Board Declares 2015 Annual Dividend of $0.44
Per Share
California First National Bancorp (NASDAQ: CFNB) (“CalFirst Bancorp” or
the “Company”) today announced net earnings of $1.7 million for the
first quarter ended September 30, 2015, down 30% from $2.5 million
earned during the first quarter of fiscal 2015. Diluted earnings per
share for the first quarter of fiscal 2016 of $0.16 were also down 30%
from $0.24 per share reported for the same period of the prior year.
2016 First Quarter Highlights
-
New loan bookings of $66 million were up 160% from prior year,
boosting loan portfolio to $281 million at September 30, 2015, up 15%
from June 30, 2015 and 81% from September 30, 2014.
-
Total assets reach $760 million at September 30, 2015, up 23% from
September 30, 2014 and 4% from June 30, 2015.
-
Total interest income for the first quarter increased 19%, driven by
loan growth.
-
2016 first quarter net income declined due to 65% drop in non-interest
income related to lower income from leases reaching the end of term
during the quarter.
-
Non-performing assets increased to 0.36% of total assets at September
30, 2015 from less than 0.01% maintained for the three years through
June 30, 2015.
-
Capital remains strong, with Tier 1 common equity ratio of 28.0%.
Commenting on the results, Patrick E. Paddon, President and Chief
Executive Officer, indicated, “During the first quarter, CalFirst
continued to benefit from higher income from commercial loans and took
advantage of opportunities in the market to further expand the
portfolio. The current environment continues to challenge the
origination of leases comparable in risk and return to loans, and we are
fortunate in our ability to focus on the most attractive alternatives at
any point in time. As interest rates remain historically low, increased
funding costs have pinched net interest margins but we were still able
to increase net interest income by 13% and lower our non-interest costs
by 5%.
“California First National Bank now represents 93% of the Company’s
assets and 100% of all loan and lease originations. Given the
significance of the Bank within our Company, we have reorganized
management and I will assume responsibility as Chief Executive Officer
and President of CalFirst Bank, in line with my role at the Company.
Leslie Jewett, who has served as President of the Bank since 2011, will
assume responsibility as Chief Financial Officer of the Bank in addition
to her position as Chief Financial Officer of the Company. These changes
were approved by the Boards of both organizations at the Board meeting
Thursday, October 29, 2015.
“At the meeting, the Board of Directors of the Company also approved the
payment of an annual dividend in the amount of $0.44 per share to be
paid on December 15, 2015 to shareholders of record on December 1, 2015.
The Board will continue to review its dividend policy on an ongoing
basis, and the decision to pay dividends in future periods will depend
on a variety of factors, including the business, economic and tax
environment.”
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Selected Interest-Earning Asset and
Interest-Bearing Liability Data
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Quarter Ending
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Quarter Ending
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September 30, 2015
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September 30, 2014
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(dollars in thousands)
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Average
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Yield/
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Average
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Yield/
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Balance
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Rate
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Balance
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Rate
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Interest-earning assets
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Interest-earning deposits
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$
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69,771
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0.18
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%
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$
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51,003
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0.20
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%
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Investment securities
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80,852
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2.19
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%
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40,377
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2.83
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%
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Commercial loans
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258,882
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3.58
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%
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137,676
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3.61
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%
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Net investment in leases
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285,329
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4.85
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%
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316,662
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4.68
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%
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Total interest-earning assets
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$
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694,834
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3.60
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%
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$
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545,718
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3.85
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%
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Interest-bearing liabilities
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Deposits
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$
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481,858
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1.04
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%
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$
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369,871
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0.92
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%
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Borrowings
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42,000
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0.35
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%
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6,858
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0.27
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%
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Total interest-bearing liabilities
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$
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523,858
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0.99
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%
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$
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376,729
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0.91
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%
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Net interest spread (1)
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2.61
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%
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2.94
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%
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Net interest margin (2)
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2.85
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%
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3.22
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%
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1)
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Net interest spread is equal to the difference between average yield
on interest-earning assets and average rate paid on interest-bearing
liabilities.
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2)
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Net interest margin represents net finance income as a percent of
average interest-earnings assets.
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Net Interest Income
Total interest income for the first quarter ending September 30, 2015
increased 19% to $6.3 million from $5.3 million for the first quarter of
fiscal 2015. This increase includes a $1.1 million, or 87%, increase in
commercial loan income and $161,700 increase in investment income,
offset by $243,800 decrease in finance income.
-
The growth in commercial loan income reflected an 88% increase in
average loan balances to $258.9 million from $137.7 million for the
same period of the prior year, while the average yield declined only 3
basis points to 3.58%.
