CFNB Second Quarter Earnings of $1.8 Million Down 12%, Lease and Loan Portfolio Increases 11%

  CFNB Second Quarter Earnings of $1.8 Million Down 12%, Lease and Loan
  Portfolio Increases 11%

Business Wire

IRVINE, Calif. -- January 23, 2013

California First National Bancorp (NASDAQ: CFNB) (“CalFirst Bancorp”) today
announced net earnings of $1.8 million for the second quarter ended December
31, 2012, a decline of 12% from net earnings of $2.1 million for the second
quarter of fiscal 2012. For the six months ended December 31, 2012, net
earnings were down 26% to $3.3 million from $4.6 million for the first six
months of fiscal 2012. Diluted earnings per share in the second quarter of
fiscal 2013 of $0.17 were down 12% from $0.20 from the second quarter of
fiscal 2012, while diluted earnings per share of $0.32 for the first six
months of fiscal 2013 were down 27% from $0.44 per share for the same period
of fiscal 2012.

The decline in net earnings during the second quarter and first six months of
fiscal 2013 is largely due to lower direct finance income resulting from a
drop in average yields earned that during the second quarter more than offset
the benefit of a 17% growth in the lease portfolio, 25% decline in interest
expense and 7% decline in non-interest expenses.

Total direct finance, loan and interest income for the second quarter of
fiscal 2013 decreased 11% to $5.3 million from $5.9 million during the second
quarter of the prior year. A $631,000, or 15%, decline in direct finance
income reflected a 17% increase in average investment in leases that offset by
a 194 basis point decline in average yield to 5.07%. Interest expense paid on
deposits and borrowings during the second quarter of fiscal 2013 decreased by
$205,000, or 25%, reflecting a 26 basis point drop in average interest rates
paid to .89% and a 4% decrease in average balances. For the second quarter of
fiscal 2013 and 2012, the Company did not record an allowance for credit
losses. The lack of provision in 2013 is due to an improvement in the credit
metrics as the growth in the portfolio is largely related to higher rated
credits. All of these factors led to a $470,000, or 9%, decrease in net direct
finance and interest income after provision for credit losses to $4.6 million.

Total non-interest income of $1.2 million for the second quarter of fiscal
2013 was down 5% from $1.3 million for the same period of the prior year
primarily due to lower income realized from the sale of property on leases
reaching the end of term during the period.

Total direct finance, loan and interest income for the first six months of
fiscal 2013 decreased 12% to $10.6 million due to a $1.1 million decrease in
direct finance income and a decrease in investment income of $290,000. During
the first six months of fiscal 2013, the average investment in leases
increased 15% to $263.2 million while the average yield earned decreased by
179 basis points to 5.29%. Commercial loan balances of $88.1 million with an
average yield of 4.9% were relatively unchanged from the first six months of
fiscal 2012. The utilization of cash to invest in leases brought average cash
and investment balances down 27% to $118 million and increased the average
yield by 26 basis points to 2.30% for the six months ended December 31, 2012.
For the six months ended December 31, 2012, interest expense on deposits and
borrowings decreased by $516,000 or 30.5% to $1.2 million, reflecting a 31
basis point decrease in average rates paid on average balances that decreased
by 6% to $261.6 million. For the first six months of fiscal 2013, the Company
recorded a provision for credit losses of $275,000, compared to no provision
recorded in fiscal 2012. The provision during the first six months of fiscal
2013 was due to deterioration in the credit of one large lease position during
the first quarter and is consistent with the 11% growth in the lease and loan
portfolio during the period.

Total non-interest income of $2.2 million for the first six months of fiscal
2013 was down 30% from $3.2 million during the comparable period of fiscal
2012. Fiscal 2012 non-interest income included the contribution of $1.8
million of income realized from leases that extended as compared to the first
six months of fiscal 2013 that included comparable income of $994,000. The
decrease in non-interest income is also attributed to lower income realized
from the sale of property on leases reaching the end of term during the
period.

During the second quarter of fiscal 2013, CalFirst Bancorp’s non-interest
expense of $2.9 million was 7% lower than the prior year, while non-interest
expense of $5.9 million for the first six months of fiscal 2013 was down 5%
from $6.2 million for the first six months of fiscal 2012. The decrease in
expenses during both periods is due primarily to lower compensation expenses
and related support costs.

Commenting on the results, Patrick E. Paddon, President and Chief Executive
Officer, indicated, “During the first six months of fiscal 2013, we saw
improvement in the level of new lease and loan originations which contributed
in part to a 35% increase in bookings during the second quarter and first six
months. Lease and loan bookings of $69.3 million during the second quarter of
fiscal 2013 included $34.4 million of direct leases, $17.9 million of lease
purchases, compared to $7.8 million of lease purchases during the second
quarter of fiscal 2012, and $16.9 million of new commercial loans. For the six
months ended December 31, 2012, total bookings of $130.0 million included a
14% increase in lease bookings to $103.7 million, consisting of the $17.9
million of lease purchases and 9.5% increase in direct leases to $85.7
million, and the addition of $26.4 million in commercial loan participations.
As a result, the net investment in leases and loans of $372.7 million at
December 31, 2012 is up 11% from June 30, 2012 and is 14% higher than the
level at December 31, 2011.

