The Trust Preferred Securities issued by Trust II adjust on each quarterly anniversary date to equal the 3-month LIBOR plus 1.48%. Both Trusts I and II have the option to defer payment of the distributions for a period of up to five years, as long as the Company is not in default on the payment of interest on the Subordinated Debentures.

Interest expense recognized by the Company for the three months ended March 31, 2020 and 2019 related to the subordinated debentures was $116 thousand and $140 thousand, respectively.

Capital Resources

Shareholders’ equity increased by $5.7 million from $84.5 million at December 31, 2019 to $90.2 million at March 31, 2020. The $5.7 million increase was related to earnings during the first three months of 2020 of $3.3 million, an increase in unrealized gain on investment securities of $2.3 million and $0.1 million representing stock option activity.

It is the policy of the Company to periodically distribute excess retained earnings to the shareholders through the payment of cash dividends. Such dividends help promote shareholder value and capital adequacy by enhancing the marketability of the Company’s stock. All authority to provide a return to the shareholders in the form of a cash or stock dividend or split rests with the Board of Directors. The Board will periodically, but on no regular schedule, reviews the appropriateness of a cash dividend payment. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. The Company is subject to various restrictions on the payment of dividends. On May 15, 2019 and November 15, 2019 the Company paid a semi-annual cash dividend of $0.23 per share.

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

In July, 2013, the federal bank regulatory agencies adopted rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks, sometimes called “Basel III,” that increased the minimum regulatory capital requirements for bank holding companies and banks and implemented strict eligibility criteria for regulatory capital instruments. The Basel III capital rules include a minimum common equity Tier 1 ratio of 4.5%, a Tier 1 capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a minimum leverage ratio of 4.0% (calculated as Tier 1 capital to average consolidated assets). The minimum capital levels required to be considered “well capitalized” include a common equity Tier 1 ratio of 6.5%, a Tier 1 risk-based capital ratio of 8.0%, a total risk-based capital ratio of 10.0%  and a leverage ratio of 5.0%.  In addition, the Basel III capital rules require that banking organizations maintain an “a capital conservation buffer” of 2.5% above the minimum capital requirements in order to avoid restrictions on their ability to pay dividends, repurchase stock or pay discretionary bonuses. Including the capital conservation buffer of 2.5%, the Basel III capital rules require the following minimum ratios for a bank holding company or bank to be considered well capitalized: a common equity Tier 1 capital ratio of 7.0%; a Tier 1 capital ratio of 8.5%, and a total capital ratio of 10.5%. At December 31, 2019, the Company’s and the Bank’s capital ratios exceed the thresholds necessary to be considered “well capitalized” under the Basel III framework.

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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 consolidated capital rules. The Company qualifies for treatment under the Policy Statement and is not currently subject to the Basel III consolidated capital rules at the bank holding company level. The new capital rules continue to apply to the Bank.

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

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

						Minimum Amount of Capital Required
											To be Well-Capitalized
						For Capital					Under Prompt
	Actual					Adequacy Purposes (1)					Corrective Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2020
Common Equity Tier 1 Ratio	$	93,849		13.6	%	$	31,029		4.5	%	$	44,819		6.5	%
Tier 1 Leverage Ratio		93,849		10.8	%		34,677		4.0	%		43,347		5.0	%
Tier 1 Risk-Based Capital Ratio		93,849		13.6	%		41,371		6.0	%		55,162		8.0	%
Total Risk-Based Capital Ratio		101,902		14.8	%		55,162		8.0	%		68,952		10.0	%
December 31, 2019
Common Equity Tier 1 Ratio	$	90,317		13.1	%	$	31,059		4.5	%	$	44,863		6.5	%
Tier 1 Leverage Ratio		90,317		10.4	%		34,897		4.0	%		43,622		5.0	%
Tier 1 Risk-Based Capital Ratio		90,317		13.1	%		41,412		6.0	%		55,216		8.0	%
Total Risk-Based Capital Ratio		97,810		14.2	%		55,216		8.0	%		69,020		10.0	%

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

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

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

Off-Balance Sheet Arrangements

Loan Commitments. In the normal course of business, there are various commitments outstanding to extend credits that are not reflected in the financial statements. Commitments to extend credit and letters of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Annual review of commercial credit lines, letters of credit and ongoing monitoring of outstanding balances reduces the risk of loss associated with these commitments. As of March 31, 2020, the Company had $104.5 million in unfunded loan commitments and $126 thousand in letters of credit. This compares to $111.4 million in unfunded loan commitments and $126 thousand in letters of credit at December 31, 2019. Of the $104.5 million in unfunded loan commitments, $57.7 million and $46.8 million represented commitments to commercial and consumer customers, respectively. Of the total unfunded commitments at March 31, 2020, $55.2 million were secured by real estate, of which $18.4 million was secured by commercial real estate and $36.8 million was secured by residential real estate in the form of equity lines of credit. The commercial loan commitments not secured by real estate primarily represent business lines of credit, while the consumer loan commitments not secured by real estate primarily represent revolving credit card lines and overdraft protection lines. Since some of the commitments are expected to expire without being drawn upon the total commitment amounts do not necessarily represent future cash requirements.

Leases. The Company leases three depository branches, three lending offices, two administrative offices and two non-branch automated teller machine locations. Including variable lease expense, total rent expense under all leases was $130 thousand and $109 thousand during the three months ended March 31, 2020 and 2019, respectively. The expiration dates of the leases vary, with the first such lease expiring during 2020 and the last such lease expiring during 2025.

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Liquidity

The Company manages its liquidity to provide the ability to generate funds to support asset growth, meet deposit withdrawals (both anticipated and unanticipated), fund customers' borrowing needs, satisfy maturity of short-term borrowings and maintain reserve requirements. The Company’s liquidity needs are managed using assets or liabilities, or both. On the asset side, in addition to 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 charging competitive offering rates on deposit products and the use of established lines of credit.

The Company is a member of the FHLB and can borrow up to $214 million from the FHLB secured by commercial and residential mortgage loans with carrying values totaling $377 million. See “Short-term Borrowing Arrangements” for additional information on our FHLB borrowing capacity. In addition to its FHLB borrowing line, the Company has unsecured short-term borrowing agreements with three of its correspondent banks in the amounts of $20 million, $11 million and $10 million. There were no outstanding borrowings under the FHLB or the correspondent bank borrowing lines at March 31, 2020 or December 31, 2019.  To provide funding for the SBA's Payroll Protection Program, the Company plans on utilizing its FHLB line as needed as well as funding provided by the Federal Reserve Bank.  

Customer deposits are the Company’s primary source of funds. Total deposits increased by $15.6 million from $747 million at December 31, 2019 to $763 million at March 31, 2020.  Deposits are held in various forms with varying maturities. 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. 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. Management believes that the Company’s available sources of funds, including borrowings, will provide adequate liquidity for its operations in the foreseeable future.

39

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2020.  The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2020.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2020 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

40

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company and/or its subsidiary are a party to claims and legal proceedings arising in the ordinary course of business. In the opinion of the Company's management, the amount of ultimate liability with respect to such proceedings will not have a material adverse effect on the financial condition or results of operations of the Company taken as a whole.

Item 1A RISK FACTORS

In addition to the other information set forth in this Form 10-Q you should carefully consider the risk factors that appeared under Item 1A, “Risk Factors” in the Company’s 2019 Annual Report. There are no material changes from the risk factors included within the Company’s 2019 Annual Report, other than the risks described below.

The economic impact of the novel COVID-19 outbreak could adversely affect our financial condition and results of operations.

In December 2019, a novel coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment. Since the COVID-19 outbreak, more than 30 million people have filed claims for unemployment, and stock markets have declined in value and, in particular, bank stocks have significantly declined in value. In response to the COVID-19 outbreak, the Federal Reserve Board has reduced the benchmark fed funds rate to a target range of 0% to 0.25%, and the yields on 10 and 30-year treasury notes have declined to historic lows. Various state governments and federal agencies are requiring lenders to provide forbearance and other relief to borrowers (e.g., waiving late payments and other fees). The federal banking agencies have encouraged financial institutions to prudently work with affected borrowers and recently passed legislation has provided relief from reporting loan classifications due to modifications related to the COVID-19 outbreak. Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. Finally, the spread of the coronavirus has caused us to modify our business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences. We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the COVID-19 can be controlled and abated and when and how the economy may be reopened.

As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

• demand for our products and services may decline, making it difficult to grow assets and income;

• if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

• collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

• our allowance for loan losses may have to be increased related to a deterioration in the credit quality of borrowers or the inability of borrowers to satisfy their obligations to the Company (and any related forbearances or restructurings that may be implemented) which will adversely affect our net income;

• the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

• the value of securities in our investment portfolio may decline if, for example, the general economy deteriorates, inflation increases, credit ratings decline, the issuers’ financial condition deteriorates or the liquidity for debt securities declines;

• material decreases in net income or a net loss over several quarters could result in a decrease in the rate or discontinuation of our quarterly cash dividend;

• we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and

• Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to the outbreak could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

Any one or a combination of the factors identified above could negatively impact our business, financial condition and results of operations and prospects.

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

          (a) None.

(b) None.

(c) None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

41

ITEM 6. EXHIBITS

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

3.1	Articles of Incorporation as amended of Registrant included as exhibit 3.1 to the Registrant’s Form S-4, File No. 333-84534, which is incorporated by reference herein.
3.2	Bylaws of Registrant as amended on March 16, 2011 included as exhibit 3.2 to the Registrant’s Form 10-K for December 31, 2010, which is incorporated by this reference herein.
3.3	Amendment of the Articles of Incorporation of Registrant dated November 1, 2002, is included as exhibit 3.3 to the Registrant’s 10-Q for September 30, 2005, which is incorporated by this reference herein.
3.4	Amendment of the Articles of Incorporation of Registrant dated August 17, 2005, is included as exhibit 3.4 to the Registrant’s 10-Q for September 30, 2005, which is incorporated by this reference herein.
4	Specimen form of certificate for Plumas Bancorp included as exhibit 4 to the Registrant’s Form S-4, File No. 333-84534, which is incorporated by reference herein.
10.1	Executive Salary Continuation Agreement of Andrew J. Ryback dated December 17, 2008, is included as exhibit 10.1 to the Registrant’s 10-K for December 31, 2008, which is incorporated by this reference herein.
10.2	Split Dollar Agreement of Andrew J. Ryback dated August 23, 2005, is included as Exhibit 10.2 to the Registrant’s 8-K filed on October 17, 2005, which is incorporated by this reference herein.
10.3	Amendment to Salary Continuation Agreement of Andrew J. Ryback dated April 1, 2019, is included as Exhibit 10.1 to the Registrant’s 8-K filed on April 2, 2019, which is incorporated by this reference herein.
10.4	Amendment to Salary Continuation Agreement of Richard L. Belstock dated April 1, 2019, is included as Exhibit 10.2 to the Registrant’s 8-K filed on April 2, 2019, which is incorporated by this reference herein.
10.5	Amendment to Salary Continuation Agreement of BJ North dated April 1, 2019, is included as Exhibit 10.3 to the Registrant’s 8-K filed on April 2, 2019, which is incorporated by this reference herein.
10.6	Salary Continuation Agreement of Aaron Boigon dated April 1, 2019, is included as Exhibit 10.4 to the Registrant’s 8-K filed on April 2, 2019, which is incorporated by this reference herein.
10.7	Promissory Note Dated October 24, 2013, is included as Exhibit 10.6 to the Registrant’s 10-Q filed on  November 7, 2013, which is incorporated by this reference herein.

10.8*	Renewal, Extension , and Modification of Loan
10.9	Amendment to Salary Continuation Agreement of Andrew J. Ryback dated April 1, 2016, is included as Exhibit 10.1 to the Registrant’s 8-K filed on April 4, 2016, which is incorporated by this reference herein.
10.10	Salary Continuation Agreement of Richard L. Belstock dated April 1, 2016, is included as Exhibit 10.2 to the Registrant’s 8-K filed on April 4, 2016, which is incorporated by this reference herein.
10.11	Salary Continuation Agreement of Kerry D. Wilson dated April 1, 2016, is included as Exhibit 10.3 to the Registrant’s 8-K filed on April 4, 2016, which is incorporated by this reference herein.
10.12	Salary Continuation Agreement of BJ North dated April 1, 2016, is included as Exhibit 10.4 to the Registrant’s 8-K filed on April 4, 2016, which is incorporated by this reference herein.
10.13	Director Retirement Agreement of Steven M. Coldani dated December 21, 2016, is included as Exhibit 10.13 to the Registrant’s 10-K filed on March 17, 2017, which is incorporated by this reference herein.
10.18	Amended and Restated Director Retirement Agreement of Daniel E. West dated May 10, 2000, is included as Exhibit 10.18 to the Registrant’s 10-QSB for June 30, 2002, which is incorporated by this reference herein.

