Stonegate Capital Partners Updates Coverage on Plumas Bancorp. (Nasdaq: PLBC)

DALLAS, TX / ACCESSWIRE / March 13, 2020 / Plumas Bancorp. (NASDAQ:PLBC)

The full report can be accessed by clicking on the following link: http://www.stonegateinc.com/reports/PLBC%20Q4FY19.pdf

COMPANY DESCRIPTION

Plumas Bancorp (the Company or Plumas) was incorporated in California in 1980 and is the bank holdings company of Plumas Bank; The Company owns all outstanding shares of Plumas Bank. Plumas Bank provides various banking products and services for small and middle market businesses and individuals in Northeastern California and Northwestern Nevada with a focus on personal service. Plumas offers an array of deposit products such as checking, savings, and retirement accounts in addition to its loan portfolio consisting of consumer, home equity, and auto loans. Plumas also provides commercial, industrial, agricultural, and construction loans. Plumas currently operates 13 branches including eleven in California and two in Nevada. Plumas also operates 3 lending offices located in Northern California and Southern Oregon.

SUMMARY

Plumas Bank has a long history of providing superior customer service, being deeply rooted in the communities that it serves while offering a full suite of banking and loan options to customers in Northeastern California and Nevada. The seasoned management team has developed a sound business model and a stable geographic base from which to continue its disciplined growth strategy. Given the Company's track record of successful branch additions, combined with expanding profitability, strong credit metrics, and operational efficiency, we anticipate continued growth going forward.

• Strong Growth Strategy Continues in 2019 - The Company recently reported record earnings in 2019 of $15.5 million, up 11% when compared to 2018. Much of this growth can be attributed to increases in commercial real estate loans, auto loans, and agricultural loans. In addition, the Company recorded record deposits of $747 million in 2019, which was an increase of 2.75% over 2018.
• Strong Core Deposits - Plumas has a strong history of increasing their demand, savings, and money market deposits from local businesses and individuals. These non-brokered core deposits have grown at a CAGR of 9.8% since 2014 with an average interest-bearing deposit rate at 0.29%.
• Diversified Loan Portfolio - PLBC provides a range of lending services including retail consumer, automobile, home equity, commercial real estate, commercial and industrial term loans, as well as SBA government-guaranteed loans, agricultural loans and credit lines. The breadth of loan diversification helps Plumas to avoid becoming overly concentrated to a single industry.
• Non-Interest Earnings Income Growth- In addition to the Company's primary source of revenue, interest income, Plumas also derives roughly 17% of their revenue from a variety of noninterest income items including loan servicing fees, service charges on deposit accounts, interchange revenue and gains on sales of SBA loans. Plumas has grown non-interest income ~19% since 2014.
• Successful growth strategy - The Company has continued to expand its branch operations into targeted growth markets of Northern California and Northwestern Nevada over the years with great success including the purchase of Mutual of Omaha Bank's Carson City Branch in October 2018.
• Valuation - Combining our thoughts on PLBC versus current regional comps, as well as 3-year historical trading multiples for its comp set, we believe PLBC should trade in a P/E range of 10x to 12x with a mid-point of 11x. Using this range on our FY20 EPS estimate results in a valuation range of $29.86 to $35.83 with a midpoint at $32.84. Also, considering current and 3-year historical trading ranges of PLBC and comps, we believe using a P/TBV multiple range of 1.4x to 1.7x is reasonable. Using this range on our FY20 EPS estimate, we arrive at a valuation range of ~$22.90 to ~$27.81 with a mid-point of ~$25.36.

CONTACT:
214-987-4121
Shane Martin, CFA

SOURCE: Stonegate Capital Partners