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CalFirst Bancorp Third Quarter Earnings Flat on 13% Growth in Average Earning Assets



  CalFirst Bancorp Third Quarter Earnings Flat on 13% Growth in Average
  Earning Assets

Business Wire

IRVINE, Calif. -- April 24, 2013

California First National Bancorp (NASDAQ: CFNB) (“CalFirst Bancorp”) today
announced net earnings for the third quarter ended March 31, 2013 of $2.1
million that were unchanged from net earnings of $2.1 million for the third
quarter of fiscal 2012. For the nine months ended March 31, 2013, net earnings
of $5.4 million were 18.3% below the $6.7 million reported for the first nine
months of fiscal 2012. Diluted earnings per share for the third quarters of
fiscal 2013 and 2012 were $0.20 per share, while diluted earnings per share
for the first nine months of fiscal 2013 of $0.52 were 18.5% below the $0.64
per share reported for the same period of the prior fiscal year.

Third quarter results benefited from 22% growth in the average investment in
the lease and loan portfolio and 25% increase in non-interest income, but were
impeded by the continued drop in average yields earned.

Total direct finance, loan and interest income for the third quarter of fiscal
2013 decreased 5.5% to $5.4 million from $5.8 million during the third quarter
of the prior year. The decrease was primarily due to a 6% decrease in direct
finance income and 24% decrease in investment income, offset by 10% growth in
commercial loan income. The $239,000 decrease in direct finance income
reflected a 24% increase in the average investment in leases to $302.0
million, but the average yield declined by 160 basis points to 4.97%.
Commercial loan income increased by $99,000 as the average yield declined by
only 23 basis points to 4.56% and average balances increased by 15% to $98.0
million. Investment income declined by $180,000 as average investment balances
were down 12% to $106.1 million and average yields were reduced by 34 basis
points. During the third quarter of fiscal 2013, interest expense on deposits
increased by $71,000, reflecting a 26% increase in average deposit balances to
$318.2 million offset by a 12 basis point decrease in average interest rates
paid to 0.89%. The Company did not record an allowance for credit losses for
the third quarter of fiscal 2013 or fiscal 2012. The lack of provision in 2013
is due to an improvement in the credit metrics of the portfolios, as the
growth is largely related to better rated credits and certain problem credits
are getting resolved. All of these factors combined for a 7.6% decrease in net
direct finance, loan and interest income after provision for credit losses to
$4.7 million.

Non-interest income for the third quarter of fiscal 2013 increased to $1.8
million from $1.4 million the year before. This increase was principally due
to a gain of $302,000 recognized on the early call of an investment security
in the current period, and also included higher gains from the sale of leases
and leased property.

Total direct finance, loan and interest income for the first nine months of
fiscal 2013 decreased 10% to $16.1 million due to a $1.4 million decrease in
direct finance income and $468,800 decrease in investment income, offset
slightly by a $103,700 increase in commercial loan income. During the first
nine months of fiscal 2013, the average investment in leases increased 19% to
$276.9 million while the average yield earned decreased by 176 basis points to
5.24%. Average commercial loan balances of $91.7 million increased 6% while
the average yield of 4.8% was only down by 12 basis points. The 20% decline in
investment income to $1.9 million for the first nine months of fiscal 2013
reflects the utilization of cash to invest in leases which brought average
cash and investment balances down 23% to $114 million and increased the
average yield by 11 basis points to 2.26%. Interest expense paid for the nine
months ended March 31, 2013 decreased by $444,300 to $1.9 million, reflecting
a 5% increase in average deposit balances, elimination of borrowings and a 24
basis point decrease in average rates paid to 0.90%. During the first nine
months of fiscal 2013, the Company made a provision for credit losses of
$275,000, compared to no provision during the same period in fiscal 2012. The
provision during the first nine months of fiscal 2013 was due to deterioration
in the credit of one large lease position during the first quarter of fiscal
2013. At March 31, 2013, the allowance for credit losses of $5.5 million is
considered consistent with the credit profile of the consolidated portfolio.
All of these factors combined for a 10% decrease in the net interest margin.

Non-interest income of $4.0 million for the first nine months of fiscal 2013
declined 13% from $4.6 million in the first nine months of fiscal 2012. The
decline was due to a 19% fall in income realized from leases reaching their
end of term during the period, offset by an increase of $321,000 in gains
realized on the early call of investment securities and sale of leases.