42

10.19	Consulting Agreement of Daniel E. West dated May 10, 2000, is included as Exhibit 10.19 to the Registrant’s 10-QSB for June 30, 2002, which is incorporated by this reference herein.
10.24	Amended and Restated Director Retirement Agreement of Gerald W. Fletcher dated May 10, 2000, is included as Exhibit 10.24 to the Registrant’s 10-QSB for June 30, 2002, which is incorporated by this reference herein.
10.25	Consulting Agreement of Gerald W. Fletcher dated May 10, 2000, is included as Exhibit 10.25 to the Registrant’s 10-QSB for June 30, 2002, which is incorporated by this reference herein.
10.33	Amended and Restated Director Retirement Agreement of Terrance J. Reeson dated April 19, 2000, is included as Exhibit 10.33 to the Registrant’s 10-QSB for June 30, 2002, which is incorporated by this reference herein.
10.34	Consulting Agreement of Terrance J. Reeson dated May 10, 2000, is included as Exhibit 10.34 to the Registrant’s 10-QSB for June 30, 2002, which is incorporated by this reference herein.
10.41	Form of Indemnification Agreement (Plumas Bancorp) is included as Exhibit 10.41 to the Registrant’s 10-Q for March 31, 2009, which is incorporated by this reference herein.
10.42	Form of Indemnification Agreement (Plumas Bank) is included as Exhibit 10.42 to the Registrant’s 10-Q for March 31, 2009, which is incorporated by this reference herein.
10.47	2013 Stock Option Plan is included as exhibit 99.1 of the Form S-8 filed September 12, 2013, which is incorporated by this reference herein.
10.48	Specimen Form of Incentive Stock Option Agreement under the 2013 Stock Option Plan is included as exhibit 99.2 of the Form S-8 filed September 12, 2013, which is incorporated by this reference herein.
10.49	Specimen Form of Nonqualified Stock Option Agreement under the 2013 Stock Option Plan is included as exhibit 99.3 of the Form S-8 filed September 12, 2013, which is incorporated by this reference herein.
10.51	First Amendment to Split Dollar Agreement of Andrew J. Ryback, is included as exhibit 10.51 to the Registrant’s 10-K for December 31, 2008, which is incorporated by this reference herein.
10.66	Director Retirement Agreement of Robert McClintock, is included as Exhibit 10.66 to the Registrant’s 10-K filed on March 23, 2012, which is incorporated by this reference herein.
10.67	First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for Terrance J. Reeson adopted on September 19, 2007, is included as Exhibit 10.67 to the Registrant’s 8-K filed on September 25, 2007, which is incorporated by this reference herein.
10.69	First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for Daniel E. West adopted on September 19, 2007, is included as Exhibit 10.69 to the Registrant’s 8-K filed on September 25, 2007, which is incorporated by this reference herein.
10.70	First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for Gerald W. Fletcher adopted on October 9, 2007, is included as Exhibit 10.70 to the Registrant’s 10-Q for September 30, 2007, which is incorporated by this reference herein.
31.1*	Rule 13a-14(a) [Section 302] Certification of Principal Financial Officer dated May 6, 2019.
31.2*	Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated May 6, 2019.
32.1*	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 6, 2019.
32.2*	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 6, 2019.

43

101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Schema.
101.CAL*	XBRL Taxonomy Calculation Linkbase.
101.DEF*	XBRL Taxonomy Definition Linkbase.
101.LAB*	XBRL Taxonomy Label Linkbase.
101.PRE*	XBRL Taxonomy Presentation Linkbase.
*	Filed herewith

SIGNATURES

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

PLUMAS BANCORP
(Registrant)
Date: May 6, 2020
	/s/ Richard L. Belstock
	Richard L. Belstock
	Chief Financial Officer
	/s/ Andrew J. Ryback
	Andrew J. Ryback
	Director, President and Chief Executive Officer

44

EX-10.8

Exhibit 10.8

TIB The Independent BankersBank, N.A.

RENEWAL, EXTENSION, AND MODIFICATION OF LOAN

(Loan #95405)

THIS RENEWAL, EXTENSION, AND MODIFICATION OF LOAN (this “Modification”) is made by and between PLUMAS BANCORP (“Borrower”) and TIB THE INDEPENDENT BANKERSBANK, N.A. (“Lender”), to be effective as of the 2^nd day of March, 2020.

RECITALS:

WHEREAS, to evidence a loan (the “Loan”) described in that certain Amended and Restated Letter Loan Agreement dated October 1, 2016 (as previously amended, the “Loan Agreement”), Borrower executed and delivered to Lender that certain Promissory Note dated October 24, 2013, in the original stated principal amount of Three Million and No/100 Dollars ($3,000,000.00) (subsequently increased to $5,000,000.00 and modified to a revolving line of credit) (as previously modified including by, without limitation, that certain Renewal, Extension, and Modification of Loan dated October 1, 2019 [the “2019 Modification”], the “Note”); and

WHEREAS, as partial security for the Note and Loan, Borrower delivered to Lender that certain Pledge Agreement (“Pledge Agreement”), dated of even date with the Note, granting a security interest in 100% of the outstanding common stock of Plumas Bank, among other property described therein (collectively, the “Pledged Collateral”); and

WHEREAS, as further security for the Note and Loan, Borrower delivered to Lender that certain Assignment of Life Insurance Policies as Collateral (“Assignment”), dated of even date with the Note, assigning its rights under certain Life Insurance Policies (together, the “Policy”) on Andrew J. Ryback (the Pledged Collateral and the Policy is herein collectively, the “Collateral”); and

WHEREAS, all obligations and indebtedness now existing or hereafter from time to time owing to the Lender under the Note, Loan Agreement, Pledge Agreement, Assignment, or other documents which have been executed by Borrower from time to time to secure or evidence the Note (as hereby modified) are sometimes collectively referred to herein as the “Obligations” (and the Note, Loan Agreement, Pledge Agreement, and all documents evidencing the Loan described therein, and as such are hereby modified, are herein collectively, the “Loan Documents”); and

WHEREAS, Borrower desires to modify the term of the Loan and extend the term of the Loan, and Lender agrees to such modification and extension pursuant to the terms hereof.

AGREEMENTS:

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agree as follows:

1. The maximum amount of the Note and Loan shall be increased to the maximum amount of $15,000,000.00. The parties hereby acknowledge that the outstanding principal balance of the Note is currently $0.00. From the date hereof, Borrower promises to pay to Lender all advances under the Note and Loan, and all other amounts owing under the Loan Documents, and to perform all of the covenants and obligations under the Note and other Loan Documents.

2. The Rate (as defined in the Note and subsequently amended) is hereby amended to the rate reported in the Credit Markets section (or similar section) of The Wall Street Journal as the U.S. “Prime Rate”, as such is announced from time to time, fluctuating daily. Quarterly payments of interest shall continue to be due as provided in the Note.

MODIFICATION OF LOAN – Loan #95405 – Page 1

3. The Maturity Date (as defined in the Note and subsequently extended) is hereby further extended to March 2, 2021.

4. The “unused portion” fee described in Paragraph 3 of the 2019 Modification is hereby deleted.

5. Borrower hereby renews, but does not extinguish, the Note and the liens and security interests created and evidenced by the Pledge Agreement, Assignment, and all other liens and security interests securing the Note, and Borrower promises to pay to the order of Lender all amounts due under the Note, or so much thereof as may be advanced and outstanding, together with interest at the rate and in the manner specified in the Note, as modified herein, and to observe, comply with and perform each and every of the terms and provisions of the Loan Documents as herein modified.

6. Borrower hereby extends and reaffirms the liens on the Collateral and all other collateral securing the Note until the indebtedness and the Note, as modified, renewed and extended hereby, have been fully paid, and agrees that the extension, rearrangement and modification set forth herein shall in no manner affect or impair the Note or the liens securing the same, and that said liens shall not in any manner be waived, the purpose of this instrument being simply to extend, rearrange and modify the time or manner of payment of the indebtedness evidenced by the Note, to modify the Note, Pledge Agreement, Assignment, and other Loan Documents, and to carry forward all liens securing the same, which are acknowledged by Borrower to be valid and subsisting. Borrower further agrees that all terms and provisions of the Note and of the instrument or instruments creating or fixing the liens securing the same shall be and remain in full force and effect as therein written, except as otherwise expressly provided herein. All liens and security interests are hereby carried forward from the original inception thereof, and Borrower hereby ratifies, reaffirms and confirms all of said liens and security interests from the original inception thereof. Except as otherwise specified herein, the terms and provisions hereof shall in no manner impair, limit, restrict, or otherwise affect the obligations of Borrower under the Loan Documents. As a material inducement to Lender to execute and deliver this Modification, Borrower hereby acknowledges and agrees that Borrower is well and truly indebted to Lender in the amount set forth hereinabove, and that the liens, security interests and assignments created by the Pledge Agreement and any other Loan Documents are, respectively, valid and subsisting liens, security interests, and assignments, and are of the validity and priority recited in the Pledge Agreement, Assignment, and the other Loan Documents. As further material inducement to Lender to execute and deliver this Modification, Borrower hereby acknowledges that there are no claims or offsets against, or defenses or counterclaim to, the terms or provisions or other obligations created or evidenced by the Loan Documents, and represent that, after modification of the Note, Pledge Agreement, Assignment, and other Loan Documents hereunder, no event has occurred, and no condition exists which would constitute a default, either with or without notice or lapse of time, or both, under the Loan Documents.

7. Borrower reaffirms and remakes, as of the date hereof, all representations and warranties contained in the Note, Loan Agreement, Pledge Agreement, Assignment, and other Loan Documents. Borrower further represents and warrants that, except as disclosed in writing to Lender, it has done nothing, nor has allowed anything, to adversely affect title to or encumber the Collateral or any other collateral of Borrower in which Lender has a security interest. Borrower further represents and warrants to Lender that it is aware of no condition or fact, which has not been disclosed in writing to Lender, which would materially adversely affect the repayment to Lender of all sums due under the Loan Documents.

8. Borrower, for itself, its successors and assigns, does hereby (a) acknowledge that Lender has performed all of its obligations to date under the Loan Documents and (b) waives, releases, and discharges Lender and its agents, employees, officers, directors, and attorneys (collectively, the “Released Parties”) from any and all of Lender’s duties, obligations, and liabilities arising under, based upon or associated with, directly or indirectly, the Note, Loan Agreement, Pledge Agreement, Assignment, and any other Loan Documents, existing as of the date of this Modification, and further does hereby waive any and all claims and causes of action of any kind or character, arising under, based upon, or associated with, directly or indirectly, the Loan Documents or the acts, actions, or omissions of the Released Parties in connection therewith, existing as of the date hereof, whether known or unknown, asserted or unasserted, equitable or at law, arising under or pursuant to common or statutory law, rules, or regulations; provided however, that, from and after the date hereof, Lender hereby indemnifies Borrower and each affiliate thereof and their respective officers, directors, employees, attorneys, and agents from, and holds each of them harmless against, any and all losses, liabilities, claims, damages, penalties, judgments, costs, and expenses (including attorneys’ fees) to which any of them may become subject which directly or indirectly arise from or relate to any breach by Lender of any representation, warranty, covenant, or other agreement contained herein.

MODIFICATION OF LOAN – Loan #95405 – Page 2

9. Borrower hereby ratifies, reaffirms and confirms any and all covenants, agreements, or promises heretofore made by Borrower to Lender in connection with the Loan, Note, Loan Agreement, Pledge Agreement, Assignment, or other Loan Documents, and all renewals thereof.

10. Borrower agrees to pay all other fees, costs, and expenses of Lender incurred in connection with the preparation and administration of this Modification, including attorneys’ fees.

11. It is hereby agreed and acknowledged that other parties, if any, who are liable in any part for the Obligations, but who are not hereby executing this Modification, are in no way released or discharged from such Obligations, nor are Lender’s rights against such persons or entities waived or negatively impacted by the execution of this Modification.

12. If any provision of this Modification or application to any party or circumstance shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Modification or the application of such provision to such person or circumstances, other than those as to which it is so determined invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

13. Except as amended hereby, the Note, Loan Agreement, Pledge Agreement, Assignment, and other Loan Documents remain unmodified and in full force and effect.

14. THE NOTE, LOAN AGREEMENT, PLEDGE AGREEMENT, ASSIGNMENT, AND OTHER WRITTEN LOAN DOCUMENTS, AS MODIFIED BY THIS MODIFICATION, REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER AND LENDER, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN BORROWER AND LENDER.

Executed to be effective as of the effective date first written above.

BORROWER:	LENDER:
PLUMAS BANCORP	TIB THE INDEPENDENT BANKERSBANK, N.A.
By:          /s/ Andrew J. Ryback	By:          /s/ Gale L. Fossatti
Andrew J. Ryback, President and CEO	Gale L. Fossatti, Senior Vice President

MODIFICATION OF LOAN – Loan #95405 – Page 3

EX-31.1

Exhibit 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Richard L. Belstock, Chief Financial Officer, certify that:

1. I have reviewed this report on Form 10-Q of Plumas Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2020	/s/ Richard L. Belstock
	Richard L. Belstock, Chief Financial Officer

EX-31.2

Exhibit 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Andrew J. Ryback, Chief Executive Officer, certify that:

1. I have reviewed this report on Form 10-Q of Plumas Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2020	/s/ Andrew J. Ryback
	Andrew J. Ryback, Chief Executive Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Plumas Bancorp (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 6, 2020	/s/ Richard L. Belstock
	Richard L. Belstock, Chief Financial Officer

EX-32.2

Exhibit 32.2

Certification of Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Plumas Bancorp (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 6, 2020	/s/ Andrew J. Ryback
	Andrew J. Ryback, Chief Executive Officer

XML

Note 3 - Investment Securities Available for Sale (Details Textual)	3 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019	Dec. 31, 2019 USD ($)	Mar. 31, 0201 USD ($)
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain (Loss), before Tax, Total	$ 6,164,000			$ 2,910,000
Available-for-sale Securities Income Tax Expense (Benefit) on Accumulated Gross Unrealized Gains Losses	$ 1,822,000			$ 861,000
Number of Securities Sold During Period	0	0
Debt Securities, Held-to-maturity, Total	$ 0		$ 0
Number of Investment Securities	185
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Positions	2
Available-for-sale Debt Securities Pledged to Secure Deposits and Repurchase Agreements Amortized Cost Basis	$ 91,211,000		83,596,000
Debt Securities, Available-for-sale, Restricted	$ 94,906,000
Collateral Pledged [Member]
Debt Securities, Available-for-sale, Restricted			$ 84,625,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Number of Investment Securities	98
US States and Political Subdivisions Debt Securities [Member]
Number of Investment Securities	87

XML

Note 7 - Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2020
Expected life of stock options (in years)		5.1
Risk free interest rate		1.68	%
Daily Volatility		26.0	%
Dividend yields		1.29	%
Weighted-average fair value of options granted during the three months ended March 31, 2020	$	5.92

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
Options outstanding at January 1, 2020		302,385		$	17.73
Options granted		5,000		$	26.42
Options exercised		(12,050	)		6.68
Options outstanding at March 31, 2020		295,335		$	18.33		6.0	$	899,000
Options exercisable at March 31, 2020		122,785		$	12.89		4.2	$	899,000
Expected to vest after March 31, 2020		152,897		$	22.20		7.2	$	-

