CFNB Reports Lower Fourth Quarter Earnings on 28% Growth in Average Lease and Loan Portfolio

  CFNB Reports Lower Fourth Quarter Earnings on 28% Growth in Average Lease
  and Loan Portfolio

Business Wire

IRVINE, Calif. -- July 31, 2013

California First National Bancorp (NASDAQ: CFNB)("CalFirst Bancorp") today
announced that net earnings for the fourth quarter ended June 30, 2013 of $1.9
million were down 15% from net earnings of $2.2 million for the fourth quarter
of fiscal 2012. For the fiscal year ended June 30, 2013, net earnings of $7.4
million were 17% below the $8.9 million reported for fiscal 2012. Diluted
earnings per share for the fourth quarter of 2013 of $0.18 per share were 15%
below the $0.21 per share for the fourth quarter of the prior year, while
diluted earnings per share of $0.70 for fiscal 2013 were 18% below the $0.85
per share reported for the prior year.

The decline in net income in fiscal 2013 is largely due to lower net direct
finance and investment income as yields on earning assets continued to decline
due to the low interest rate and competitive pricing environment. Results are
also buffeted by lower non-interest income. Fourth quarter net income
benefited from a 32% reduction in the provision for income taxes related to a
reduction in the estimated tax rate for fiscal 2013.

Total direct finance, loan and interest income for the fourth quarter of
fiscal 2013 decreased 9% to $5.3 million from $5.8 million for the fourth
quarter of fiscal 2012. The decrease includes a $222,000, or 6%, decrease in
direct finance income and a $255,000 decrease in investment income. The
decrease in direct finance income related to a decline of 183 basis points in
the average yield earned that offset a 33% increase in the average investment
in leases to $332.4 million. The average investment in commercial loans of
$95.3 million for the fourth quarter of fiscal 2013 was up 14% from the prior
year, while the average yield dropped 82 basis points. Combined, the average
yield earned on leases and loans during the quarter decreased by 158 basis
points to 4.52%, while the average yield earned on average investment balances
of $117.4 million decreased by 80 basis points to 1.65%. During the fourth
quarter of fiscal 2013, interest expense on deposits of $783,000 was up 33%
from the prior year due to a 40% increase in average balances to $348.8
million and only a 5 basis points drop in average rates paid to 0.90%. The
Company did not make a provision for credit losses during the fourth quarter
of fiscal 2013 as the Company saw positive resolution of certain problem
credits and the loan portfolio declined by 29% during the quarter due to a
number of loan payoffs. As a result of the foregoing, net direct finance, loan
and interest income after provision for credit losses during the fourth
quarter of fiscal 2013 decreased 13.5% to $4.5 million, compared to $5.2
million for the fourth quarter of fiscal 2012.

For the fourth quarter ended June 30, 2013, non-interest income of $851,000
fell by 34% from $1.3 million for the fourth quarter of the prior year. This
decrease was primarily due to a $406,000 decrease in gains from the sale of
leased property and $107,000 decrease in gain on sale of leases.

For the year ended June 30, 2013, total direct finance, loan and interest
income decreased 9.5% to $21.4 million, compared to $23.6 million in fiscal
2012. This decline was primarily due to a $1.6 million, or 9.8%, decrease in
direct finance income and $724,000, or 23%, decline in investment income. The
drop in direct finance income included a 22% increase in the average
investment in leases to $290.5 million, but the average yield declined by 180
basis points to 5.02%. Commercial loan income increased by $70,000 as average
balances for the year were up 7% to $91.9 million while the average yield
declined by 25 basis points to 4.80%. Combined, the average yield on leases
and loans held in the Company’s own portfolio decreased by 138 basis points in
fiscal 2013 to 4.97%. The decline in investment income was largely due to a
20% decline in average investment balances to $114.8 million as average yields
earned only dropped by 10 basis points to 2.10%. For the year ended June 30,
2013, interest expense on deposits decreased by $250,000 to $2.7 million,
reflecting an 11% increase in average balances to $297.0 million offset by a
20 basis point decline in average rates paid. During fiscal 2013, the Company
made a provision for credit losses of $275,000, compared to no provision in
fiscal 2012. The provision in fiscal 2013 was made during the first quarter
due to deterioration in the credit of one large lease position at that time.
All of the above factors contributed to an 11% decrease in net direct finance,
loan and interest income after provision for credit losses in fiscal 2013 to
$18.5 million from $20.7 million in fiscal 2012.

For fiscal 2013, non-interest income of $4.8 million was down 17.5% from $5.9
million in fiscal 2012. The decline was largely due to a $1.0 million fall in
income from the re-lease of property on leases reaching the end of term during
the period and lower gains from the sale of leased property, offset in part by
an increase of $260,000 in gains realized on the early call of investment
securities.

CalFirst Bancorp’s non-interest expenses of $2.6 million for the fourth
quarter of fiscal 2013 were 13% below the fourth quarter of fiscal 2012, while
non-interest expenses of $11.6 million for fiscal 2013 were down 6% from $12.3
million reported for the prior year. The decrease in expenses is due primarily
to lower compensation expenses and related support costs.

