Q3 2024 Update on Plumas Bancorp (NASDAQ: PLBC)
This post is an update on Plumas Bancorp’s Q3 2024. I wanted to send it out yesterday, but just didn’t have the time.
Plumas Bancorp (NASDAQ: PLBC) is a community bank with $1+ billion in deposits headquartered in Reno, Nevada.
My original writeup on the business can be found here: https://possiblevalue.substack.com/p/plumas-bancorp-ticker-plbc
Plumas issued an earnings release for Q3 2024 along with a corresponding investor presentation. An additional 8-K was released this morning declaring a common dividend of $0.27 per share payable on August 15, 2024. Links to all three filings can be found here:
Business Update
All the financial information below was taken directly from the earnings release and investor presentation linked above.
Net income – Q3 2024 earnings of $7.8 million or $1.33 per share, a decrease of $140 thousand from $8.0 million or $1.36 per share during the third quarter of 2023. Diluted earnings per share decreased to $1.31 per share during the three months ended September 30, 2024 down from $1.34 per share during the quarter ended September 30, 2023.
For the nine months ended September 30, 2024, the Company reported net income of $20.9 million or $3.54 per share, a decrease of $1.4 million from $22.3 million or $3.80 per share earned during the nine months ended September 30, 2023. Earnings per diluted share decreased to $3.50 during the nine months ended September 30, 2024, down $0.25 from $3.75 during the first nine months of 2023.
ROAA and ROE – The annualized return on average assets was 1.84% for the three months ended September 30, 2024, down from 2.00% for the three months ended September 30, 2023. The annualized return on average equity decreased from 24.4% during the third quarter of 2023 to 18.1% during the current quarter.
The annualized return on average assets was 1.69% for the nine months ended September 30, 2024, down from 1.88% for the nine months ended September 30, 2023. The annualized return on average equity decreased from 23.3% during the first nine months of 2023 to 17.2% during the current period.
Loans – Gross loans increased by $45 million, or 5%, from $959 million at September 30, 2023, to $1.0 billion at September 30, 2024. Increases in loans included $88 million in commercial real estate loans and $5 million in commercial loans, these items were partially offset by decreases of $33 million in automobile loans, $10 million in agricultural loans and $5 million in construction loans. Approximately 77% of Plumas’ loan portfolio was comprised of variable rate loans as of 9/30/2034.
Deposits – Total deposits decreased by $51 million from $1.40 billion at September 30, 2023 to $1.35 billion at September 30, 2024. The decrease in deposits includes decreases of $34 million in demand deposits, and $41 million in savings deposits. Partially offsetting these declines were increases of $12 million in both money market accounts and time deposits. While deposits decreased during the 12 month period, we experienced an increase in deposits for the three months ended September 30, 2024 of $46 million. At September 30, 2024, 52% of the Company’s deposits were in the form of non-interest-bearing demand deposits which you love to see.
Investments - Total investment securities increased by $18 million from $438 million at September 30, 2023, to $457 million at September 30, 2024 related to a decline in the unrealized loss on investment securities. The Bank’s investment security portfolio consists of debt securities issued by US Government agencies, US Government sponsored agencies and municipalities. All investment securities are classified as available for sale. The unrealized loss on investment securities decreased from $76 million at September 30, 2023 to $21 million at September 30, 2024. Cash and due from banks increased by $27 million from $91 million at September 30, 2023, to $118 million at September 30, 2024.
Asset Quality – Plumas’ asset quality remains solid as shown in the screencap below which was taken from p. 14 of the earnings release linked above.
Nonperforming loans declined considerably in Q3 2024 to $4.5 million versus $8.97 million in Q2 2024. Nonperforming loans were relatively the same versus Q3 2023.
Shareholder’s equity – Total shareholders’ equity increased by $62 million from $120 million at September 30, 2023, to $182 million at September 30, 2024.
Debt - At December 31, 2023, the Company had outstanding borrowings under the Bank Term Funding Program (BTFP) totaling $80 million. In January 2024, the Company borrowed an additional $25 million under the BTFP and during September 2024 we made a $45 million payment resulting in a balance of $60 million outstanding at September 30, 2024. This borrowing bears interest at the rate of 4.85% and is payable on January 17, 2025. Borrowings under the BTFP can be prepaid without penalty.
In addition to the BTFP borrowings, Plumas Bancorp has outstanding borrowings of $15 million with a correspondent bank. This loan matures on January 25, 2035 and can be prepaid at any time. During the initial three years the loan functions as an interest only revolving line of credit. Beginning on year four the loan converts into a term loan requiring semi-annual principal and interest payments and no further advances can be made. This borrowing bears interest at a fixed rate of 3.85% for the first 5 years and then at a floating interest rate linked to WSJ Prime Rate for the remaining eight year term.
Net-interest income and margin - Net interest income was $18.9 million for the three months ended September 30, 2024, an increase of $1.1 million from the same period in 2023. The increase in net interest income includes an increase of $2.8 million in interest income partially offset by an increase of $1.7 million in interest expense. Interest and fees on loans increased by $1.4 million related to growth in the loan portfolio and an increase in yield on the portfolio. Net interest margin for the three months ended September 30, 2024 was 4.76%, down slightly from 4.77% for the same period in 2023.
Net interest income for the nine months ended September 30, 2024 was $54.7 million, an increase of $2.6 million from the $52.1 million earned during the same period in 2023. The increase in net interest income includes an increase of $8.0 million in interest income partially offset by an increase of $5.4 million in interest expense. Net interest margin for the nine months ended September 30, 2024 increased 6 basis points to 4.76, up from 4.70% for the same period in 2023.
Non-interest income and expense - Non-interest income decreased by $76 thousand to $2.2 million during the current quarter. During the three months ended September 30, 2024, total non-interest expense increased by $1.4 million from $9.4 million during the third quarter of 2023 to $10.8 million during the current quarter.
During the nine months ended September 30, 2024, non-interest income totaled $6.6 million, a decrease of $1.8 million from the nine months ended September 30, 2023. The largest component of this decrease was a $1.7 million gain on termination of our interest rate swaps during 2023.
During the nine months ended September 30, 2024 non-interest expense increased by $3.9 million to $31.6 million. The largest components of this increase were a $1.1 million increase in salary and benefit expenses, a $1.7 million increase in occupancy and equipment expenses and a $618 thousand increase in other non-interest expenses.
Screencaps of Plumas’ selected financial data and loan portfolio are shown below. They were taken from p. 14 of the earnings release linked above.
My comments on this quarter are almost the same as Q2 2024. Earnings can’t go up every quarter/year, the dividend looks good, and the performance ratios have remained at an exceptional level. Credit quality is solid, and the shareholder’s equity was up versus Q2 2024 and Q3 2023. Gross loans to deposits are healthy at 74.3% and the regulatory capital ratios don’t look too shabby either.
Plumas’ loan portfolio and deposit distribution are shown in the screencap below and was taken from p. 19 of the earnings release linked above.
Plumas’ loan portfolio remains anchored to its Commercial Real Estate Loans which now represent more than 61% of total loans.
I commented on the last update about its office exposure and it hasn’t changed much. Per Slide 18 from the investor presentation, linked above and shown below, Plumas still has ~$70 million in loans between investor owned and owner-occupied offices.
Disclosure: I am long Plumas Bancorp.