XML

Note 4 - Loans and the Allowance for Loan Losses (Details Textual) xbrli-pure in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Impaired Financing Receivable, Recorded Investment, Total	$ 2,247,000		$ 2,244,000
Impaired Financing Receivable, Related Allowance	154,000		154,000
Impaired Financing Receivable, with Related Allowance, Recorded Investment	538,000		539,000
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,709,000		1,705,000
Impaired Financing Receivable, Average Recorded Investment, Total	2,256,000	$ 1,352,000	1,777,000
Impaired Financing Receivable, Interest Income, Accrual Method, Total	15,000	18,000	62,000
Impaired Financing Receivable, Interest Income, Cash Basis Method, Total	0	$ 0
Financing Receivable, Troubled Debt Restructuring	1,012,000		1,016,000
Financing Receivable Modifications Related Allowances	33,000		33,000
Financing Receivable, Troubled Debt Restructuring, Commitment to Lend	$ 0		0
Financing Receivable, Modifications, Number of Contracts	0	0
Financing Receivable, Troubled Debt Restructuring, Subsequent Default, Number of Contracts	0	0
Financing Receivable, Nonaccrual	$ 2,310,000		$ 2,050,000
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	$ 33,000	$ 26,000
Number of Loans, 90 Days Past Due and Still Accruing	0		0
Deferred Loan Origination Costs	$ 496,000	$ 598,000

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net income	$ 3,316	$ 3,818
Other comprehensive income:
Change in net unrealized gain/loss	3,254	2,599
Reclassification adjustments for net (gains) losses included in net income
Net unrealized holding gain	3,254	2,599
Related tax effect:
Change in net unrealized gain/loss	(961)	(768)
Reclassification of net gains (losses) included in net income
Income tax effect	(961)	(768)
Other comprehensive income	2,293	1,831
Total comprehensive income	$ 5,609	$ 5,649

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Document Information [Line Items]
Entity Registrant Name	Plumas Bancorp
Entity Central Index Key	0001168455
Trading Symbol	plbc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		5,178,532
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Title of 12(b) Security	Common Stock, no par value

XML

Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation and Basis of Presentation

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

Plumas Statutory Trust I and Trust II are

not

consolidated into the Company's consolidated financial statements and, accordingly, are accounted for under the equity method. The Company's investment in Trust I of

$352,000

and Trust II of

$180,000

are included in accrued interest receivable and other assets on the consolidated balance sheet. The junior subordinated deferrable interest debentures issued and guaranteed by the Company and held by Trust I and Trust II are reflected as debt on the consolidated balance sheet.

The accounting and reporting policies of Plumas Bancorp and subsidiary conform with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position at 

March 31, 2020

and the results of its operations and its cash flows for the

three

- month period ended

March 31, 2020

and

2019

. Our condensed consolidated balance sheet at 

December 31, 2019

is derived from audited financial statements.

The unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting on Form

10

-Q. Accordingly, certain disclosures normally presented in the notes to the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The Company believes that the disclosures are adequate to make the information

not

misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's

2019

Annual Report to Shareholders on Form

10

-K. The results of operations for the 

three

-month period ended

March 31, 2020

may

not

necessarily be indicative of future operating results. In preparing such financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the periods reported. Actual results could differ significantly from those estimates.

S

egment Information

Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does

not

allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment.

No

customer accounts for more than

10

percent of revenues for the Company or the Bank.

Revenue from Contracts with Customers

The Company records revenue from contracts with customers in accordance with Accounting Standards Codification Topic

606,

“Revenue from Contracts with Customers” (“Topic

606”

). Under Topic

606,

the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. Significant revenue has

not

been recognized in the current reporting period that results from performance obligations satisfied in previous periods.

Most of the Company’s revenue-generating transactions are

not

subject to ASC

606,

including revenue generated from financial instruments, such as the Company’s loans and investment securities. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Condensed Consolidated Statements of Income was

not

necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic

606

that significantly affects the determination of the amount and timing of revenue from contracts with customers.

Recently Adopted Accounting Pronouncements

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

Fair Value Measurement, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after

December 15, 2019,

with early adoption permitted.  As ASU

No.

2018

-

13

only revises disclosure requirements, it did

not

have a material impact on the Company’s Consolidated Financial Statements.

Pending Accounting Pronouncements

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

Measurement of Credit Losses on Financial Instruments. ASU

No.

2016

-

13

significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (

1

) financial assets subject to credit losses and measured at amortized cost, and (

2

) certain off-balance sheet credit exposures. This includes, but is

not

limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does

not

apply to available-for-sale (“AFS”) debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU

No.

2016

-

13

also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. ASU

No.

2016

-

13

is effective for interim and annual reporting periods beginning after

December 15, 2019;

early adoption is permitted for interim and annual reporting periods beginning after

December 15, 2018.

Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the

first

reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company has begun its implementation efforts by establishing an implementation team chaired by the Company’s Chief Lending Officer and composed of members of the Company’s credit administration and accounting departments. We have purchased software to support the CECL calculation of the allowance for loan losses under ASU

No

2016

-

13

and have engaged the software vendor to assist in the transition to the CECL model. The Company’s preliminary evaluation indicates the provisions of ASU

No.

2016

-

13

are expected to impact the Company’s Consolidated Financial Statements, in particular the level of the reserve for credit losses. However, the Company continues to evaluate the extent of the potential impact.

On

October 16, 2019,

the FASB approved a proposal to change the effective date of ASU

No.

2016

-

13

for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities delaying the effective date to fiscal years beginning after

December 31, 2022,

including interim periods within those fiscal periods. As the Company is a smaller reporting company and has

not

adopted provisions of the standard early, the delay is applicable to the Company.

XML

Note 7 - Stock-based Compensation (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Payment Arrangement, Expense	$ 78,000	$ 50,000
Share-based Payment Arrangement, Expense, Tax Benefit	6,000	3,000
Proceeds from Stock Options Exercised	35,000	76,000
Share-based Payment Arrangement, Exercise of Option, Tax Benefit	$ 10,000	$ 0
Stock Option Plan 2013 [Member]
Common Stock, Capital Shares Reserved for Future Issuance (in shares)	396,835
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)	101,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)	5,000	0
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 768,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)	3 years 73 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	$ 189,000	$ 197,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	$ 235,000	$ 251,000
Stock Option Plan 2013 [Member] | Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)	10 years

XML

Note 9 - Fair Value Measurement - Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Estimated fair value	$ 159,247	$ 159,320
Reported Value Measurement [Member]
Cash and cash equivalents	58,058	46,942
Estimated fair value	159,247	159,320
Loans, net	619,487	616,036
FHLB stock	3,517	3,517
Accrued interest receivable	2,995	3,398
Deposits	762,886	747,324
Repurchase agreements	8,383	16,013
Junior subordinated deferrable interest debentures	10,310	10,310
Accrued interest payable	91	96
Estimate of Fair Value Measurement [Member]
Cash and cash equivalents	58,058	46,942
Estimated fair value	159,247	159,320
Loans, net	662,368	626,795
Accrued interest receivable	2,995	3,398
Deposits	764,400	747,332
Repurchase agreements	8,383	16,013
Junior subordinated deferrable interest debentures	7,080	7,661
Accrued interest payable	91	96
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents	58,058	46,942
Accrued interest receivable	1	15
Deposits	725,158	709,130
Accrued interest payable	11	13
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Estimated fair value	159,247	159,320
Accrued interest receivable	559	574
Deposits	39,242	38,202
Repurchase agreements	8,383	16,013
Accrued interest payable	60	60
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Loans, net	662,368	626,795
Accrued interest receivable	2,435	2,809
Junior subordinated deferrable interest debentures	7,080	7,661
Accrued interest payable	$ 20	$ 23

XML

Note 6 - Earnings Per Share (Details Textual) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	208,000
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)		71,000

XML

Note 4 - Loans and the Allowance for Loan Losses - Outstanding Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Loans	$ 623,743	$ 619,718
Deferred loan costs, net	3,548	3,561
Allowance for loan losses	(7,804)	(7,243)	$ (7,067)	$ (6,958)
Total net loans	619,487	616,036
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans	49,246	47,892
Allowance for loan losses	(714)	(617)	(796)	(914)
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Loans	76,044	78,785
Allowance for loan losses	(622)	(653)	(542)	(538)
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	332,294	316,986
Allowance for loan losses	(3,830)	(3,426)	(2,969)	(2,686)
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Loans	19,674	31,181
Allowance for loan losses	(397)	(481)	(641)	(758)
Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	13,820	14,530
Allowance for loan losses	(171)	(163)	(195)	(214)
Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Loans	35,262	35,471
Allowance for loan losses	(422)	(393)	(450)	(464)
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans	92,862	90,310
Allowance for loan losses	(1,541)	(1,409)	(1,384)	(1,289)
Consumer Portfolio Segment [Member] | Other Loans [Member]
Loans	4,541	4,563
Allowance for loan losses	$ (107)	$ (101)	$ (90)	$ (95)

XML

Note 4 - Loans and the Allowance for Loan Losses - Allocation of the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Mar. 31, 2020	Dec. 31, 2019
Beginning balance	$ 7,243	$ 6,958	$ 6,958
Charge-offs	(268)	(351)	(1,521)
Recoveries	79	60	306
Provision	750	400	1,500
Ending balance	7,804	7,067	7,243
Allowance for loan losses, individually evaluated for impairment				$ 154	$ 154
Allowance for loan losses, collectively evaluated for impairment				7,650	7,089
Allowance for loan losses	7,243	7,067	6,958	7,804	7,243
Loans, individually evaluated for impairment				2,247	2,244
Loans, collectively evaluated for impairment				621,496	617,474
Loans				623,743	619,718
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Beginning balance	617	914	914
Charge-offs	(131)	(16)
Recoveries	2	9
Provision	226	(111)
Ending balance	714	796	617
Allowance for loan losses, individually evaluated for impairment
Allowance for loan losses, collectively evaluated for impairment				714	617
Allowance for loan losses	714	796	914	714	617
Loans, individually evaluated for impairment					25
Loans, collectively evaluated for impairment				49,246	47,867
Loans				49,246	47,892
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Beginning balance	653	538	538
Charge-offs
Recoveries
Provision	(31)	4
Ending balance	622	542	653
Allowance for loan losses, individually evaluated for impairment
Allowance for loan losses, collectively evaluated for impairment				622	653
Allowance for loan losses	622	542	538	622	653
Loans, individually evaluated for impairment				247	248
Loans, collectively evaluated for impairment				75,797	78,537
Loans				76,044	78,785
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Beginning balance	3,426	2,686	2,686
Charge-offs
Recoveries	1
Provision	403	283
Ending balance	3,830	2,969	3,426
Allowance for loan losses, individually evaluated for impairment				121	121
Allowance for loan losses, collectively evaluated for impairment				3,709	3,305
Allowance for loan losses	3,830	2,969	2,686	3,830	3,426
Loans, individually evaluated for impairment				805	815
Loans, collectively evaluated for impairment				331,489	316,171
Loans				332,294	316,986
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Beginning balance	481	758	758
Charge-offs
Recoveries
Provision	(84)	(117)
Ending balance	397	641	481
Allowance for loan losses, individually evaluated for impairment				5	5
Allowance for loan losses, collectively evaluated for impairment				392	476
Allowance for loan losses	397	641	758	397	481
Loans, individually evaluated for impairment				109	110
Loans, collectively evaluated for impairment				19,565	31,071
Loans				19,674	31,181
Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Beginning balance	163	214	214
Charge-offs
Recoveries	1	1
Provision	7	(20)
Ending balance	171	195	163
Allowance for loan losses, individually evaluated for impairment				28	28
Allowance for loan losses, collectively evaluated for impairment				143	135
Allowance for loan losses	171	195	214	171	163
Loans, individually evaluated for impairment				656	612
Loans, collectively evaluated for impairment				13,164	13,918
Loans				13,820	14,530
Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Beginning balance	393	464	464
Charge-offs
Recoveries	1	1
Provision	28	(15)
Ending balance	422	450	393
Allowance for loan losses, individually evaluated for impairment
Allowance for loan losses, collectively evaluated for impairment				422	393
Allowance for loan losses	422	450	464	422	393
Loans, individually evaluated for impairment				430	434
Loans, collectively evaluated for impairment				34,832	35,037
Loans				35,262	35,471
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Beginning balance	1,409	1,289	1,289
Charge-offs	(134)	(312)
Recoveries	70	47
Provision	196	360
Ending balance	1,541	1,384	1,409
Allowance for loan losses, individually evaluated for impairment
Allowance for loan losses, collectively evaluated for impairment				1,541	1,409
Allowance for loan losses	1,541	1,384	1,289	1,541	1,409
Loans, individually evaluated for impairment
Loans, collectively evaluated for impairment				92,862	90,310
Loans				92,862	90,310
Consumer Portfolio Segment [Member] | Other Loans [Member]
Beginning balance	101	95	95
Charge-offs	(3)	(23)
Recoveries	4	2
Provision	5	16
Ending balance	107	90	101
Allowance for loan losses, individually evaluated for impairment
Allowance for loan losses, collectively evaluated for impairment				107	101
Allowance for loan losses	$ 107	$ 90	$ 95	107	101
Loans, individually evaluated for impairment
Loans, collectively evaluated for impairment				4,541	4,563
Loans				$ 4,541	$ 4,563

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Consolidation and Basis of Presentation

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

Plumas Statutory Trust I and Trust II are

not

consolidated into the Company's consolidated financial statements and, accordingly, are accounted for under the equity method. The Company's investment in Trust I of

$352,000

and Trust II of

$180,000

are included in accrued interest receivable and other assets on the consolidated balance sheet. The junior subordinated deferrable interest debentures issued and guaranteed by the Company and held by Trust I and Trust II are reflected as debt on the consolidated balance sheet.

The accounting and reporting policies of Plumas Bancorp and subsidiary conform with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position at 

March 31, 2020

and the results of its operations and its cash flows for the

three

- month period ended

March 31, 2020

and

2019

. Our condensed consolidated balance sheet at 

December 31, 2019

is derived from audited financial statements.

The unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting on Form

10

-Q. Accordingly, certain disclosures normally presented in the notes to the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The Company believes that the disclosures are adequate to make the information

not

misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's

2019

Annual Report to Shareholders on Form

10

-K. The results of operations for the 

three

-month period ended

March 31, 2020

may

not

necessarily be indicative of future operating results. In preparing such financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the periods reported. Actual results could differ significantly from those estimates.

Segment Reporting, Policy [Policy Text Block]

S

egment Information

Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does

not

allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment.

No

customer accounts for more than

10

percent of revenues for the Company or the Bank.

Revenue from Contract with Customer [Policy Text Block]

Revenue from Contracts with Customers

The Company records revenue from contracts with customers in accordance with Accounting Standards Codification Topic

606,

“Revenue from Contracts with Customers” (“Topic

606”

). Under Topic

606,

the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. Significant revenue has

not

been recognized in the current reporting period that results from performance obligations satisfied in previous periods.

Most of the Company’s revenue-generating transactions are

not

subject to ASC

606,

including revenue generated from financial instruments, such as the Company’s loans and investment securities. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Condensed Consolidated Statements of Income was

not

necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic

606

that significantly affects the determination of the amount and timing of revenue from contracts with customers.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

Fair Value Measurement, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after

December 15, 2019,

with early adoption permitted.  As ASU

No.

2018

-

13

only revises disclosure requirements, it did

not

have a material impact on the Company’s Consolidated Financial Statements.

Pending Accounting Pronouncements

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

Measurement of Credit Losses on Financial Instruments. ASU

No.

2016

-

13

significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (

1

) financial assets subject to credit losses and measured at amortized cost, and (

2

) certain off-balance sheet credit exposures. This includes, but is

not

limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does

not

apply to available-for-sale (“AFS”) debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU

No.

2016

-

13

also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. ASU

No.

2016

-

13

is effective for interim and annual reporting periods beginning after

December 15, 2019;

early adoption is permitted for interim and annual reporting periods beginning after

December 15, 2018.

Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the

first

reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company has begun its implementation efforts by establishing an implementation team chaired by the Company’s Chief Lending Officer and composed of members of the Company’s credit administration and accounting departments. We have purchased software to support the CECL calculation of the allowance for loan losses under ASU

No

2016

-

13

and have engaged the software vendor to assist in the transition to the CECL model. The Company’s preliminary evaluation indicates the provisions of ASU

No.

2016

-

13

are expected to impact the Company’s Consolidated Financial Statements, in particular the level of the reserve for credit losses. However, the Company continues to evaluate the extent of the potential impact.

On

October 16, 2019,

the FASB approved a proposal to change the effective date of ASU

No.

2016

-

13

for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities delaying the effective date to fiscal years beginning after

December 31, 2022,

including interim periods within those fiscal periods. As the Company is a smaller reporting company and has

not

adopted provisions of the standard early, the delay is applicable to the Company.

XML

Note 6 - Earnings Per Share

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

6.

EARNINGS PER SHARE

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

	For the Three Months Ended
	March 31,
(In thousands, except per share data)	2020		2019
Net Income:
Net income	$	3,316	$	3,818
Earnings Per Share:
Basic earnings per share	$	0.64	$	0.74
Diluted earnings per share	$	0.63	$	0.73
Weighted Average Number of Shares Outstanding:
Basic shares		5,171		5,144
Diluted shares		5,231		5,225

Shares of common stock issuable under stock options for which the exercise prices were greater than the average market prices were

not

included in the computation of diluted earnings per share due to their antidilutive effect.  Stock options

not

included in the computation of diluted earnings per share, due to shares

not

being in-the-money and having an antidilutive effect, were approximately

208,000

and

71,000

for the

three

-month periods ended

March 31, 2020

and

2019

, respectively.

XML

Note 4 - Loans and the Allowance for Loan Losses - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Beginning balance	$ 7,243	$ 6,958	$ 6,958
Provision charged to operations	750	400	1,500
Losses charged to allowance	(268)	(351)	(1,521)
Recoveries	79	60	306
Ending balance	$ 7,804	$ 7,067	$ 7,243

XML

Note 4 - Loans and the Allowance for Loan Losses - Aging Analysis of the Loan Portfolio (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Loans, past due	$ 5,233,000	$ 5,705,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	2,310,000	2,050,000
Loans, current	618,510,000	614,013,000
Loans	623,743,000	619,718,000
Loans, 90 days past due and still accruing
Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	2,923,000	3,655,000
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans, past due	260,000	391,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	47,000	58,000
Loans, current	48,986,000	47,501,000
Loans	49,246,000	47,892,000
Loans, 90 days past due and still accruing
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	213,000	333,000
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Loans, past due	130,000	199,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual
Loans, current	75,914,000	78,586,000
Loans	76,044,000	78,785,000
Loans, 90 days past due and still accruing
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	130,000	199,000
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Loans, past due	1,719,000	2,297,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	891,000	830,000
Loans, current	330,575,000	314,689,000
Loans	332,294,000	316,986,000
Loans, 90 days past due and still accruing
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	828,000	1,467,000
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Loans, past due	82,000	83,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	82,000	83,000
Loans, current	19,592,000	31,098,000
Loans	19,674,000	31,181,000
Loans, 90 days past due and still accruing
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due
Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Loans, past due	378,000	277,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	267,000	277,000
Loans, current	13,442,000	14,253,000
Loans	13,820,000	14,530,000
Loans, 90 days past due and still accruing
Residential Portfolio Segment [Member] | Real Estate Loan [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	111,000
Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Loans, past due	900,000	904,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	574,000	616,000
Loans, current	34,362,000	34,567,000
Loans	35,262,000	35,471,000
Loans, 90 days past due and still accruing
Residential Portfolio Segment [Member] | Equity Lines of Credit [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	326,000	288,000
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans, past due	1,689,000	1,463,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	414,000	182,000
Loans, current	91,173,000	88,847,000
Loans	92,862,000	90,310,000
Loans, 90 days past due and still accruing
Consumer Portfolio Segment [Member] | Automobile Loan [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	1,275,000	1,281,000
Consumer Portfolio Segment [Member] | Other Loans [Member]
Loans, past due	75,000	91,000
Loans, 90 days past due and still accruing
Financing Receivable, Nonaccrual	35,000	4,000
Loans, current	4,466,000	4,472,000
Loans	4,541,000	4,563,000
Loans, 90 days past due and still accruing
Consumer Portfolio Segment [Member] | Other Loans [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	$ 40,000	$ 87,000

XML

Note 6 - Earnings Per Share - Calculation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net income	$ 3,316	$ 3,818
Basic earnings per share (in dollars per share)	$ 0.64	$ 0.74
Diluted earnings per share (in dollars per share)	$ 0.63	$ 0.73
Basic shares (in shares)	5,171	5,144
Diluted shares (in shares)	5,231	5,225

XML

Note 9 - Fair Value Measurement

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9.

FAIR VALUE MEASUREMENT

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

Level

1:

Quoted prices for identical instruments traded in active exchange markets.

Level

2:

Quoted prices (unadjusted) for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are

not

active and model-based valuation techniques for which all significant assumptions are observable or can be corroborated by observable market data.

 Level

3:

Model based techniques that use

one

significant assumption

not

observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use on pricing the asset or liability. Valuation techniques include management judgment and estimation which

may

be significant.

In certain cases, the inputs used to measure fair value

may

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

Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques

may

require the transfer of financial instruments from

one

fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period.

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

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments, at

March 31, 2020

follows, in thousands:

			Fair Value Measurements at March 31, 2020, Using:
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	58,058	$	58,058	$	-	$	-	$	58,058
Investment securities		159,247		-		159,247		-		159,247
Loans, net		619,487		-		-		662,368		662,368
FHLB stock		3,517		-		-		-		N/A
Accrued interest receivable		2,995		1		559		2,435		2,995
Financial liabilities:
Deposits		762,886		725,158		39,242		-		764,400
Repurchase agreements		8,383		-		8,383		-		8,383
Junior subordinated deferrable interest debentures		10,310		-		-		7,080		7,080
Accrued interest payable		91		11		60		20		91

The carrying amounts and estimated fair values of financial instruments, at

December 31, 2019

follows, in thousands:

			Fair Value Measurements at December 31, 2019 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	46,942	$	46,942	$	-	$	-	$	46,942
Investment securities		159,320		-		159,320		-		159,320
Loans, net		616,036		-		-		626,795		626,795
FHLB stock		3,517		-		-		-		N/A
Accrued interest receivable		3,398		15		574		2,809		3,398
Financial liabilities:
Deposits		747,324		709,130		38,202		-		747,332
Repurchase agreements		16,013		-		16,013		-		16,013
Junior subordinated deferrable interest debentures		10,310		-		-		7,661		7,661
Accrued interest payable		96		13		60		23		96

Because

no

market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors. Those estimates that are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision are included in Level

3.

Changes in assumptions could significantly affect the fair values presented.

These estimates do

not

reflect any premium or discount that could result from offering the Company's entire holdings of a particular financial instrument for sale at

one

time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have

not

been considered in any of these estimates.

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of

March 31, 2020

and

December 31, 2019

, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and liabilities measured at fair value on a recurring basis at

March 31, 2020

are summarized below, in thousands:

			Fair Value Measurements at
			March 31, 2020 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	125,895	$	-	$	125,895	$	-
Obligations of states and political subdivisions		33,352				33,352
	$	159,247	$	-	$	159,247	$	-

 Assets and liabilities measured at fair value on a recurring basis at

December 31, 2019

are summarized below, in thousands:

			Fair Value Measurements at
			December 31, 2019 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	125,678	$	-	$	125,678	$	-
Obligations of states and political subdivisions		33,642				33,642
	$	159,320	$	-	$	159,320	$	-

The fair value of securities available-for-sale equals quoted market price, if available. If quoted market prices are

not

available, fair value is determined using quoted market prices for similar securities or matrix pricing. There were

no

changes in the valuation techniques used during

2020

or

2019

. Transfers between hierarchy measurement levels are recognized by the Company as of the beginning of the reporting period. Changes in fair market value are recorded in other comprehensive income.

Assets and liabilities measured at fair value on a non-recurring basis at

March 31, 2020

are summarized below, in thousands:

			Fair Value Measurements at
			March 31, 2020 Using
			Quoted
			Prices in						Total
			Active		Significant				Losses
			Markets for		Other		Significant		Three Months
			Identical		Observable		Unobservable		Ended
			Assets		Inputs		Inputs		March 31,
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)		2020
Assets:
Impaired loans:
Real estate – commercial	$	130	$	-	$	-	$	130	$	-
Other real estate:
Real estate – commercial		347		-		-		347		-
Construction and land		360		-		-		360		-
Total other real estate		707		-		-		707		-
Total	$	837	$	-	$	-	$	837	$	-

Assets and liabilities measured at fair value on a non-recurring basis at

December 31, 2019

are summarized below, in thousands:

			Fair Value Measurements at
			December 31, 2019 Using
			Quoted
			Prices in						Total
			Active		Significant				Losses
			Markets for		Other		Significant		Three Months
			Identical		Observable		Unobservable		Ended
			Assets		Inputs		Inputs		March 31,
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)		2019
Assets:
Impaired loans:
Real estate – commercial	$	130	$	-	$	-	$	130	$	61
Other real estate:
Real estate – commercial		347		-		-		347		-
Construction and land		360		-		-		360		-
Total other real estate		707		-		-		707		-
Total	$	837	$	-	$	-	$	837	$	61

The Company has

no

liabilities which are reported at fair value.

The following methods were used to estimate fair value.

Collateral-Dependent Impaired Loans

: The Bank does

not

record loans at fair value on a recurring basis. However, from time to time, fair value adjustments are recorded on these loans to reflect partial write-downs, through charge-offs or specific reserve allowances, that are based on fair value estimates of the underlying collateral. The fair value estimates for collateral-dependent impaired loans are generally based on recent real estate appraisals or broker opinions, obtained from independent

third

parties, which are frequently adjusted by management to reflect current conditions and estimated selling costs (Level

3

).   Net losses of

$61,000

represent impairment charges recognized during the

three

months ended

March 31, 2019

related to the above impaired loans.

No

impairment charges were incurred during the

three

months ended

March 31, 2020.

Other Real Estate:

Nonrecurring adjustments to certain real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. Fair values are generally based on

third

party appraisals of the property which are commonly adjusted by management to reflect current conditions and selling costs (Level

3

).

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

The following table presents quantitative information about Level

3

fair value measurements for financial instruments measured at fair value on a non-recurring basis at

March 31, 2020

and

December 31, 2019

(dollars in thousands): 

							Range		Range
	Fair Value		Fair Value		Valuation		(Weighted Average)		(Weighted Average)
Description	3/31/2020		12/31/2019		Technique	Significant Unobservable Input	3/31/2020		12/31/2019
Impaired Loans:
RE – Commercial	$	130	$	130	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	10%	(10.0)%	10%	(10.0)%
Other Real Estate:
RE – Commercial	$	347	$	347	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	16% - 17%	(16.0)%	16% - 17%	(16.0)%
Construction and Land	$	360	$	360	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	10%	(10.0)%	10%	(10.0)%

XML

Note 5 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

5.

COMMITMENTS AND CONTINGENCIES

The Company is party to claims and legal proceedings arising in the ordinary course of business. In the opinion of the Company’s management, the amount of ultimate liability with respect to such proceedings will

not

have a material adverse effect on the financial condition or result of operations of the Company taken as a whole.

In the normal course of business, there are various outstanding commitments to extend credit, which are

not

reflected in the financial statements, including loan commitments of

$104.5

million and

$111.4

million and stand-by letters of credit of

$126

thousand and

$126

thousand at

March 31, 2020

and

December 31, 2019

, respectively.

Of the loan commitments outstanding at

March 31, 2020

,

$7.1

million are real estate construction loan commitments that are expected to fund within the next

twelve

months. The remaining commitments primarily relate to revolving lines of credit or other commercial loans, and many of these are expected to expire without being drawn upon. Therefore, the total commitments do

not

necessarily represent future cash requirements. Each loan commitment and the amount and type of collateral obtained, if any, are evaluated on an individual basis. Collateral held varies, but

may

include real property, bank deposits, debt or equity securities or business assets.

