CFNB First Quarter Earnings Down 38% on Lower Non-Interest and Lease Income

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CFNB First Quarter Earnings Down 38% on Lower Non-Interest and Lease Income

IRVINE, Calif.--(BUSINESS WIRE)-- California First National Bancorp (NAS: CFNB)  ("CalFirst Bancorp" or the "Company") today announced net earnings of $1.5 million for the first quarter ended September 30, 2012, down 38% from $2.5 million earned during the first quarter of fiscal 2012. Diluted earnings per share for the first quarter were $0.15 as compared to $0.24 per share reported for the same period of the prior year.


The decrease in net earnings from the first quarter of the prior year is largely due to a $772,000 decrease in income realized on the investment in residuals coming to end of term during the period and a 13% decrease in net interest income after provision for credit losses.

Total direct finance, loan and interest income for the first quarter ending September 30, 2012 decreased 12% to $5.4 million, compared to $6.1 million for the first quarter of fiscal 2012. This decrease includes a $488,000, or 12%, decrease in direct finance income due to a 165 basis point decline in the average yield earned that offset a 13% increase in the average investment in leases to $252.5 million. Commercial loan income decreased by $92,000 as the average yield declined 36 basis points on an average balance that was down 1% to $86.9 million. The average yield on all leases and loans held in the Company's portfolio decreased 126 basis points to 5.55%. The average yield on cash and investments of 2.3% was up 32 basis points from the first quarter of fiscal 2012 as average cash balances were reduced by 46% to $54.0 million and produced an 18% decrease in investment income to $688,000. Interest expense paid decreased 35% due to a 35 basis point decline in average rate paid to 0.91% and an 11% decrease in the average balance of deposits to $250.5 million. The Company made a $275,000 provision for credit losses for the first quarter of fiscal 2013, compared to no provision for the prior quarter ending September 30, 2011. The provision related to growth in both the lease and loan portfolios and the deterioration in the credit of one large lease position. As a result of the foregoing, net direct finance, loan and interest income after provision for credit losses decreased by $693,000, or 13%, to $4.5 million.

Non-interest income for the first quarter of fiscal 2013 decreased by 47% to $978,000 from $1.9 million in the first quarter of the prior year, primarily due to lower income realized on leases reaching the end of term. The first quarter of fiscal 2012 included the contribution of one significant sales type lease that boosted non-interest income in that period by 92%.

During the first quarter of fiscal 2013, CalFirst Bancorp's non-interest expenses decreased 2% to $3.0 million, compared to $3.1 million during the first quarter of fiscal 2012. The decrease in expenses reflected slightly lower operating expenses.

Commenting on the results, Patrick E. Paddon, President and Chief Executive Officer, indicated, "Lower yields on interest earning assets continue to hamper our ability to increase profitability in line with asset growth. First quarter lease bookings of $51.2 million were up 29% from the first quarter of fiscal 2012, while commercial loan bookings of $9.5 million were up from $5.2 million in the prior year. Total first quarter loan and lease bookings increased by 35% to $60.7 million, and contributed to a 4% growth in the net investment in leases and loans from June 30 to $349.5 million at September 30, 2012, which was 12% above the level at September 30, 2011. For the first quarter of fiscal 2013, new lease and loan originations were 9% lower than during the first quarter of fiscal 2012, As a result, the backlog of approved lease and loan commitments of $112 million was 1% below the level of a year ago."

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.

CALIFORNIA FIRST NATIONAL BANCORP

 

Consolidated Statements of Earnings

(000's except per share data)

      
Three Months Ended
September 30,
 2012       2011
 
Direct finance and loan income$4,706$5,285
Investment and interest income 688 838
Total direct finance, loan and interest income5,3946,123
 
Interest expense on deposits and borrowings 571 882
 
Net direct finance, loan and interest income4,8235,241
Provision for credit losses 275 -
Net direct finance, loan and interest Income after

provision for credit losses

4,548

5,241

 

Non-interest income

Operating and sales-type lease income5441,426
Gain on sale of leases and leased property313320
Gains (losses) recorded on investment securities--
Other fee income - net 121 106
Total non-interest income 978 1,852
 

Non-interest expenses

Compensation and employee benefits2,2402,229
Occupancy234239
Professional services155147
Other general and administrative 387 465
Total non-interest expenses 3,016 3,080
 
Earnings before income taxes2,5104,013
Income taxes 972 1,525
Net earnings$1,538$2,488
 
Basic earnings per share$0.15$0.24
Diluted earnings per share$0.15$0.24
 
Weighted average common shares outstanding10,44410,418
Diluted number of common shares outstanding10,45110,428
 

CALIFORNIA FIRST NATIONAL BANCORP

 

Consolidated Balance Sheets

(000's)

          
ASSETSSeptember 30, 2012June 30, 2012
 

Cash and short term investments

$

45,490

$

56,921

Investment securities

65,334

66,751

Net receivables

4,737

1,597

Property for transactions in process

18,874

18,548

Net investment in leases

263,643

253,553

Commercial loans

85,838

82,910

Income tax receivable

199

880

Other assets

1,549

1,736

Discounted lease rentals assigned to lenders

 

2,432

 

3,275

 

$

488,096

$

486,171

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

$

3,354

$

4,386

Income taxes payable, including deferred taxes

24,075

24,060

Deposits

254,106

253,297

Other liabilities

5,361

4,714

Non-recourse debt

 

2,432

 

3,275

Total liabilities

289,328

289,732

Stockholders' Equity

 

198,768

 

196,439

 

$

488,096

$

486,171



California First National Bancorp
Robert Hodgson, 949-255-0500
bhodgson@calfirstbancorp.com

KEYWORDS:   United States  North America  California

INDUSTRY KEYWORDS:

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