Commenting on the results, Patrick E. Paddon, President and Chief Executive
Officer, indicated, "CalFirst Bancorp’s fiscal 2013 results reflect the impact
of lower yields earned on leases, loans and investments but also show the
benefit of efforts to increase production while controlling costs and
producing a well performing portfolio. Fourth quarter lease bookings of $57.2
million were up 26% from the prior year. Lease transactions booked for the
year of $243.2 million were up 40% from the prior year, with 79% originated
directly. Total commercial loans booked of $50 million in fiscal 2013 were up
from $6.1 million booked in fiscal 2012, producing total loan and lease
bookings in fiscal 2013 of $293.2 million, up 63% from fiscal 2012. As a
result, the net investment in leases of $342.6 million at June 30, 2013 is 35%
above the level at June 30, 2012. Due to loan payoffs and refinancing that
offset new loan bookings, the commercial loan portfolio of $74.0 million is
down 11%, resulting in an overall 24% increase in the total lease and loan
portfolio to $416.6 million at June 30, 2013. Despite the growth,
non-performing and substandard assets declined by $1.3 million and were less
than 2% of the net investment at June 30, 2013.

"Total lease and loan originations during the fourth quarter of fiscal 2013
were 7% below the fourth quarter of fiscal 2012, but for the year, 2013
originations of $292 million were 40% ahead of the prior year. The estimated
backlog of approved lease and loan commitments of $109.7 million at June 30,
2013 is down 20% from $136.7 million at June 30, 2012. With our backlog and
pending transactions in our pipeline, we are optimistic that growth in earning
assets will continue into fiscal 2014, while market conditions may help stem
the erosion in our net interest margins. During the first quarter, the Company
will move its headquarters, a step that offers the opportunity to
substantially lower our occupancy expenses and help improve profitability. At
June 30, 2013, CalFirst Bancorp’s net worth stood at $180.9 million, and it
remains very well capitalized with a tier-1 capital ratio of 35% that
continues to offer substantial support for growth."

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
through a centralized marketing program designed to offer cost-effective
alternatives.

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 the Company's
expected growth in assets, estimated bookings, operating expenses and the
impact of general economic conditions and interest rates on our earnings. 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. 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                Years Ended
                     June 30,                          June 30,
                     2013        2012               2013        2012
                                                                      
Direct finance
and loan             $ 4,835        $ 5,091            $ 18,995       $ 20,505
income
Investment and
interest              483           738               2,408         3,133
income
Total direct
finance, loan          5,318          5,829              21,403         23,638
and interest
income
Interest
expense on            783           589               2,664         2,914
deposits and
borrowings
Net direct
finance, loan          4,535          5,241              18,739         20,724
and interest
income
Provision for         -             -                 275           -
credit losses
Net direct
finance, loan
and interest           4,535          5,241              18,464         20,724
income after
provision for
credit losses
                                                                      
Non-interest
income
Operating and
sales-type             360            378                1,711          2,755
lease income
Gain on sale
of leases,
loans and              304            818                2,278          2,478
leased
property
Gains recorded
on investment          -              -                  316            56
securities
Other fee             187           98                526           569
income – net
Total
non-interest           851            1,294              4,831          5,858
income
                                                                      
Non-interest
expenses
Compensation
and employee           1,915          2,301              8,505          9,037
benefits
Occupancy              227            234                922            936
Professional           102            158                585            578
services
Other general
and                   365           321               1,598         1,756
administrative
Total
non-interest          2,609         3,014             11,610        12,307
expenses
                                                                      
Earnings
before income          2,777          3,521              11,685         14,275
taxes
                                                                      
Income taxes          871           1,285             4,331         5,372
                                                                      
Net earnings         $ 1,906        $ 2,236            $ 7,354        $ 8,903
                                                                      
Basic earnings       $ 0.18         $ 0.21             $ 0.70         $ 0.85
per share
Diluted
earnings per         $ 0.18         $ 0.21             $ 0.70         $ 0.85
share
                                                                      
Weighted
average common         10,447         10,421             10,446         10,420
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                             June 30, 2013                 June 30, 2012
Cash and short term                $    75,469                   $    56,921
investments
Investment securities                   48,162                        66,751
Net receivables                         1,395                         1,597
Property for transactions in            11,927                        18,548
process
Net investment in leases                342,589                       253,553
Commercial loans                        73,980                        82,910
Income tax receivable                   3,301                         880
Other assets                            1,312                         1,736
Discounted lease rentals               768                          3,275
assigned to lenders
                                  $    558,903                  $    486,171
                                                                      
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable                   $    8,849                    $    4,386
Income taxes payable,                   18,575                        24,060
including deferred taxes
Deposits                                346,028                       253,297
Other liabilities                       3,804                         4,714
Non-recourse debt                      768                          3,275
Total liabilities                       378,024                       289,732
Stockholders' equity                   180,880                      196,439
                                   $    558,903                  $    486,171

Contact:

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