Stand-by letters of credit are conditional commitments written to guarantee the performance of a customer to a

third

party. These guarantees are primarily related to the purchases of inventory by commercial customers and are typically short-term in nature. Credit risk is similar to that involved in extending loan commitments to customers and accordingly, evaluation and collateral requirements similar to those for loan commitments are used. The deferred liability related to the Company’s stand-by letters of credit was

not

significant at

March 31, 2020

or

December 31, 2019

.

XML

Note 3 - Investment Securities Available for Sale - Investment Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Within one year, amortized cost
Within one year, estimated fair value
After one year through five years, amortized cost	3,468
After one year through five years, estimated fair value	3,569
After five years through ten years, amortized cost	5,464
After five years through ten years, estimated fair value	5,629
After ten years, amortized cost	23,132
After ten years, estimated fair value	24,154
Amortized cost	153,083
Estimated fair value	159,247	$ 159,320
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Government-sponsored mortgage-backed securities, amortized cost	121,019
Government-sponsored mortgage-backed securities, estimated fair value	$ 125,895

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual) - Accrued Interest Receivable and Other Assets [Member]	Mar. 31, 2020 USD ($)
Plumas Statutory Trust I [Member]
Equity Method Investments	$ 352,000
Plumas Statutory Trust II [Member]
Equity Method Investments	$ 180,000

XML

Note 6 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Three Months Ended
	March 31,
(In thousands, except per share data)	2020		2019
Net Income:
Net income	$	3,316	$	3,818
Earnings Per Share:
Basic earnings per share	$	0.64	$	0.74
Diluted earnings per share	$	0.63	$	0.73
Weighted Average Number of Shares Outstanding:
Basic shares		5,171		5,144
Diluted shares		5,231		5,225

XML

Note 1 - The Business of Plumas Bancorp

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Nature of Operations [Text Block]

1.

THE BUSINESS OF PLUMAS BANCORP

During

2002,

Plumas Bancorp (the "Company") was incorporated as a bank holding company for the purpose of acquiring Plumas Bank (the "Bank") in a

one

bank holding company reorganization. This corporate structure gives the Company and the Bank greater flexibility in terms of operation, expansion and diversification. The Company formed Plumas Statutory Trust I ("Trust I") for the sole purpose of issuing trust preferred securities on

September 26, 2002.

The Company formed Plumas Statutory Trust II ("Trust II") for the sole purpose of issuing trust preferred securities on

September 28, 2005.

The Bank operates

eleven

branches in California, including branches in Alturas, Chester, Fall River Mills, Greenville, Kings Beach, Portola, Quincy, Redding, Susanville, Tahoe City, and Truckee. In

December 2015

the Bank opened a branch in Reno, Nevada; its

first

branch outside of California and in

2018

the Bank purchased a branch located in Carson City, Nevada. The Bank’s administrative headquarters is in Quincy, California. In addition, the Bank operates a lending office specializing in government-guaranteed lending in Auburn, California, and commercial/agricultural lending offices in Chico California and Klamath Falls, Oregon. The Bank's primary source of revenue is generated from providing loans to customers who are predominately small and middle market businesses and individuals residing in the surrounding areas.

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Note 7 - Stock-based Compensation - Weighted Average Fair Value Assumptions (Details)	3 Months Ended
	Mar. 31, 2020 $ / shares
Daily Volatility	26.00%
Weighted-average fair value of options granted during the three months ended March 31, 2020 (in dollars per share)	$ 5.92
Share-based Payment Arrangement, Option [Member]
Expected life of stock options (Year)	5 years 36 days
Risk free interest rate	1.68%
Dividend yields	1.29%

XML

Note 9 - Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale	$ 159,247,000	$ 159,320,000
Fair Value, Recurring [Member]
Debt Securities, Available-for-sale	159,247	159,320
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Debt Securities, Available-for-sale	159,247	159,320
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Debt Securities, Available-for-sale	125,895,000	125,678,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Recurring [Member]
Debt Securities, Available-for-sale	125,895	125,678
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Debt Securities, Available-for-sale	125,895	125,678
US States and Political Subdivisions Debt Securities [Member]
Debt Securities, Available-for-sale	33,352,000	33,642,000
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member]
Debt Securities, Available-for-sale	33,352	33,642
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Debt Securities, Available-for-sale	$ 33,352	$ 33,642

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Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Interest Income:
Interest and fees on loans	$ 8,540	$ 8,510
Interest on investment securities	952	1,137
Other	107	179
Total interest income	9,599	9,826
Interest Expense:
Interest on deposits	259	297
Interest on junior subordinated deferrable interest debentures	116	140
Other	3	3
Total interest expense	378	440
Net interest income before provision for loan losses	9,221	9,386
Provision for Loan Losses	750	400
Net interest income after provision for loan losses	8,471	8,986
Non-Interest Income:
Service charges	705	650
Interchange revenue	539	513
Gain on sale of loans	464	244
Other	517	558
Total non-interest income	2,225	1,965
Salaries and employee benefits	3,529	3,200
Occupancy and equipment	865	858
Other	1,742	1,626
Total non-interest expenses	6,136	5,684
Income before provision for income taxes	4,560	5,267
Provision for Income Taxes	1,244	1,449
Net income	$ 3,316	$ 3,818
Basic earnings per share (in dollars per share)	$ 0.64	$ 0.74
Diluted earnings per share (in dollars per share)	$ 0.63	$ 0.73

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Note 7 - Stock-based Compensation

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

7.

STOCK-BASED COMPENSATION

In

May 2013,

the Company established the

2013

Stock Option Plan for which

396,835

shares of common stock are reserved and

101,500

shares are available for future grants as of

March 31, 2020

. The

2013

Plan requires that the option price

may

not

be less than the fair market value of the stock at the date the option is granted, and that the stock must be paid in full at the time the option is exercised. Payment in full for the option price must be made in cash, with Company common stock previously acquired by the optionee and held by the optionee for a period of at least

nine

months, in options of the Optionee that are fully vested and exercisable or in any combination of the foregoing. The options expire on dates determined by the Board of Directors, but

not

later than

ten

years from the date of grant.

During the

three

months ended

March 31, 2019

the Company granted options to purchase

5,000

shares of common stock. 

No

options were granted during the

three

months ended

March 31, 2019.

The fair value of each option was estimated on the date of grant using the following assumptions. 

	2020
Expected life of stock options (in years)		5.1
Risk free interest rate		1.68	%
Daily Volatility		26.0	%
Dividend yields		1.29	%
Weighted-average fair value of options granted during the three months ended March 31, 2020	$	5.92

The Company determines the fair value of options on the date of grant using a Black-Scholes-Merton option pricing model that uses assumptions based on expected option life, expected stock volatility and the risk-free interest rate. The expected volatility assumptions used by the Company are based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options. The Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock options it grants to employees. The risk-free rate is based on the U.S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of the grant.

A summary of the activity within the

2013

Plan follows: 

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
Options outstanding at January 1, 2020		302,385		$	17.73
Options granted		5,000		$	26.42
Options exercised		(12,050	)		6.68
Options outstanding at March 31, 2020		295,335		$	18.33		6.0	$	899,000
Options exercisable at March 31, 2020		122,785		$	12.89		4.2	$	899,000
Expected to vest after March 31, 2020		152,897		$	22.20		7.2	$	-

As of

March 31, 2020

, there was

$768,000

of total unrecognized compensation cost related to non-vested, share-based compensation. That cost is expected to be recognized over a weighted average period of

3.2

years.

The total fair value of options vested during the

three

months ended

March 31, 2020

and

2019

was

$189,000

and

$197,000,

respectively. The total intrinsic value of options at time of exercise was

$235,000

and

$251,000

for the

three

months ended

March 31, 2020

and

2019

, respectively.

Compensation cost related to stock options recognized in operating results under the stock option plans was

$78,000

and

$50,000

for the

three

months ended

March 31, 2020

and

2019

, respectively. The associated income tax benefit recognized was

$6,000

and

$3,000

for the

three

months ended

March 31, 2020

and

March 31, 2019

, respectively.

Cash received from option exercises under the plans for the

three

months ended

March 31, 2020

and

2019

were

$35,000

and

76,000,

respectively. The tax benefit realized for the tax deductions from option exercise totaled

$10,000

and

$0

for the

three

months ended

March 31, 2020

and

2019

, respectively. 

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Note 3 - Investment Securities Available for Sale

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

3.

   INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair value of investment securities at

March 31, 2020

and

December 31, 2019

consisted of the following, in thousands:

Available-for-Sale	March 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	121,019	$	4,876	$	-		$	125,895
Obligations of states and political subdivisions		32,064		1,289		(1	)		33,352
	$	153,083	$	6,165	$	(1	)	$	159,247

Unrealized gain on available-for-sale investment securities totaling

$6,164,000

were recorded, net of

$1,822,000

in tax expense, as accumulated other comprehensive income within shareholders' equity at

March 31, 2020

. 

No

securities were sold during the

three

months ended

March 31, 2020

.

Available-for-Sale	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	123,940	$	1,924	$	(186	)	$	125,678
Obligations of states and political subdivisions		32,470		1,201		(29	)		33,642
	$	156,410	$	3,125	$	(215	)	$	159,320

Unrealized gain on available-for-sale investment securities totaling

$2,910,000

were recorded, net of

$861,000

in tax expense, as accumulated other comprehensive loss within shareholders' equity at

December 31, 2019

.

No

securities were sold during the

three

months ended

March 31, 2019

. 

There were

no

transfers of available-for-sale investment securities during the

three

months ended

March 31, 2020

and

twelve

months ended

December 31, 2019

. There were

no

securities classified as held-to-maturity at

March 31, 2020

or

December 31, 2019

.

Investment securities with unrealized losses at

March 31, 2020

and

December 31, 2019

are summarized and classified according to the duration of the loss period as follows, in thousands:

March 31, 2020	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	-	$	-	$	-	$	-	$	-	$	-
Obligations of states and political subdivisions		998		1						998		1
	$	998	$	1	$	-	$	-	$	998	$	1

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	10,319	$	31	$	19,733	$	155	$	30,052	$	186
Obligations of states and political subdivisions		2,965		29		-		-		2,965		29
	$	13,284	$	60	$	19,733	$	155	$	33,017	$	215

At

March 31, 2020

, the Company held

185

securities of which

2

were in a loss position. All of the securities in a loss position were in a loss position for less than

twelve

months. Of the

185

securities,

98

are U.S. Government-sponsored agencies collateralized by residential mortgage obligations and

87

were obligations of states and political subdivisions. The unrealized losses relate principally to market rate conditions. All of the securities continue to pay as scheduled. When analyzing an issuer’s financial condition, management considers the length of time and extent to which the market value has been less than cost; the historical and implied volatility of the security; the financial condition of the issuer of the security; and the Company’s intent and ability to hold the security to recovery. As of

March 31, 2020

, management does

not

have the intent to sell these securities nor does it believe it is more likely than

not

that it will be required to sell these securities before the recovery of its amortized cost basis. Based on the Company’s evaluation of the above and other relevant factors, the Company does

not

believe the securities that are in an unrealized loss position as of

March 31, 2020

are other than temporarily impaired.

The amortized cost and estimated fair value of investment securities at

March 31, 2020

by contractual maturity are shown below, in thousands.

	Amortized Cost		Estimated Fair Value
Within one year	$	-	$	-
After one year through five years		3,468		3,569
After five years through ten years		5,464		5,629
After ten years		23,132		24,154
Investment securities not due at a single maturity date:
Government-sponsored mortgage-backed securities		121,019		125,895
	$	153,083	$	159,247

Expected maturities will differ from contractual maturities because the issuers of the securities

may

have the right to call or prepay obligations with or without call or prepayment penalties.

Investment securities with amortized costs totaling

$91,211,000

and

$83,596,000

and estimated fair values totaling

$94,906,000

and

$84,625,000

at

March 31, 2020

and

December 31, 2019

, respectively, were pledged to secure deposits and repurchase agreements. 

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Note 3 - Investment Securities Available for Sale (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

Available-for-Sale	March 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	121,019	$	4,876	$	-		$	125,895
Obligations of states and political subdivisions		32,064		1,289		(1	)		33,352
	$	153,083	$	6,165	$	(1	)	$	159,247

Available-for-Sale	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	123,940	$	1,924	$	(186	)	$	125,678
Obligations of states and political subdivisions		32,470		1,201		(29	)		33,642
	$	156,410	$	3,125	$	(215	)	$	159,320

Schedule of Unrealized Loss on Investments [Table Text Block]

March 31, 2020	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	-	$	-	$	-	$	-	$	-	$	-
Obligations of states and political subdivisions		998		1						998		1
	$	998	$	1	$	-	$	-	$	998	$	1

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	10,319	$	31	$	19,733	$	155	$	30,052	$	186
Obligations of states and political subdivisions		2,965		29		-		-		2,965		29
	$	13,284	$	60	$	19,733	$	155	$	33,017	$	215

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized Cost		Estimated Fair Value
Within one year	$	-	$	-
After one year through five years		3,468		3,569
After five years through ten years		5,464		5,629
After ten years		23,132		24,154
Investment securities not due at a single maturity date:
Government-sponsored mortgage-backed securities		121,019		125,895
	$	153,083	$	159,247

XML

Note 4 - Loans and the Allowance for Loan Losses - Credit Risk Profile by Internally Assigned Grade (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Loans	$ 623,743	$ 619,718
Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans	96,954	94,687
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans	449	186
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans	92,862	90,310
Consumer Portfolio Segment [Member] | Automobile Loan [Member] | Performing Financial Instruments [Member]
Loans	92,448	90,128
Consumer Portfolio Segment [Member] | Automobile Loan [Member] | Nonperforming Financial Instruments [Member]
Loans	414	182
Consumer Portfolio Segment [Member] | Other Loans [Member]
Loans	4,541	4,563
Consumer Portfolio Segment [Member] | Other Loans [Member] | Performing Financial Instruments [Member]
Loans	4,506	4,559
Consumer Portfolio Segment [Member] | Other Loans [Member] | Nonperforming Financial Instruments [Member]
Loans	35	4
Consumer Portfolio Segment [Member] | Residential Portfolio Segment [Member]
Loans	$ 97,403
Consumer Portfolio Segment [Member] | Commercial Portfolio Segment [Member]
Loans		$ 94,873

