MOUNTAINSEED AND PLUMAS BANCORP ANNOUNCE SALE-LEASEBACK TRANSACTION
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Insights
The sale-leaseback deal between Plumas Bancorp and MountainSeed represents a strategic financial maneuver with implications for Plumas Bancorp's balance sheet and earnings profile. By selling the properties and then leasing them back, Plumas Bancorp is able to unlock capital tied up in real estate assets, which can be redirected towards more profitable or strategic initiatives. This influx of cash can be used to offset unrealized losses in the bank's investment portfolio, a move that may enhance the bank's financial resilience against interest rate fluctuations and market volatility.
By restructuring a portion of the investment portfolio to achieve higher yields, Plumas Bancorp is positioning itself for increased interest income streams. This could potentially lead to improved profitability in the long term. However, it is important to consider the lease obligations that the bank has now taken on, as these will be recurring expenses that could affect net income. The impact on the bank's book value per share should be positive in the short term, as the immediate gains from the sale will be reflected in the financial statements.
From a real estate investment perspective, the sale-leaseback transaction indicates MountainSeed's commitment to this type of investment strategy, which can be beneficial for both parties involved. For MountainSeed, acquiring the properties from Plumas Bank ensures a long-term, stable tenant and a predictable income stream over the 15-year lease term. This can be an attractive proposition for investors seeking stable cash flows. Additionally, the control over these properties could provide MountainSeed with future strategic options such as rent adjustments or property redevelopment after the lease term.
For Plumas Bank, the deal allows them to continue operating their branches without interruption, maintaining customer service and brand presence in their communities. The long-term commitment of a 15-year lease, with an option for an additional 15 years, provides operational stability. However, it is essential to scrutinize the lease terms, as unfavorable conditions could lead to financial strain over time.
The sale-leaseback transaction holds significance for the local communities served by Plumas Bank. By committing to a 15-year lease term, with the possibility of an additional 15 years, Plumas Bank is signaling its dedication to these communities. This could foster a sense of stability and ongoing support for local economies, as the presence of a bank can be integral to community development and financial services accessibility.
Nevertheless, it is crucial to monitor how this transaction will affect the bank's ability to invest in local community projects and services. While the immediate financial benefits are clear, the long-term implications of the lease commitments on the bank's financial flexibility and community support initiatives should be evaluated. The bank's ability to adapt to changing community needs over the lease period will be an important factor in assessing the overall impact of the deal on community economic development.
RENO, Nev., Feb. 15, 2024 (GLOBE NEWSWIRE) -- Plumas Bancorp (Nasdaq: PLBC), the parent company of Plumas Bank, and MountainSeed are proud to announce a sale-leaseback deal valued at approximately
MountainSeed Real Estate Services acquired nine properties operated as branches from Plumas Bank and leased each property back to the bank for a 15-year lease term. Plumas Bank will continue to operate the branch offices as usual.
MountainSeed and Plumas Bank have agreed to complete a second sale-and-leaseback transaction for three additional Plumas Bank properties. The sale is expected to be completed in March 2024.
“We are thrilled to work with Plumas Bank, and our capital markets team’s momentum is off to a strong start in 2024. In this specific transaction, the strategy is expected to improve the Bank’s earnings profile and increase their book value in a meaningful way. Everyone on their team has been a pleasure to work with throughout the process, and we are excited for a long-term relationship with such a well-run bank,” stated Patrick Roberts, Chief Revenue Officer at MountainSeed.
“This sale-leaseback transaction will result in significant benefits to both our shareholders and the communities that we serve,” said Andrew J. Ryback, Director, President and CEO of Plumas Bank and Plumas Bancorp. “The gains that we’ll generate from the transaction will be used to offset unrealized losses in our investment portfolio upon the restructuring of a portion of our portfolio. The restructure will result in higher yields and interest income streams for years to come while increasing our book value per share in the current period.”
Ryback added, “For our communities, this transaction commits us to serving them for the long term — 15 years with an option for 15 more. MountainSeed’s expertise helped to facilitate a powerful sales-leaseback transaction which supports our long-term objectives.”
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About MountainSeed
MountainSeed acts as a beacon of trust and innovation in the real estate and banking industries, serving as a partner to over 600 community banks and credit unions across 50 states. MountainSeed has become the most active acquirer of bank branches through sale-leaseback transactions. In addition, the company processes over
About Plumas Bank and Plumas Bancorp
Plumas Bank is a subsidiary of Plumas Bancorp (NASDAQ: PLBC), a bank holding company headquartered in Reno, Nevada. Plumas Bank is a locally managed, award-winning community bank founded in 1980 and headquartered in Quincy, California. With 15 branch offices in Northeastern California and Northern Nevada, and loan production offices in California and southern Oregon, Plumas Bank is one of the top performing community banks in the country. For more information regarding Plumas Bancorp and Plumas Bank, visit plumasbank.com.
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended and Plumas Bancorp intends for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may" and include, among others, statements regarding future sales of Plumas Bank’s properties and the financial impacts of the sale and leaseback transactions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this news release. Factors that might cause such differences include, but are not limited to: The possibility that additional sales of real estate may be delayed or may not occur based on the results of MountainSeed’s due diligence or other factors, Plumas Bancorp’s ability to successfully execute its business plans and achieve its objectives; general economic and financial market conditions, either nationally or locally in areas in which Plumas Bancorp conducts its operations; changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect Plumas Bancorp’s operations or business; loss of key personnel; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies and other risk factors described in the Plumas Bancorp’s filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2022 and the Form 8-K filed on February 15, 2023.
FAQ
What is the value of the sale-leaseback deal announced by Plumas Bancorp (PLBC) and MountainSeed?
How many properties were acquired by MountainSeed from Plumas Bank in the transaction?
What is the lease term for the properties acquired by MountainSeed from Plumas Bank?
What benefits are expected for Plumas Bank's shareholders and communities from the sale-leaseback transaction?
Who stated that the sale-leaseback transaction will improve the Bank's earnings profile and increase their book value?