Non-interest expenses for the third quarter of fiscal 2013 of $3.1 million
were $12,000 below the third quarter of the prior year, while non-interest
expenses for the first nine months of fiscal 2013 decreased $291,000 or 3% to
$9.0 million from $9.3 million reported for the first nine months of the prior
year. The decrease in expenses during the first nine months of fiscal 2013 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 nine months of fiscal 2013, we saw
continued improvement in the level of new lease and loan originations which
contributed in part to a 166% increase in bookings during the third quarter
and 73% increase for nine months. Despite the growth in earning assets,
earnings continued to be restricted by lower net interest margins. Lease and
loan bookings of $102.3 million during the third quarter of fiscal 2013
included $72.9 million of direct leases and $20.0 million of direct loans.
Lease purchases of $9.4 million during the third quarter of fiscal 2013
compared to $10.6 million of lease purchases during the third quarter of
fiscal 2012. For the nine months ended March 31, 2013, total bookings of
$232.4 million included a 45% increase in lease bookings to $186.0 million,
consisting of $27.4 million of lease purchases, a 51% increase in direct
leases to $158.6 million, and the addition of $46.4 million in commercial
loans. As a result, the net investment in leases and loans of $426.9 million
at March 31, 2013 is up 27% from June 30, 2012 and is 15% higher than the
level at December 31, 2012.

“Third quarter lease originations were 31% below the third quarter of fiscal
2012, but total lease and loan originations during the quarter were up 12%.
For the first nine months of fiscal 2013, lease originations were 31% ahead of
the prior year while total lease and loan originations were up 61%. With the
high level of bookings during the third quarter, however, the estimated
backlog of approved lease and loan commitments of $100 million at March 31,
2013 is 10% below the level at the end of the third quarter of fiscal 2012 and
down from $137 million at December 31, 2012.”

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 using telephone,
the Internet, and direct mail from a centralized location, 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.” If management assumptions prove to be incorrect or 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 (unaudited)

(000's except per share data)
                                                        
                     Three Months Ended                Nine Months Ended
                     March 31,                         March 31,
                     2013           2012               2013           2012
                                                                       
Direct finance
and loan             $ 4,872        $ 5,011            $ 14,160       $ 15,415
income
Investment and
interest               570            750                1,926          2,394
income
Total direct
finance, loan          5,442          5,761              16,086         17,809
and interest
income
                                                                       
Interest
expense on             707            636                1,881          2,326
deposits and
borrowings
                                                                       
Net direct
finance, loan          4,735          5,125              14,205         15,483
and interest
income
Provision for          -              -                  275            -
credit losses
Net direct
finance, loan
and interest           4,735          5,125              13,930         15,483
income after
provision for
credit losses
                                                                       
Non-interest
income
Operating and
sales-type             357            602                1,351          2,378
lease income
Gain on sale
of leases,
loans and              999            545                1,974          1,660
leased
property
Gains recorded
on investment          302            -                  316            56
securities
Other fee              96             252                339            470
income – net
Total
non-interest           1,754          1,399              3,980          4,564
income
                                                                       
Non-interest
expenses
Compensation
and employee           2,259          2,236              6,590          6,736
benefits
Occupancy              224            224                695            702
Professional           163            148                484            420
services
Other general
and                    449            499                1,233          1,435
administrative
Total
non-interest           3,095          3,107              9,002          9,293
expenses
                                                                       
Earnings
before income          3,394          3,417              8,908          10,754
taxes
                                                                       
Income taxes           1,293          1,299              3,460          4,087
                                                                       
Net earnings         $ 2,101        $ 2,118            $ 5,448        $ 6,667
                                                                       
Basic earnings       $ 0.20         $ 0.20             $ 0.52         $ 0.64
per share
Diluted
earnings per         $ 0.20         $ 0.20             $ 0.52         $ 0.64
share
                                                                       
Weighted
average common         10,447         10,420             10,446         10,419
shares
outstanding
Diluted number
of common              10,454         10,430             10,453         10,429
shares
outstanding
                                                                         
                                                                         

                                                                
CALIFORNIA FIRST NATIONAL BANCORP

Consolidated Balance Sheets

(000’s)
                                                                  
ASSETS                        March 31, 2013                     June 30, 2012
                                                                  
Cash and short term           $    58,471                        $    56,921
investments
Investment securities              53,866                             66,751
Net receivables                    1,405                              1,597
Property for                       11,661                             18,548
transactions in process
Net investment in                  322,583                            253,553
leases
Commercial loans                   104,363                            82,910
Income tax receivable              685                                880
Other assets                       1,522                              1,736
Discounted lease
rentals assigned to                1,042                              3,275
lenders
                              $    555,598                       $    486,171
                                                                       
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable              $    9,530                         $    4,386
Income taxes payable,
including deferred                 18,241                             24,060
taxes
Deposits                           343,327                            253,297
Other liabilities                  4,239                              4,714
Non-recourse debt                  1,042                              3,275
Total liabilities                  376,379                            289,732
Stockholders' Equity               179,219                            196,439
                              $    555,598                       $    486,171

Contact:

CalFirst Bancorp
S. Leslie Jewett, (949) 255-0500
ljewett@calfirstbancorp.com
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