XML

Note 5 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Unused Commitments to Extend Credit	$ 104,500	$ 111,400
Construction Loan Payable [Member]
Unused Commitments to Extend Credit	7,100
Standby Letters of Credit [Member]
Unused Commitments to Extend Credit	$ 126	$ 126

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Note 3 - Investment Securities Available for Sale - Amortized Cost and Estimated Fair Value of Investment Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Investment securities available for sale, amortized cost	$ 153,083	$ 156,410
Investment securities available for sale, gross unrealized gains	6,165	3,125
Investment securities available for sale, gross unrealized losses	(1)	(215)
Investment securities available for sale, Estimated fair value	159,247	159,320
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Investment securities available for sale, amortized cost	121,019	123,940
Investment securities available for sale, gross unrealized gains	4,876	1,924
Investment securities available for sale, gross unrealized losses		(186)
Investment securities available for sale, Estimated fair value	125,895	125,678
US States and Political Subdivisions Debt Securities [Member]
Investment securities available for sale, amortized cost	32,064	32,470
Investment securities available for sale, gross unrealized gains	1,289	1,201
Investment securities available for sale, gross unrealized losses	(1)	(29)
Investment securities available for sale, Estimated fair value	$ 33,352	$ 33,642

XML

Note 9 - Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Fair Value, by Balance Sheet Grouping [Table Text Block]

			Fair Value Measurements at March 31, 2020, Using:
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	58,058	$	58,058	$	-	$	-	$	58,058
Investment securities		159,247		-		159,247		-		159,247
Loans, net		619,487		-		-		662,368		662,368
FHLB stock		3,517		-		-		-		N/A
Accrued interest receivable		2,995		1		559		2,435		2,995
Financial liabilities:
Deposits		762,886		725,158		39,242		-		764,400
Repurchase agreements		8,383		-		8,383		-		8,383
Junior subordinated deferrable interest debentures		10,310		-		-		7,080		7,080
Accrued interest payable		91		11		60		20		91

			Fair Value Measurements at December 31, 2019 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	46,942	$	46,942	$	-	$	-	$	46,942
Investment securities		159,320		-		159,320		-		159,320
Loans, net		616,036		-		-		626,795		626,795
FHLB stock		3,517		-		-		-		N/A
Accrued interest receivable		3,398		15		574		2,809		3,398
Financial liabilities:
Deposits		747,324		709,130		38,202		-		747,332
Repurchase agreements		16,013		-		16,013		-		16,013
Junior subordinated deferrable interest debentures		10,310		-		-		7,661		7,661
Accrued interest payable		96		13		60		23		96

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

			Fair Value Measurements at
			March 31, 2020 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	125,895	$	-	$	125,895	$	-
Obligations of states and political subdivisions		33,352				33,352
	$	159,247	$	-	$	159,247	$	-

			Fair Value Measurements at
			December 31, 2019 Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	125,678	$	-	$	125,678	$	-
Obligations of states and political subdivisions		33,642				33,642
	$	159,320	$	-	$	159,320	$	-

Fair Value Measurements, Nonrecurring [Table Text Block]

			Fair Value Measurements at
			March 31, 2020 Using
			Quoted
			Prices in						Total
			Active		Significant				Losses
			Markets for		Other		Significant		Three Months
			Identical		Observable		Unobservable		Ended
			Assets		Inputs		Inputs		March 31,
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)		2020
Assets:
Impaired loans:
Real estate – commercial	$	130	$	-	$	-	$	130	$	-
Other real estate:
Real estate – commercial		347		-		-		347		-
Construction and land		360		-		-		360		-
Total other real estate		707		-		-		707		-
Total	$	837	$	-	$	-	$	837	$	-

			Fair Value Measurements at
			December 31, 2019 Using
			Quoted
			Prices in						Total
			Active		Significant				Losses
			Markets for		Other		Significant		Three Months
			Identical		Observable		Unobservable		Ended
			Assets		Inputs		Inputs		March 31,
	Total Fair Value		(Level 1)		(Level 2)		(Level 3)		2019
Assets:
Impaired loans:
Real estate – commercial	$	130	$	-	$	-	$	130	$	61
Other real estate:
Real estate – commercial		347		-		-		347		-
Construction and land		360		-		-		360		-
Total other real estate		707		-		-		707		-
Total	$	837	$	-	$	-	$	837	$	61

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

							Range		Range
	Fair Value		Fair Value		Valuation		(Weighted Average)		(Weighted Average)
Description	3/31/2020		12/31/2019		Technique	Significant Unobservable Input	3/31/2020		12/31/2019
Impaired Loans:
RE – Commercial	$	130	$	130	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	10%	(10.0)%	10%	(10.0)%
Other Real Estate:
RE – Commercial	$	347	$	347	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	16% - 17%	(16.0)%	16% - 17%	(16.0)%
Construction and Land	$	360	$	360	Third Party appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	10%	(10.0)%	10%	(10.0)%

XML

Note 9 - Fair Value Measurement (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Gain (Loss) on Sale of Assets and Asset Impairment Charges		$ (61,000)
Asset Impairment Charges, Total	$ 0
Impaired Loans [Member]
Gain (Loss) on Sale of Assets and Asset Impairment Charges		$ (61,000)

XML

Note 9 - Fair Value Measurement - Quantitative Information About Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on a Non-recurring Basis (Details) $ in Thousands	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Measurement Input, Cost to Sell [Member]
Impaired loans, Measurement Input	0.1	0.1
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Measurement Input, Cost to Sell [Member] | Weighted Average [Member]
Impaired loans, Measurement Input	(0.1)	(0.1)
Other real estate, Measurement Input	(0.16)	(0.16)
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Measurement Input, Cost to Sell [Member] | Minimum [Member]
Other real estate, Measurement Input	0.17	0.16
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Measurement Input, Cost to Sell [Member] | Maximum [Member]
Other real estate, Measurement Input	0.16	0.17
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Measurement Input, Cost to Sell [Member]
Other real estate, Measurement Input	0.1	0.1
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Measurement Input, Cost to Sell [Member] | Weighted Average [Member]
Other real estate, Measurement Input	(0.1)	(0.1)
Fair Value, Nonrecurring [Member]
Other real estate	$ 707	$ 707
Fair Value, Nonrecurring [Member] | Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Impaired loans	130	130
Other real estate	347	347
Fair Value, Nonrecurring [Member] | Commercial Portfolio Segment [Member] | Construction Loans [Member]
Other real estate	$ 360	$ 360

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock Including Additional Paid in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2018	5,137,476
Balance at Dec. 31, 2018	$ 6,944	$ 62,005	$ (2,017)	$ 66,932
Net income		3,818		3,818
Other comprehensive income (loss)			1,831	1,831
Exercise of stock options and tax effect (in shares)	13,400
Exercise of stock options and tax effect	$ 76			76
Stock-based compensation expense	$ 50			50
Balance (in shares) at Mar. 31, 2019	5,150,876
Balance at Mar. 31, 2019	$ 7,070	65,823	(186)	72,707
Balance (in shares) at Dec. 31, 2019	5,165,760
Balance at Dec. 31, 2019	$ 7,312	75,144	2,049	84,505
Net income		3,316		3,316
Other comprehensive income (loss)			2,293	2,293
Exercise of stock options and tax effect (in shares)	10,272
Exercise of stock options and tax effect	$ 35			35
Stock-based compensation expense	$ 78			78
Balance (in shares) at Mar. 31, 2020	5,176,032
Balance at Mar. 31, 2020	$ 7,425	$ 78,460	$ 4,342	$ 90,227

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Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 58,058	$ 46,942
Investment securities available for sale	159,247	159,320
Loans, less allowance for loan losses of $7,804 at March 31, 2020 and $7,243 at December 31, 2019	619,487	616,036
Real estate acquired through foreclosure	707	707
Premises and equipment, net	14,774	14,629
Bank owned life insurance	13,275	13,184
Accrued interest receivable and other assets	14,023	14,373
Total assets	879,571	865,191
Deposits:
Non-interest bearing	336,375	331,619
Interest bearing	426,511	415,705
Total deposits	762,886	747,324
Repurchase agreements	8,383	16,013
Accrued interest payable and other liabilities	7,765	7,039
Junior subordinated deferrable interest debentures	10,310	10,310
Total liabilities	789,344	780,686
Commitments and contingencies (Note 5)
Shareholders’ equity:
Common stock, no par value; 22,500,000 shares authorized; issued and outstanding – 5,176,032 shares at March 31, 2020 and 5,165,760 at December 31, 2019	7,425	7,312
Retained earnings	78,460	75,144
Accumulated other comprehensive income, net	4,342	2,049
Total shareholders’ equity	90,227	84,505
Total liabilities and shareholders’ equity	$ 879,571	$ 865,191

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Note 3 - Investment Securities Available for Sale - Investment Securities With Unrealized Losses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Less than 12 months fair value	$ 998	$ 13,284
Less than 12 months unrealized losses	1	60
12 months or more fair value		19,733
12 months or more unrealized losses		155
Total fair value	998	33,017
Total unrealized losses	1	215
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Less than 12 months fair value		10,319
Less than 12 months unrealized losses		31
12 months or more fair value		19,733
12 months or more unrealized losses		155
Total fair value		30,052
Total unrealized losses		186
US States and Political Subdivisions Debt Securities [Member]
Less than 12 months fair value	998	2,965
Less than 12 months unrealized losses	1	29
12 months or more fair value
12 months or more unrealized losses
Total fair value	998	2,965
Total unrealized losses	$ 1	$ 29

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Note 1 - The Business of Plumas Bancorp (Details Textual)	Mar. 31, 2020
Number of Branches	11

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Flows from Operating Activities:
Net income	$ 3,316,000	$ 3,818,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for Loan Losses	750,000	400,000
Change in deferred loan origination costs/fees, net	(167,000)	(266,000)
Depreciation and amortization	348,000	355,000
Stock-based compensation expense	78,000	50,000
Amortization of investment security premiums	221,000	180,000
Gain on sale of OREO and other vehicles	3,000	(9,000)
Gain on sale of loans held for sale	(464,000)	(244,000)
Loans originated for sale	(7,539,000)	(3,711,000)
Proceeds from loan sales	10,495,000	6,048,000
Earnings on bank-owned life insurance	(91,000)	(82,000)
Increase in accrued interest receivable and other assets	(533,000)	(627,000)
Increase in accrued interest payable and other liabilities	726,000	994,000
Net cash provided by operating activities	7,143,000	6,906,000
Cash Flows from Investing Activities:
Proceeds from principal repayments from available-for-sale government-sponsored mortgage-backed securities	6,822,000	4,211,000
Proceeds from matured and called available-for-sale securities	380,000
Purchases of available-for-sale securities	(4,081,000)	(3,500,000)
Net increase in loans	(6,823,000)	(9,801,000)
Proceeds from sale of other vehicles	118,000	167,000
Purchase of premises and equipment	(410,000)	(202,000)
Net cash used in investing activities	(3,994,000)	(9,125,000)
Cash Flows from Financing Activities:
Net increase in demand, interest bearing and savings deposits	16,028,000	6,707,000
Net decrease in time deposits	(466,000)	(2,349,000)
Net decrease in securities sold under agreements to repurchase	(7,630,000)	(4,148,000)
Proceeds from exercise of stock options	35,000	76,000
Net cash provided by financing activities	7,967,000	286,000
Increase (decrease) in cash and cash equivalents	11,116,000	(1,933,000)
Cash and Cash Equivalents at Beginning of Year	46,942,000	46,686,000
Cash and Cash Equivalents at End of Period	58,058,000	44,753,000
Supplemental Disclosure of Cash Flow Information:
Interest expense	383,000	434,000
Income taxes
Non-Cash Investing Activities:
Real estate and vehicles acquired through foreclosure	127,000	189,000
Non-Cash Financing Activities:
Common stock retired in connection with the exercise of stock options	$ 46,000

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands, $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Loans, allowance for loan losses	$ 7,804	$ 7,243
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	22,500,000	22,500,000
Common stock, shares issued (in shares)	5,176,032	5,165,760
Common stock, shares outsanding (in shares)	5,176,032	5,165,760

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Note 7 - Stock-based Compensation - Stock Option Activity (Details) - Stock Option Plan 2013 [Member] - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Options outstanding, shares (in shares)	302,385
Options outstanding, weighted average exercise price (in dollars per share)	$ 17.73
Options granted, shares (in shares)	5,000	0
Options granted, weighted average exercise price (in dollars per share)	$ 26.42
Options exercised, shares (in shares)	(12,050)
Options exercised, weighted average exercise price (in dollars per share)	$ 6.68
Options outstanding, shares (in shares)	295,335
Options outstanding, weighted average exercise price (in dollars per share)	$ 18.33
Options outstanding, weighted average remaining contractual term (Year)	6 years
Options outstanding, intrinsic value	$ 899,000
Options exercisable, shares (in shares)	122,785
Options exercisable, weighted average exercise price (in dollars per share)	$ 12.89
Options exercisable, weighted average remaining contractual term (Year)	4 years 73 days
Options exercisable, intrinsic value	$ 899,000
Expected to vest, shares (in shares)	152,897
Expected to vest, weighted average exercise price (in dollars per share)	$ 22.20
Expected to vest, weighted average remaining contractual term (Year)	7 years 73 days

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Note 9 - Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Non-recurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Impaired loans, Total gain (loss)		$ 61
Other real estate, Total gain (loss)
Asset, Total gain (loss)		61
Fair Value, Nonrecurring [Member]
Other real estate	707		$ 707
Assets	837		837
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Other real estate
Assets
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Other real estate
Assets
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Other real estate	707		707
Assets	837		837
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Impaired loans, Total gain (loss)
Other real estate, Total gain (loss)
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Fair Value, Nonrecurring [Member]
Impaired loans	130		130
Other real estate	347		347
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired loans
Other real estate
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired loans
Other real estate
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans	130		130
Other real estate	347		347
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Other real estate, Total gain (loss)
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Fair Value, Nonrecurring [Member]
Other real estate	360		360
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Other real estate
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Other real estate
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Other real estate	$ 360		$ 360