-
The decrease in finance income was due to a 10% decrease in average
lease balances to $285.3 million that offset a 17 basis point
improvement in the average yield.
-
The average yield on the combined lease and loan portfolio declined by
11 basis points during the first quarter of fiscal 2016 to 4.25% on an
average portfolio that increased 20% to $544.2 million.
-
Finance income during the first quarter of the prior year benefited
from the early termination of several leases that boosted the yield.
Excluding the accelerated finance income from last year’s results, the
average yield on leases and loans in the first quarter of fiscal 2015
would have been 4.03%, 22 basis points below the average yield earned
in the first quarter of fiscal 2016.
-
For the first quarter of fiscal 2016, the average yield on cash and
investments of 1.26% was down 11 basis points from the first quarter
of fiscal 2015 as average investment balances increased over 100% to
$80.9 million, but at average yields that declined 65 basis points to
2.19%, and average cash balances increased 36.8% to $69.8 million,
with an average yield down 2 basis points.
During the first quarter of fiscal 2016, interest expense paid increased
51% to $1.3 million from $858,000, reflecting a 39% increase in the
average balance of deposits and borrowings to $523.9 million from $376.7
million and 8 basis point increase in average rate paid to 0.99%. The
increased interest cost is largely due to a 12 basis point increase in
average cost of deposits to 1.04% on a $112 million increase in average
deposits, with the total funding cost increase tempered by a $35 million
increase in average borrowings at an average rate of 0.35%.
The Company made a $500,000 provision for credit losses during the first
quarter of fiscal 2016, which compared to a $275,000 provision made
during the quarter ending September 30, 2014. The higher first quarter
2016 provision related to the deterioration in the outlook for one large
lease in bankruptcy, as well as growth in the loan portfolio since June
30, 2015. As a result of the foregoing, net interest income after
provision for credit losses increased 8% to $4.5 million from $4.1
million for the first quarter of the prior year.
Non-interest income
Total non-interest income for the first quarter of fiscal 2016 decreased
by 65% to $896,000 from $2.5 million in the first quarter of the prior
year, primarily due to a $1.8 million decrease in income realized on the
sale of leased property. The first quarter of 2015 included a gain of
$2.1 million from the sale of property on one large transaction reaching
the end of term during the quarter and accounted for 80.9% of
non-interest income for the period.
Non-interest Expenses
The Company’s non-interest expenses of $2.5 million reported for the
quarter ended September 30, 2015 declined by $141,000, or 5%, from $2.7
million in the first quarter of fiscal 2015. The decrease reflected
higher deferred origination expenses in the period compared to the prior
year, as current period costs otherwise were relatively unchanged.
Leases and Loans
First quarter 2016 loan bookings of $66.0 million increased 160%
from $25.4 million booked the prior year, while lease bookings of $25.6
million were down 61% from $65.5 million. Combined, total lease and loan
bookings of $91.7 million were up 1% from 2015 first quarter bookings of
$90.9 million.
The total lease and loan portfolio at September 30, 2015 increased 14%
to $552.1 million from $485.4 million at September 30, 2014, and 2% from
$541.8 million at June 30, 2015. Transactions in process increased 30%
to $40.8 million, and when including them, total lease and loan assets
increased 4% from June 30, 2015. During the first quarter, the credit of
a customer in bankruptcy deteriorated and the lease was placed on
non-accrual. As a result, non-performing assets increased to $2.8
million, from less than $50,000 at June 30, 2015.
2016 first quarter lease and loan originations were up 41% from
the first quarter of fiscal 2015, with the strength from loan
originations that more than doubled from the first and fourth quarters
of fiscal 2015. First quarter 2016 lease originations were down 24% from
the prior year first quarter. The estimated backlog of approved lease
and loan commitments of $126.4 million at September 30, 2015 is 10%
lower than at September 30, 2014, but up slightly from $125 million at
June 30, 2015.
Investment Securities
Investment securities of $79.6 million at September 30, 2015 are down 6%
from $84.5 million at June 30, 2015, but up 66% from $47.8 million at
September 30, 2014. The slight decline during the quarter related to the
maturity of a corporate bond.
California First National Bancorp is a bank holding company with lending
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.” Such statements include expectations
regarding backlog of lease and loan commitments and growth in interest
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 2015 Annual Report on Form 10-K.
