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

DALLAS, TX / ACCESSWIRE / May 19, 2020 / Plumas Bancorp. (NASDAQ:PLBC)

The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/PLBC Q1FY20.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.

• Profits Continue Despite COVID - The Company reported net income of $3.3 million ($0.64 per share) for Q1 2020 down 13% compared to Q1 2019 due to a reduction in interest income and increased provisions for loan losses. The Company's interest income was down 2% from Q1 2019 to Q1 2020 due to declines in market interest rates, which was partially offset by a decrease in interest expenses. Plumas has had a strong history of profitable operation that we would expect to continue throughout the COVID-19 disruption.

• Strong Core Deposits - Plumas has a strong history of increasing their demand, savings, and money market deposits from local businesses and individuals. This continued throughout Q1 2020 as total deposits grew by 4% to reach $763 million. Since 2015, the Company has grown deposits at a 9.11% CAGR.

• 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 9x to 11x with a mid-point of 10x. Using this range on our FY20 EPS estimate results in a valuation range of $24.13 to $29.49 with a midpoint at $26.81. 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.

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

CONTACT:

Stonegate Capital Partners
Shane Martin, CFA
(214) 987-4121
shane@stonegateinc.com

SOURCE: Stonegate Capital Partners