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Note 4 - Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	March 31,			December 31,
	2020			2019
Commercial	$	49,246		$	47,892
Agricultural		76,044			78,785
Real estate – residential		13,820			14,530
Real estate – commercial		332,294			316,986
Real estate – construction and land development		19,674			31,181
Equity lines of credit		35,262			35,471
Auto		92,862			90,310
Other		4,541			4,563
Total loans		623,743			619,718
Deferred loan costs, net		3,548			3,561
Allowance for loan losses		(7,804	)		(7,243	)
Total net loans	$	619,487		$	616,036

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	March 31,			December 31,
	2020			2019
Balance, beginning of period	$	7,243		$	6,958
Provision charged to operations		750			1,500
Losses charged to allowance		(268	)		(1,521	)
Recoveries		79			306
Balance, end of period	$	7,804		$	7,243

Financing Receivable Credit Quality Indicators [Table Text Block]

March 31, 2020	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
Grade:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Pass	$	48,784	$	73,909	$	13,553	$	326,468	$	19,592	$	34,688	$	516,994
Special Mention		415		2,135		-		4,935		-		-		7,485
Substandard		47		-		267		891		82		574		1,861
Doubtful		-		-		-		-		-		-		-
Total	$	49,246	$	76,044	$	13,820	$	332,294	$	19,674	$	35,262	$	526,340

December 31, 2019	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
Grade:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Pass	$	47,334	$	76,620	$	14,253	$	309,785	$	31,097	$	34,855	$	513,944
Special Mention		478		2,165		-		4,954		-		-		7,597
Substandard		80		-		277		2,247		84		616		3,304
Doubtful		-		-		-		-		-		-		-
Total	$	47,892	$	78,785	$	14,530	$	316,986	$	31,181	$	35,471	$	524,845

Financing Receivable, Current, Allowance for Credit Loss [Table Text Block]

Three Months Ended March 31, 2020:	Commercial			Agricultural			Real Estate-Residential			Real Estate-Commercial		Real Estate-Construction			Equity LOC			Auto			Other			Total
Allowance for Loan Losses
Beginning balance	$	617		$	653		$	163		$	3,426	$	481		$	393		$	1,409		$	101		$	7,243
Charge-offs		(131	)		-			-			-		-			-			(134	)		(3	)		(268	)
Recoveries		2			-			1			1		-			1			70			4			79
Provision		226			(31	)		7			403		(84	)		28			196			5			750
Ending balance	$	714		$	622		$	171		$	3,830	$	397		$	422		$	1,541		$	107		$	7,804
Three Months Ended March 31, 2019:
Allowance for Loan Losses
Beginning balance	$	914		$	538		$	214		$	2,686	$	758		$	464		$	1,289		$	95		$	6,958
Charge-offs		(16	)		-			-			-		-			-			(312	)		(23	)		(351	)
Recoveries		9			-			1			-		-			1			47			2			60
Provision		(111	)		4			(20	)		283		(117	)		(15	)		360			16			400
Ending balance	$	796		$	542		$	195		$	2,969	$	641		$	450		$	1,384		$	90		$	7,067
March 31, 2020:
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	-		$	-		$	28		$	121	$	5		$	-		$	-		$	-		$	154
Ending balance: collectively evaluated for impairment		714			622			143			3,709		392			422			1,541			107			7,650
Ending balance	$	714		$	622		$	171		$	3,830	$	397		$	422		$	1,541		$	107		$	7,804
Loans
Ending balance: individually evaluated for impairment	$	-		$	247		$	656		$	805	$	109		$	430		$	-		$	-		$	2,247
Ending balance: collectively evaluated for impairment		49,246			75,797			13,164			331,489		19,565			34,832			92,862			4,541			621,496
Ending balance	$	49,246		$	76,044		$	13,820		$	332,294	$	19,674		$	35,262		$	92,862		$	4,541		$	623,743

December 31, 2019:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Auto		Other		Total
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	-	$	-	$	28	$	121	$	5	$	-	$	-	$	-	$	154
Ending balance: collectively evaluated for impairment		617		653		135		3,305		476		393		1,409		101		7,089
Ending Balance	$	617	$	653	$	163	$	3,426	$	481	$	393	$	1,409	$	101	$	7,243
Loans
Ending balance: individually evaluated for impairment	$	25	$	248	$	612	$	815	$	110	$	434	$	-	$	-	$	2,244
Ending balance: collectively evaluated for impairment		47,867		78,537		13,918		316,171		31,071		35,037		90,310		4,563		617,474
Ending balance	$	47,892	$	78,785	$	14,530	$	316,986	$	31,181	$	35,471	$	90,310	$	4,563	$	619,718

Financing Receivable, Past Due [Table Text Block]

							Total
March 31, 2020			90 Days				Past Due
	30-89 Days		and Still				and
	Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial	$	213	$	-	$	47	$	260	$	48,986	$	49,246
Agricultural		130		-		-		130		75,914		76,044
Real estate – residential		111		-		267		378		13,442		13,820
Real estate – commercial		828		-		891		1,719		330,575		332,294
Real estate - construction & land		-		-		82		82		19,592		19,674
Equity Lines of Credit		326		-		574		900		34,362		35,262
Auto		1,275		-		414		1,689		91,173		92,862
Other		40		-		35		75		4,466		4,541
Total	$	2,923	$	-	$	2,310	$	5,233	$	618,510	$	623,743

							Total
December 31, 2019			90 Days				Past Due
	30-89 Days		and Still				and
	Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial	$	333	$	-	$	58	$	391	$	47,501	$	47,892
Agricultural		199		-		-		199		78,586		78,785
Real estate – residential		-		-		277		277		14,253		14,530
Real estate - commercial		1,467		-		830		2,297		314,689		316,986
Real estate - construction & land		-		-		83		83		31,098		31,181
Equity Lines of Credit		288		-		616		904		34,567		35,471
Auto		1,281		-		182		1,463		88,847		90,310
Other		87		-		4		91		4,472		4,563
Total	$	3,655	$	-	$	2,050	$	5,705	$	614,013	$	619,718

Impaired Financing Receivables [Table Text Block]

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
As of March 31, 2020:	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		247		247		-		248		5
Real estate – residential		479		489		-		480		7
Real estate – commercial		553		611		-		558		-
Real estate – construction & land		-		-		-		-		-
Equity Lines of Credit		430		458		-		432		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		-		-		-		-		-
Real estate – residential		177		176		28		177		2
Real estate – commercial		252		265		121		252		-
Real estate – construction & land		109		109		5		109		1
Equity Lines of Credit		-		-		-		-		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		247		247		-		248		5
Real estate – residential		656		665		28		657		9
Real estate – commercial		805		876		121		810		0
Real estate – construction & land		109		109		5		109		1
Equity Lines of Credit		430		458		-		432		0
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total	$	2,247	$	2,355	$	154	$	2,256	$	15

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
As of December 31, 2019:	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	25	$	85	$	-	$	23	$	-
Agricultural		248		248		-		249		19
Real estate – residential		435		447		-		385		29
Real estate – commercial		563		614		-		476		-
Real estate – construction & land		-		-		-		-		-
Equity Lines of Credit		434		457		-		213		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		-		-		-		-		-
Real estate – residential		177		177		28		178		7
Real estate – commercial		252		261		121		139		-
Real estate – construction & land		110		110		5		114		7
Equity Lines of Credit		-		-		-		-		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total:
Commercial	$	25	$	85	$	-	$	23	$	-
Agricultural		248		248		-		249		19
Real estate – residential		612		624		28		563		36
Real estate – commercial		815		875		121		615		-
Real estate – construction & land		110		110		5		114		7
Equity Lines of Credit		434		457		-		213		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total	$	2,244	$	2,399	$	154	$	1,777	$	62

Consumer Portfolio Segment [Member]

Notes Tables

Financing Receivable Credit Quality Indicators [Table Text Block]

	Consumer Credit Exposure						Consumer Credit Exposure
	Credit Risk Profile Based on Payment Activity						Credit Risk Profile Based on Payment Activity
	March 31, 2020						December 31, 2019
	Auto		Other		Total		Auto		Other		Total
Grade:
Performing	$	92,448	$	4,506	$	96,954	$	90,128	$	4,559	$	94,687
Non-performing		414		35		449		182		4		186
Total	$	92,862	$	4,541	$	97,403	$	90,310	$	4,563	$	94,873

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Note 8 - Income Taxes

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8.

INCOME TAXES

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

Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amount of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. A valuation allowance is recognized if, based on the weight of available evidence management believes it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. On the consolidated balance sheet, net deferred tax assets are included in accrued interest receivable and other assets.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than

not

that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.  Tax positions taken are

not

offset or aggregated with other positions. Tax positions that meet the more-likely-than-

not

recognition threshold are measured as the largest amount of tax benefit that is more than

50

percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statements of income. There have been

no

significant changes to unrecognized tax benefits or accrued interest and penalties for the

three

months ended

March 31, 2020

.

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Note 4 - Loans and the Allowance for Loan Losses

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4.

LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Outstanding loans are summarized below, in thousands:

	March 31,			December 31,
	2020			2019
Commercial	$	49,246		$	47,892
Agricultural		76,044			78,785
Real estate – residential		13,820			14,530
Real estate – commercial		332,294			316,986
Real estate – construction and land development		19,674			31,181
Equity lines of credit		35,262			35,471
Auto		92,862			90,310
Other		4,541			4,563
Total loans		623,743			619,718
Deferred loan costs, net		3,548			3,561
Allowance for loan losses		(7,804	)		(7,243	)
Total net loans	$	619,487		$	616,036

Changes in the allowance for loan losses, in thousands, were as follows:

	March 31,			December 31,
	2020			2019
Balance, beginning of period	$	7,243		$	6,958
Provision charged to operations		750			1,500
Losses charged to allowance		(268	)		(1,521	)
Recoveries		79			306
Balance, end of period	$	7,804		$	7,243

The recorded investment in impaired loans totaled

$2,247,000

and

$2,244,000

at

March 31, 2020

and

December 31, 2019

, respectively. The Company had specific allowances for loan losses of

$154,000

on impaired loans of

$538,000

at

March 31, 2020

as compared to specific allowances for loan losses of

$154,000

on impaired loans of

$539,000

at

December 31, 2019

. The balance of impaired loans in which

no

specific reserves were required totaled

$1,709,000

and

$1,705,000

at

March 31, 2020

and

December 31, 2019

, respectively. The average recorded investment in impaired loans for the

three

months ended

March 31, 2020

and

March 31, 2019

was

$2,256,000

and

$1,352,000,

respectively. The Company recognized

$15,000

and

$18,000

in interest income for impaired loans during the

three

months ended

March 31, 2020

and

2019

, respectively.

No

interest was recognized on nonaccrual loans accounted on a cash basis during the

three

months ended

March 31, 2020

and

2019

.

Included in impairied loans are troubled debt restructurings. Section

4013

of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides that a qualifying loan modification or extension is exempt by law from classification as a Troubled Debt Restructuring ("TDR") pursuant to FASB ASC

340

-

10.

In addition, FIL-

36

-

2020

issued by the FDIC on

April 7, 2020

provides more limited circumstances in which a loan modification or extension is

not

subject to classification as a TDR pursuant to FASB ASC

340

-

10.

The Company evaluates loan extensions or modifications

not

qualified under Section

4013

of the CARES Act or under FIL-

36

-

2020

in accordance with FASB ASC

340

-

10

with respect to the classification of the loan as a TDR. Under ASC

340

-

10,

if the Company grants a loan extension or modification to a borrower experiencing financial difficulties for other than an insignificant period of time that includes a below–market interest rate, principal forgiveness, payment forbearance or other concession intended to minimize the economic loss to the Company, the loan extension or loan modification is classified as a TDR. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal then due and payable, management measures any impairment on the restructured loan in the same manner as for impaired loans as noted above. To determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The carrying value of troubled debt restructurings at

March 31, 2020

and

December 31, 2019

was

$1,012,000

and

$1,016,000,

respectively. The Company has allocated 

$33,000

of specific reserves on loans to customers whose loan terms have been modified in troubled debt restructurings as of

March 31, 2020

and

December 31, 2019

. The Company has

not

committed to lend additional amounts on loans classified as troubled debt restructurings at

March 31, 2020

and

December 31, 2019

.

There were

no

troubled debt restructurings that occurred during the 

three

months ending

March 31, 2020

or

March 31, 2019

.

There were

no

troubled debt restructurings for which there was a payment default within

twelve

months following the modification during the

three

months ended

March 31, 2020

and

2019

, respectively.

At

March 31, 2020

and

December 31, 2019

, nonaccrual loans totaled

$2,310,000

and

$2,050,000,

respectively. Interest foregone on nonaccrual loans totaled

$

33,000

and

$26,000

for the

three

months ended

March 31, 2020

and

2019

, respectively.  There were

no

loans past due

90

days or more and on accrual status at

March 31, 2020

and

December 31, 2019

.

Salaries and employee benefits totaling

$496,000

and

$598,000

have been deferred as loan origination costs during the

three

months ended

March 31, 2020

and

2019

, respectively.

The Company assigns a risk rating to all loans and periodically, but

not

less than annually, performs detailed reviews of all criticized and classified loans over

$100,000

to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by independent specialists engaged by the Company and the Company’s regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan.

The risk ratings can be grouped into

three

major categories, defined as follows:

Special Mention

– Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses

may

result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard

– A substandard loan is

not

adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Well defined weaknesses include a project's lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time or the project's failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are

not

corrected.