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CALIFORNIA FIRST NATIONAL BANCORP
Consolidated Statements of Earnings
(000's except per share data)
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Three months ended
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September 30,
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Percent
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2015
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2014
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Change
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Finance and loan income
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$
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5,777
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$
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4,946
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16.8
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%
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Investment interest income
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473
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311
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52.1
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%
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Total interest income
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6,250
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5,257
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18.9
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%
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Interest expense on deposits and borrowings
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1,293
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|
858
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50.7
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%
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Net interest income
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4,957
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4,399
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12.7
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%
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Provision for credit losses
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500
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275
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81.8
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%
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Net interest income after provision for credit losses
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4,457
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|
4,124
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8.1
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%
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Non-interest income
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Operating and sales-type lease income
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143
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134
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6.7
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%
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Gain on sale of leases and leased property
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688
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2,360
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(70.8
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)%
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Gain on sale of investment securities
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23
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-
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n/a
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Other than temporary impairment loss
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-
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(91
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)
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n/a
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Other fee income
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42
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144
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(70.8
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)%
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Total non-interest income
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|
896
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|
2,547
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(64.8
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)%
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|
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Non-interest expenses
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|
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Compensation and employee benefits
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1,741
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1,926
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(9.6
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)%
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Occupancy
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169
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158
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7.0
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%
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Professional services
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184
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148
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24.3
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%
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Other
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437
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440
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(0.7
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)%
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Total non-interest expenses
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2,531
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|
2,672
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(5.3
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)%
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Earnings before income taxes
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2,822
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|
3,999
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(29.4
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)%
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Income taxes
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|
1,098
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|
1,540
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|
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(28.7
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)%
|
Net earnings
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|
$
|
1,724
|
|
|
|
$
|
2,459
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(29.9
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)%
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Basic earnings per common share
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$
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0.16
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$
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0.24
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(29.9
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)%
|
Diluted earnings per common share
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|
$
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0.16
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$
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0.24
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(29.9
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)%
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|
Weighted average common shares outstanding
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10,460
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10,460
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|
Diluted number of common shares outstanding
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|
10,460
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|
10,460
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CALIFORNIA FIRST NATIONAL BANCORP
Consolidated Balance Sheets
(000’s)
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September 30,
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June 30,
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Percent
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2015
|
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2015
|
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|
|
Change
|
ASSETS
|
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|
|
|
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|
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Cash and short term investments
|
|
|
|
$
|
71,908
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|
|
|
$
|
60,240
|
|
|
|
19.4
|
%
|
Investment securities
|
|
|
|
|
79,580
|
|
|
|
|
84,546
|
|
|
|
(5.9
|
)%
|
Net receivables
|
|
|
|
|
2,074
|
|
|
|
|
1,174
|
|
|
|
76.7
|
%
|
Property for transactions in process
|
|
|
|
|
40,795
|
|
|
|
|
31,340
|
|
|
|
30.2
|
%
|
Net investment in leases
|
|
|
|
|
271,419
|
|
|
|
|
298,324
|
|
|
|
(9.0
|
)%
|
Commercial loans
|
|
|
|
|
280,700
|
|
|
|
|
243,462
|
|
|
|
15.3
|
%
|
Income tax receivable
|
|
|
|
|
84
|
|
|
|
|
231
|
|
|
|
(63.6
|
)%
|
Other assets
|
|
|
|
|
4,557
|
|
|
|
|
1,564
|
|
|
|
191.4
|
%
|
Discounted lease rentals assigned to lenders
|
|
|
|
|
8,751
|
|
|
|
|
10,193
|
|
|
|
(14.1
|
)%
|
|
|
|
|
$
|
759,868
|
|
|
|
$
|
731,074
|
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
5,096
|
|
|
|
$
|
2,635
|
|
|
|
93.4
|
%
|
Income taxes payable, including deferred taxes
|
|
|
|
|
12,466
|
|
|
|
|
11,944
|
|
|
|
4.4
|
%
|
Deposits
|
|
|
|
|
497,277
|
|
|
|
|
471,906
|
|
|
|
5.4
|
%
|
Borrowings
|
|
|
|
|
42,000
|
|
|
|
|
42,000
|
|
|
|
0.0
|
%
|
Other liabilities
|
|
|
|
|
3,951
|
|
|
|
|
4,178
|
|
|
|
(5.4
|
)%
|
Non-recourse debt
|
|
|
|
|
8,751
|
|
|
|
|
10,193
|
|
|
|
(14.1
|
)%
|
Total liabilities
|
|
|
|
|
569,541
|
|
|
|
|
542,856
|
|
|
|
4.9
|
%
|
Stockholders' Equity
|
|
|
|
|
190,327
|
|
|
|
|
188,218
|
|
|
|
1.1
|
%
|
|
|
|
|
$
|
759,868
|
|
|
|
$
|
731,074
|
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151030005152/en/
Copyright Business Wire 2015