“Second quarter direct lease originations were 83% above the second quarter of
fiscal 2012 and total lease and loan originations were up 156%. For the first
six months of fiscal 2013, direct lease originations were up 44% and total
originations were up 79%. The estimated backlog of approved lease and loan
commitments of $137 million at December 31, 2012 is 50% above the level at the
end of the second quarter of fiscal 2012 and maintained at the level at June
30, 2012. We continue to focus efforts on direct and third party lease and
loan activities, and believe we are seeing progress.”

California First National Bancorp is a bank holding company with leasing and
bank operations based in Orange County, California. California First National
Bank is an FDIC-insured national bank that gathers deposits from a centralized
location by posting rates on the Internet, and provides lease financing and
commercial loans to businesses and organizations nationwide.

This press release contains forward-looking statements, which involve
management assumptions, risks and uncertainties. The statements in this press
release that are not strictly historical in nature constitute “forward-looking
statements.” Such statements include expectations regarding growth in direct
finance income and lease and loan bookings. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could
cause actual results to be different from the results expressed or implied by
such forward-looking statements. Consequently, if such management assumptions
prove to be incorrect or such risks or uncertainties materialize, the
Company’s actual results could differ materially from the results forecast in
the forward-looking statements. All forward-looking statements are qualified
in their entirety by this cautionary statement, and the Company undertakes no
obligation to revise or update this press release to reflect events or
circumstances arising after the date hereof. For further discussion regarding
management assumptions, risks and uncertainties, readers should refer to the
Company’s 2012 Annual Report on Form 10-K and the 2013 quarterly reports on
Form 10-Q.

CALIFORNIA FIRST NATIONAL BANCORP
                                                    
Consolidated Statements of Earnings

(000's except per share data)
                                                         
                               Three Months Ended        Six Months Ended
                               December 31,              December 31,
                               2012       2011         2012       2011
                                                                      
Direct finance and loan        $ 4,583      $ 5,118      $ 9,288      $ 10,403
income
Investment and interest         667         807         1,355       1,645
income
Total direct finance, loan       5,250        5,925        10,643       12,047
and interest income
                                                                      
Interest expense on             603         808         1,173       1,689
deposits and borrowings
                                                                      
Net direct finance, loan         4,647        5,117        9,470        10,358
and interest income
Provision for credit            -           -           275         -
losses
Net direct finance, loan
and interest income,
after provision for credit       4,647        5,117        9,195        10,358
losses
                                                                      
Non-interest income
Operating and sales-type         450          349          994          1,776
lease income
Gain on sale of leases and       662          795          976          1,115
leased property
Gains (losses) recorded on       14           56           14           56
investment securities
Other fee income - net          122         113         243         219
Total non-interest income        1,248        1,313        2,226        3,165
                                                                      
Non-interest expenses
Compensation and employee        2,091        2,272        4,330        4,500
benefits
Occupancy                        237          239          471          478
Professional services            165          124          320          272
Other general and               398         471         785         936
administrative
Total non-interest               2,890        3,106        5,906        6,186
expenses
                                                                      
Earnings before income           3,005        3,325        5,515        7,337
taxes
                                                                      
Income taxes                    1,195       1,263       2,167       2,788
                                                                      
Net earnings                   $ 1,810      $ 2,062      $ 3,347      $ 4,549
                                                                      
Basic earnings per share       $ 0.17       $ 0.20       $ 0.32       $ 0.44
Diluted earnings per share     $ 0.17       $ 0.20       $ 0.32       $ 0.44
                                                                      
Weighted average common          10,447       10,420       10,445       10,419
shares outstanding
Diluted number of common         10,455       10,431       10,453       10,429
shares outstanding
                                                                        

CALIFORNIA FIRST NATIONAL BANCORP
                                                            
Consolidated Balance Sheets

(000’s)
                                                                 
                                                                 
ASSETS                                     December 31, 2012     June 30, 2012
                                                                 
Cash and short term investments            $      54,024         $    56,921
Investment securities                             59,661              66,751
Net receivables                                   1,518               1,597
Property for transactions in process              18,271              18,548
Net investment in leases                          281,053             253,553
Commercial loans                                  91,632              82,910
Income tax receivable                             148                 880
Other assets                                      1,583               1,736
Discounted lease rentals assigned to             1,333              3,275
lenders
                                          $      509,223        $    486,171
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                           $      2,292          $    4,386
Income taxes payable, including                   18,483              24,060
deferred taxes
Deposits                                          305,154             253,297
Other liabilities                                 4,571               4,714
Non-recourse debt                                1,333              3,275
Total liabilities                                 331,833             289,732
Stockholders' Equity                             177,390            196,439
                                          $      509,223        $    486,171

Contact:

California First National Bancorp
R. Hodgson
(949) 255-0500
bhodgson@calfirstbancorp.com
 
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