Doubtful

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

Loans

not

meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following table shows the loan portfolio allocated by management's internal risk ratings at the dates indicated, in thousands:

March 31, 2020	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
Grade:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Pass	$	48,784	$	73,909	$	13,553	$	326,468	$	19,592	$	34,688	$	516,994
Special Mention		415		2,135		-		4,935		-		-		7,485
Substandard		47		-		267		891		82		574		1,861
Doubtful		-		-		-		-		-		-		-
Total	$	49,246	$	76,044	$	13,820	$	332,294	$	19,674	$	35,262	$	526,340

December 31, 2019	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
Grade:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Pass	$	47,334	$	76,620	$	14,253	$	309,785	$	31,097	$	34,855	$	513,944
Special Mention		478		2,165		-		4,954		-		-		7,597
Substandard		80		-		277		2,247		84		616		3,304
Doubtful		-		-		-		-		-		-		-
Total	$	47,892	$	78,785	$	14,530	$	316,986	$	31,181	$	35,471	$	524,845

	Consumer Credit Exposure						Consumer Credit Exposure
	Credit Risk Profile Based on Payment Activity						Credit Risk Profile Based on Payment Activity
	March 31, 2020						December 31, 2019
	Auto		Other		Total		Auto		Other		Total
Grade:
Performing	$	92,448	$	4,506	$	96,954	$	90,128	$	4,559	$	94,687
Non-performing		414		35		449		182		4		186
Total	$	92,862	$	4,541	$	97,403	$	90,310	$	4,563	$	94,873

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

Three Months Ended March 31, 2020:	Commercial			Agricultural			Real Estate-Residential			Real Estate-Commercial		Real Estate-Construction			Equity LOC			Auto			Other			Total
Allowance for Loan Losses
Beginning balance	$	617		$	653		$	163		$	3,426	$	481		$	393		$	1,409		$	101		$	7,243
Charge-offs		(131	)		-			-			-		-			-			(134	)		(3	)		(268	)
Recoveries		2			-			1			1		-			1			70			4			79
Provision		226			(31	)		7			403		(84	)		28			196			5			750
Ending balance	$	714		$	622		$	171		$	3,830	$	397		$	422		$	1,541		$	107		$	7,804
Three Months Ended March 31, 2019:
Allowance for Loan Losses
Beginning balance	$	914		$	538		$	214		$	2,686	$	758		$	464		$	1,289		$	95		$	6,958
Charge-offs		(16	)		-			-			-		-			-			(312	)		(23	)		(351	)
Recoveries		9			-			1			-		-			1			47			2			60
Provision		(111	)		4			(20	)		283		(117	)		(15	)		360			16			400
Ending balance	$	796		$	542		$	195		$	2,969	$	641		$	450		$	1,384		$	90		$	7,067
March 31, 2020:
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	-		$	-		$	28		$	121	$	5		$	-		$	-		$	-		$	154
Ending balance: collectively evaluated for impairment		714			622			143			3,709		392			422			1,541			107			7,650
Ending balance	$	714		$	622		$	171		$	3,830	$	397		$	422		$	1,541		$	107		$	7,804
Loans
Ending balance: individually evaluated for impairment	$	-		$	247		$	656		$	805	$	109		$	430		$	-		$	-		$	2,247
Ending balance: collectively evaluated for impairment		49,246			75,797			13,164			331,489		19,565			34,832			92,862			4,541			621,496
Ending balance	$	49,246		$	76,044		$	13,820		$	332,294	$	19,674		$	35,262		$	92,862		$	4,541		$	623,743

December 31, 2019:	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Auto		Other		Total
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	-	$	-	$	28	$	121	$	5	$	-	$	-	$	-	$	154
Ending balance: collectively evaluated for impairment		617		653		135		3,305		476		393		1,409		101		7,089
Ending Balance	$	617	$	653	$	163	$	3,426	$	481	$	393	$	1,409	$	101	$	7,243
Loans
Ending balance: individually evaluated for impairment	$	25	$	248	$	612	$	815	$	110	$	434	$	-	$	-	$	2,244
Ending balance: collectively evaluated for impairment		47,867		78,537		13,918		316,171		31,071		35,037		90,310		4,563		617,474
Ending balance	$	47,892	$	78,785	$	14,530	$	316,986	$	31,181	$	35,471	$	90,310	$	4,563	$	619,718

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

							Total
March 31, 2020			90 Days				Past Due
	30-89 Days		and Still				and
	Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial	$	213	$	-	$	47	$	260	$	48,986	$	49,246
Agricultural		130		-		-		130		75,914		76,044
Real estate – residential		111		-		267		378		13,442		13,820
Real estate – commercial		828		-		891		1,719		330,575		332,294
Real estate - construction & land		-		-		82		82		19,592		19,674
Equity Lines of Credit		326		-		574		900		34,362		35,262
Auto		1,275		-		414		1,689		91,173		92,862
Other		40		-		35		75		4,466		4,541
Total	$	2,923	$	-	$	2,310	$	5,233	$	618,510	$	623,743

							Total
December 31, 2019			90 Days				Past Due
	30-89 Days		and Still				and
	Past Due		Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial	$	333	$	-	$	58	$	391	$	47,501	$	47,892
Agricultural		199		-		-		199		78,586		78,785
Real estate – residential		-		-		277		277		14,253		14,530
Real estate - commercial		1,467		-		830		2,297		314,689		316,986
Real estate - construction & land		-		-		83		83		31,098		31,181
Equity Lines of Credit		288		-		616		904		34,567		35,471
Auto		1,281		-		182		1,463		88,847		90,310
Other		87		-		4		91		4,472		4,563
Total	$	3,655	$	-	$	2,050	$	5,705	$	614,013	$	619,718

The following tables show information related to impaired loans at

March 31, 2020

, in thousands:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
As of March 31, 2020:	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		247		247		-		248		5
Real estate – residential		479		489		-		480		7
Real estate – commercial		553		611		-		558		-
Real estate – construction & land		-		-		-		-		-
Equity Lines of Credit		430		458		-		432		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		-		-		-		-		-
Real estate – residential		177		176		28		177		2
Real estate – commercial		252		265		121		252		-
Real estate – construction & land		109		109		5		109		1
Equity Lines of Credit		-		-		-		-		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		247		247		-		248		5
Real estate – residential		656		665		28		657		9
Real estate – commercial		805		876		121		810		0
Real estate – construction & land		109		109		5		109		1
Equity Lines of Credit		430		458		-		432		0
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total	$	2,247	$	2,355	$	154	$	2,256	$	15

The following tables show information related to impaired loans at

December 31, 2019

, in thousands:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
As of December 31, 2019:	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	25	$	85	$	-	$	23	$	-
Agricultural		248		248		-		249		19
Real estate – residential		435		447		-		385		29
Real estate – commercial		563		614		-		476		-
Real estate – construction & land		-		-		-		-		-
Equity Lines of Credit		434		457		-		213		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Agricultural		-		-		-		-		-
Real estate – residential		177		177		28		178		7
Real estate – commercial		252		261		121		139		-
Real estate – construction & land		110		110		5		114		7
Equity Lines of Credit		-		-		-		-		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total:
Commercial	$	25	$	85	$	-	$	23	$	-
Agricultural		248		248		-		249		19
Real estate – residential		612		624		28		563		36
Real estate – commercial		815		875		121		615		-
Real estate – construction & land		110		110		5		114		7
Equity Lines of Credit		434		457		-		213		-
Auto		-		-		-		-		-
Other		-		-		-		-		-
Total	$	2,244	$	2,399	$	154	$	1,777	$	62

XML

Note 4 - Loans and the Allowance for Loan Losses - Loan Portfolio Allocated by Internal Risk Ratings (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Loans	$ 623,743	$ 619,718
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans	49,246	47,892
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Loans	76,044	78,785
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	332,294	316,986
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Loans	19,674	31,181
Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	13,820	14,530
Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Loans	35,262	35,471
Commercial and Residential Portfolio Segments [Member]
Loans	526,340	524,845
Pass [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans	48,784	47,334
Pass [Member] | Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Loans	73,909	76,620
Pass [Member] | Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	326,468	309,785
Pass [Member] | Commercial Portfolio Segment [Member] | Construction Loans [Member]
Loans	19,592	31,097
Pass [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	13,553	14,253
Pass [Member] | Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Loans	34,688	34,855
Pass [Member] | Commercial and Residential Portfolio Segments [Member]
Loans	516,994	513,944
Special Mention [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans	415	478
Special Mention [Member] | Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Loans	2,135	2,165
Special Mention [Member] | Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	4,935	4,954
Special Mention [Member] | Commercial Portfolio Segment [Member] | Construction Loans [Member]
Loans
Special Mention [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Loans
Special Mention [Member] | Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Loans
Special Mention [Member] | Commercial and Residential Portfolio Segments [Member]
Loans	7,485	7,597
Substandard [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans	47	80
Substandard [Member] | Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Loans
Substandard [Member] | Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	891	2,247
Substandard [Member] | Commercial Portfolio Segment [Member] | Construction Loans [Member]
Loans	82	84
Substandard [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Loans	267	277
Substandard [Member] | Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Loans	574	616
Substandard [Member] | Commercial and Residential Portfolio Segments [Member]
Loans	1,861	3,304
Doubtful [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans
Doubtful [Member] | Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Loans
Doubtful [Member] | Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Loans
Doubtful [Member] | Commercial Portfolio Segment [Member] | Construction Loans [Member]
Loans
Doubtful [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Loans
Doubtful [Member] | Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Loans
Doubtful [Member] | Commercial and Residential Portfolio Segments [Member]
Loans

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Note 4 - Loans and the Allowance for Loan Losses - Impaired Loans (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Recorded investment with no related allowance recorded	$ 1,709,000		$ 1,705,000
Recorded investment with an allowance	538,000		539,000
Impaired Financing Receivable, Related Allowance	154,000		154,000
Recorded investment	2,247,000		2,244,000
Unpaid principal balance	2,355,000		2,399,000
Average recorded investment	2,256,000	$ 1,352,000	1,777,000
Interest income recognized	15,000	$ 18,000	62,000
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Recorded investment with no related allowance recorded			25,000
Unpaid principal balance with no related allowance recorded			85,000
Average recorded investment with no related allowance recorded			23,000
Interest income recognized with no related allowance recorded
Recorded investment with an allowance
Unpaid principal balance with allowance
Impaired Financing Receivable, Related Allowance
Average recorded investment with an allowance
Interest income recognized with an allowance
Recorded investment			25,000
Unpaid principal balance			85,000
Average recorded investment			23,000
Interest income recognized
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Recorded investment with no related allowance recorded	247,000		248,000
Unpaid principal balance with no related allowance recorded	247,000		248,000
Average recorded investment with no related allowance recorded	248,000		249,000
Interest income recognized with no related allowance recorded	5,000		19,000
Recorded investment with an allowance
Unpaid principal balance with allowance
Impaired Financing Receivable, Related Allowance
Average recorded investment with an allowance
Interest income recognized with an allowance
Recorded investment	247,000		248,000
Unpaid principal balance	247,000		248,000
Average recorded investment	248,000		249,000
Interest income recognized	5,000		19,000
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Recorded investment with no related allowance recorded	553,000		563,000
Unpaid principal balance with no related allowance recorded	611,000		614,000
Average recorded investment with no related allowance recorded	558,000		476,000
Interest income recognized with no related allowance recorded
Recorded investment with an allowance	252,000		252,000
Unpaid principal balance with allowance	265,000		261,000
Impaired Financing Receivable, Related Allowance	121,000		121,000
Average recorded investment with an allowance	252,000		139,000
Interest income recognized with an allowance
Recorded investment	805,000		815,000
Unpaid principal balance	876,000		875,000
Average recorded investment	810,000		615,000
Interest income recognized	0
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Recorded investment with no related allowance recorded
Unpaid principal balance with no related allowance recorded
Average recorded investment with no related allowance recorded
Interest income recognized with no related allowance recorded
Recorded investment with an allowance	109,000		110,000
Unpaid principal balance with allowance	109,000		110,000
Impaired Financing Receivable, Related Allowance	5,000		5,000
Average recorded investment with an allowance	109,000		114,000
Interest income recognized with an allowance	1,000		7,000
Recorded investment	109,000		110,000
Unpaid principal balance	109,000		110,000
Average recorded investment	109,000		114,000
Interest income recognized	1,000		7,000
Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Recorded investment with no related allowance recorded	479,000		435,000
Unpaid principal balance with no related allowance recorded	489,000		447,000
Average recorded investment with no related allowance recorded	480,000		385,000
Interest income recognized with no related allowance recorded	7,000		29,000
Recorded investment with an allowance	177,000		177,000
Unpaid principal balance with allowance	176,000		177,000
Impaired Financing Receivable, Related Allowance	28,000		28,000
Average recorded investment with an allowance	177,000		178,000
Interest income recognized with an allowance	2,000		7,000
Recorded investment	656,000		612,000
Unpaid principal balance	665,000		624,000
Average recorded investment	657,000		563,000
Interest income recognized	9,000		36,000
Residential Portfolio Segment [Member] | Equity Lines of Credit [Member]
Recorded investment with no related allowance recorded	430,000		434,000
Unpaid principal balance with no related allowance recorded	458,000		457,000
Average recorded investment with no related allowance recorded	432,000		213,000
Interest income recognized with no related allowance recorded
Recorded investment with an allowance
Unpaid principal balance with allowance
Impaired Financing Receivable, Related Allowance
Average recorded investment with an allowance
Interest income recognized with an allowance
Recorded investment	430,000		434,000
Unpaid principal balance	458,000		457,000
Average recorded investment	432,000		213,000
Interest income recognized	0
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Recorded investment with no related allowance recorded
Unpaid principal balance with no related allowance recorded
Average recorded investment with no related allowance recorded
Interest income recognized with no related allowance recorded
Recorded investment with an allowance
Unpaid principal balance with allowance
Impaired Financing Receivable, Related Allowance
Average recorded investment with an allowance
Interest income recognized with an allowance
Recorded investment
Unpaid principal balance
Average recorded investment
Interest income recognized
Consumer Portfolio Segment [Member] | Other Loans [Member]
Recorded investment with no related allowance recorded
Unpaid principal balance with no related allowance recorded
Average recorded investment with no related allowance recorded
Interest income recognized with no related allowance recorded
Recorded investment with an allowance
Unpaid principal balance with allowance
Impaired Financing Receivable, Related Allowance
Average recorded investment with an allowance
Interest income recognized with an allowance
Recorded investment
Unpaid principal balance
Average recorded investment
Interest income recognized