EXECUTIVE SALARY CONTINUATION AGREEMENT

EXECUTIVE SALARY CONTINUATION AGREEMENT

This Agreement is made and entered into this 23rd day of August, 2005, by and between Plumas Bank, a corporation organized under the laws of the State of California (the “Employer”), and Andrew J. Ryback, an individual residing in the State of California (hereinafter referred to as the “Executive”).

RECITALS

WHEREAS, the Executive is an employee of the Employer and is serving as its Executive Vice President/Chief Financial Officer;

WHEREAS, the Executive’s experience and knowledge of the affairs of the Employer and the banking industry are extensive and valuable;

WHEREAS, it is deemed to be in the best interests of the Employer to provide the Executive with certain salary continuation benefits, on the terms and conditions set forth herein, in order to reasonably induce the Executive to remain in the Employer’s employment; and

WHEREAS, the Executive and the Employer wish to specify in writing the terms and conditions upon which this additional compensatory incentive will be provided to the Executive.

NOW, THEREFORE, in consideration of the services to be performed in the future, as well as the mutual promises and covenants contained herein, the Executive and the Employer agree as follows:

AGREEMENT

1. Terms and Definitions.

1.1. Administrator. The Employer shall be the “Administrator” and, solely for the purposes of ERISA, the “fiduciary” of this Agreement where a fiduciary is required by ERISA.

1.2. Annual Benefit. The term “Annual Benefit” shall mean an annual sum of Sixty-two Thousand Dollars ($62,000) multiplied by the Applicable Percentage (defined below) and then reduced to the extent required: (i) under the other provisions of this Agreement; (ii) by reason of the lawful order of any regulatory agency or body having jurisdiction over the Employer; and (iii) in order for the Employer to properly comply with any and all applicable state and federal laws, including, but not limited to, income, employment and disability income tax laws (e.g., FICA, FUTA, SDI).

1.3 Applicable Percentage. The term “Applicable Percentage” shall mean that percentage listed on Schedule “A” attached hereto which is adjacent to the number of complete years (with a “year” being the performance of personal services for or on behalf of the Employer as an employee for a period of 365 days) which have elapsed starting from the Effective Date of this Agreement and ending on the date payments are to first begin under the terms of this Agreement. In the event that Executive’s employment with Employer is terminated other than by reason of disability, Normal Retirement, Retirement or voluntary termination on the part of Executive, Executive shall be deemed for purposes of determining the number of complete years to have completed a year of service in its entirety for any partial year of service after the last anniversary date of the Effective Date during which the Executive’s employment is terminated.

1.4. The Code. The “Code” shall mean the Internal Revenue Code of 1986, as amended (the “Code”).

1.5. Disability/Disabled. The term “Disability” or “Disabled” shall mean either that the Executive is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan sponsored by the Employer.

1.6. Early Retirement Date. The term “Early Retirement Date” shall mean the Retirement (as defined below) of the Executive on a date which occurs after the date Executive reaches age 60 and prior to the date Executive reaches age 65.

1.7. Effective Date. The term “Effective Date” shall mean the date upon which this Agreement was entered into by the parties, as first written above.

1.8. ERISA. The term “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

1.9 Plan Year. The term “Plan Year” shall mean the Employer’s calendar year.

1.10. Retirement. The term “Retirement” or “Retires” shall refer to the date which the Executive acknowledges in writing to Employer to be the last day he will provide any significant personal services, whether as an employee, director or independent consultant or contractor, to Employer or to, for, or on behalf of, any other business entity conducting, performing or making available to any person or entity banking or other financial services of any kind. For purposes of this Agreement, the phrase “significant personal services” shall mean more than ten (10) hours of personal services rendered to one or more individuals or entities in any thirty (30) day period.

2. Scope, Purpose and Effect.

2.1. Contract of Employment. Although this Agreement is intended to provide the Executive with an additional incentive to remain in the employ of the Employer, this Agreement shall not be deemed to constitute a contract of employment between the Executive and the Employer nor shall any provision of this Agreement restrict or expand the right of the Employer to terminate the Executive’s employment. This Agreement shall have no impact or effect upon any separate written Employment Agreement which the Executive may have with the Employer, it being the parties’ intention and agreement that unless this Agreement is specifically referenced in said Employment Agreement (or any modification thereto), this Agreement (and the Employer’s obligations hereunder) shall stand separate and apart and shall have no effect upon, nor be affected by, the terms and provisions of said Employment Agreement.

2.2. Fringe Benefit. The benefits provided by this Agreement are granted by the Employer as a fringe benefit to the Executive and are not a part of any salary reduction plan or any arrangement deferring a bonus or a salary increase. The Executive has no option to take any current payments or bonus in lieu of the benefits provided by this Agreement.

3. Payments Upon or After Retirement.

3.1. Payments Upon Retirement. If the Executive shall remain in the continuous employment of the Employer until attaining sixty- five (65) years of age, the Executive shall be entitled to be paid the Annual Benefit, as defined above, for a period of fifteen (15) years, in One Hundred Eighty (180) equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Executive Retires or upon such later date as may be mutually agreed upon by the Executive and the Employer in advance of said Retirement date. At the Employer’s sole and absolute discretion, the Employer may increase the Annual Benefit as and when the Employer determines the same to be appropriate in order to reflect a substantial change in the cost of living. Notwithstanding anything contained herein to the contrary, the Employer shall have no obligation hereunder to make any such cost-of-living adjustment.

3.2. Payments in the Event of Death After Retirement. In the event of Executive’s death following Retirement, no death benefit shall be provided under this Agreement.

4. Payments in the Event of Death or Disability Occurs Prior to Retirement.

4.1. Payments in the Event of Death Prior to Retirement. In the event of Executive’s death prior to Retirement, no death benefit shall be provided under this Agreement.

4.2. Payment in the Event of Disability Prior to Retirement. In the event the Executive becomes Disabled while actively employed by the Employer at any time after the date of this Agreement but prior to Retirement, the Executive shall:

5. Payments in the Event Employment is Terminated Other than by Disability, Retirement or a Change in Control of the Employer.

5.1 Payments in the Event Employment is Terminated Other than by Death, Disability, Retirement or a Change of Control of the Employer. As indicated in Paragraph 2 above, the Employer reserves the right to terminate the Executive’s employment, with or without cause but subject to any written employment agreement which may then exist, at any time prior to the Executive’s Retirement. In the event that the employment of the Executive shall be terminated, for any reason, including voluntary termination by the Executive, but other than by reason of Disability, Retirement, or a change of control of the Employer as set forth in Paragraph 5.2, the Executive (or his legal representative, if the Executives dies prior to receiving all payments provided in this paragraph) shall be entitled to be paid the Annual Benefit, as set forth in Schedule A for a period of fifteen (15) years, as determined by the applicable years of service at the time of the Executive’s termination of employment with the Employer, in One Hundred Eighty (180) equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Executive terminates employment and attains sixty-five (65) years of age.

5.2 Termination of Employment in the Event of a Change of Control. A “Terminating Event” shall mean the earliest occurrence of one of the following events:

A change in ownership of the Bancorp occurs on the date that any person (or group of persons) acquires ownership of stock of the Bancorp that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Bancorp.

A change in effective control of the Ban