DALLAS, TX -- October 27th, 2022 -- Plumas Bancorp (Nasdaq: PLBC): Stonegate Capital Partners updates coverage on Plumas Bancorp (Nasdaq: PLBC). The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/PLBC_22Q3.pdf
COMPANY DESCRIPTION
Plumas Bancorp (the Company or Plumas) is a bank holding company headquartered in Reno, Nevada and was incorporated in 2002. Plumas Bancorp is the holding company for Plumas Bank, a Quincy, California based bank founded in 1980. 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 Bank offers an array of deposit products such as checking, savings, and retirement accounts in addition to its loan portfolio consisting of commercial, industrial, agricultural, and construction loans. Plumas Bank also provides consumer, home equity, and auto loans. Plumas Bank currently operates 14 branches including 12 in California and two in Nevada. Plumas Bank also operates two lending offices located in Northern California and one lending office in Southern Oregon.
SUMMARY
- Recent acquisition creates upside – The Company closed its previously announced $23.4M acquisition of Feather River Bancorp on 7/1/2021. Assets increased to $1.65B at Q322 end, up from $1.3B at Q221. Deposits also increased to $1.5B in Q322 from $1.1B in Q221. Additional attractive features from the acquisition include expanded market opportunities in Northern California markets, scale is enhanced with geographic expansion, it further diversifies the loan portfolio, and is immediately accretive to EPS.
- Strong core deposits – Plumas has a strong history of increasing its demand, savings, and money market deposits from local businesses and individuals. In total, deposits grew by 8% Y/Y to reach $1.5B on September 30, 2022. Since 2016, the Company has grown deposits at a ~18% 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 in a single industry.
- Non-interest earnings income growth– In addition to the Company’s primary source of revenue, interest income, Plumas also derives ~18% of its 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 7a loans. Plumas has grown non-interest income ~3% since 2016.
- Successful growth strategy - The Company 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 and the acquisition of Feather River Bancorp in 2021.
- Valuation – We use a comp analysis on P/E and P/BV to help frame valuation. Using a P/E range of 10x to 12x with a mid-point of 11x on our FY22 EPS estimate results in a valuation range of $44.43 to $53.32 with a mid-point of $48.88. Using a P/BV multiple range of 1.4x to 1.5x, which is an equal premium derived from P/TBV, we arrive at a valuation range of $35.63 to $38.17 with
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.
