CFNB Announces 27% Increase in Fiscal 2006 Earnings; Qualified for Continued Listing on the Nasdaq Global Market.IRVINE Irvine, town, Scotland Irvine (ûr`vĭn), town (1991 pop. 32,507), North Ayrshire, SW Scotland, on the Irvine River estuary. Industries include iron and brass foundries. Other products are chemicals, electric goods, and clothing. , Calif. -- California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). First National Bancorp (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CFNB CFNB California First National Bancorp ) ("CalFirst Bancorp") today announced that for the fourth quarter ended June June: see month. 30, 2006, net earnings of $3.3 million increased 23% from net earnings of $2.7 million for the fourth quarter of fiscal 2005. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the fourth quarter of 2006 increased 21% to $0.28 per share, compared to $0.23 per share for the fourth quarter of the prior year. For the fiscal year ended June 30, 2006, net earnings of $10.7 million were up 27% from $8.4 million reported for fiscal 2005. Diluted earnings per share of $.94 for the fiscal year ended June 30, 2006, were up 26% from $0.74 per share reported for the prior year. As previously reported, during the third quarter of fiscal 2006, the company identified that certain lease extensions classified as sales-type leases Sales-type lease The leasing out of a firm's own equipment, such as a printing company leasing its own presses, thereby competing with an independent leasing company. should have been classified as operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. and determined it appropriate to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its financial statements for the years ending June 30, 2004 and 2005, and the first half of fiscal 2006. The effect of the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. on the company's previously reported results was to increase other income and gross profit for the three months ended June 30, 2005, by $89,000, and increase net income by $55,000. For the year ended June 30, 2005, other income and gross profit were increased by $404,000, while net income was increased by $252,000, or $.02 per share. All results and discussion presented below for the quarter and year ended June 30, 2005, are based on results after giving effect to the adjustments as well as certain other reclassifications that did not impact net earnings. For the fourth quarter ended June 30, 2006, total direct finance and interest income increased 25% to $5.7 million, compared to $4.6 million for the fourth quarter of fiscal 2005. This increase is primarily due to higher direct finance income resulting from a 15% increase in the average investment in capital leases held in the company's portfolio, along with higher yields on such portfolio and higher rates earned on investments which offset lower cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investment balances. This increase was offset partially by a $512,000 increase in interest expense paid on deposits arising from higher average balances and interest rates. Consequently, net direct finance and interest income after provision for lease losses increased 19% to $4.7 million, compared to $3.9 million for the fourth quarter of fiscal 2005. For the fourth quarter ended June 30, 2006, other income of $4.5 million was up 8% from $4.1 million for the fourth quarter of the prior year, reflecting increased income from lease extensions that offset slightly lower gains on the sale of leased property. The foregoing factors resulted in gross profit of $9.2 million for the fourth quarter of fiscal 2006, an increase of 13% from $8.1 million for the quarter ended June 30, 2005. For the fiscal year ended June 30, 2006, total direct finance and interest income increased 22% to $20.2 million, compared to $16.5 million in fiscal 2005, primarily due to increased income from the growth in the portfolio, with a contribution from higher yields earned on leases and higher interest income earned on cash and investments. Slower growth in net direct finance and interest income after provision for lease losses of 13%, to $17.1 million from $15.1 million, reflected the impact of higher interest expense related to an almost doubling in deposits and increased rates paid, along with a $123,000 increase in the provision for lease losses. The higher provision largely relates to the growth in the aggregate lease portfolio. For the full fiscal year, other income of $15.7 million increased 9% from $14.4 million during fiscal 2005. The increase largely related to higher gain on sales of leased property, which offset a decrease in other fee income. As a result of the foregoing, gross profit for the year increased 11% to $32.8 million compared to $29.5 million for the year ended June 30, 2005. CalFirst Bancorp's selling, general and administrative ("S,G&A") expenses of $3.8 million recognized during the fourth quarter were essentially unchanged from the fourth quarter of fiscal 2005. S,G&A expenses recognized for the year were down by 5% to $15.3 million from $16.0 million during the prior year. The decrease in S,G&A expenses for the year is due to lower costs resulting from a slightly smaller sales force and lower variable costs resulting from efforts to control costs. S,G&A expenses in fiscal 2006 also reflect a lower deferral deferral - Waiting for quiet on the Ethernet. of initial direct costs of $3.6 million, compared to $4.0 million in fiscal 2005. Commenting on the results, Patrick E. Paddon, president and chief executive officer, indicated: "The results for fiscal 2006 reflect the benefit from the growth in investment in leases along with strong results from our portfolio of assets reaching the end of term. For the year ended June 30, 2006, new lease bookings of $163.8 million were just slightly ahead of $161.5 million booked the prior year. However, with two strong years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time net investment in capital leases of $214.0 million at June 30, 2006, is up 14% from June 30, 2005, and up over 39% from two years ago. This expansion contributed to the 24% increase in direct finance income during the fourth quarter and 22% increase for the year. The volume of new leases originated during fiscal 2006 of $182 million is up only slightly from $176 million during the prior year, however the backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of approved but un-booked leases at June 30, 2006, is about 7% above the level of a year ago. "Looking forward to fiscal 2007, we should see continued growth in our direct finance income from the larger investment in capital leases, which should be sustained with the completion and booking of current lease commitments. Higher interest rates should continue to contribute to higher direct finance and interest income. Other income in fiscal 2007 will be impacted by a lower volume of leases reaching the end of term than enjoyed during the past year. We have renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. our focus on the development and expansion of the sales organization with the objective of achieving higher lease originations in fiscal 2007." On Aug. 10, 2006, the Nasdaq Listing Qualifications Panel advised the company that the company is in full compliance with Nasdaq Marketplace Rules and therefore is qualified for continued listing on The Nasdaq Global Market. California First National Bancorp is a bank holding company with leasing and bank operations based in Orange County, Calif. California First Leasing Corp. leases and finances computer networks and other high technology assets through a centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. marketing program designed to offer cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. leasing alternatives. California First National Bank is an FDIC-insured national bank that gathers deposits using telephone, the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , and direct mail from a centralized location, and will lease capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) to businesses and organizations and provide business loans to fund the purchase of assets leased by third parties. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , 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 direct finance income, the impact of changes in interest rates and residual Residual See:Residual value realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. . 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Such risks include the risk that the market conditions, including changes in interest rates or the credit condition of our lessees could result in a different outcome than currently anticipated by the company. All forward-looking statements are qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by this cautionary statement, and the company undertakes no obligation to revise or update this press release to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or arising after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . For further discussion regarding management assumptions, risks and uncertainties, readers should refer to the company's quarterly report on Form 10-Q Form 10-Q See 10-Q. for the period ending March 31, 2006.
CALIFORNIA FIRST NATIONAL BANCORP
Consolidated Statements of Earnings
(000's except per share data)
Three Months Ended Year Ended
June 30, June 30,
------------------ -------------------
2006 2005 2006 2005
------- ---------- -------- ----------
(restated) (restated)
Direct finance income $5,264 $4,236 $18,861 $15,496
Interest income on investments $432 $315 $1,329 $1,009
------- ---------- -------- ----------
Total direct finance and
interest income $5,696 $4,551 $20,190 $16,505
Interest expense on deposits $915 $403 $2,593 $1,054
Provision for lease losses $80 $207 $482 $359
------- ---------- -------- ----------
Net direct finance and interest
income after provision for
lease losses $4,701 $3,941 $17,115 $15,092
Other income
-------------------------------
Operating and sales-type lease
income $1,665 $897 $4,498 $4,379
Gain on sale of leases and
leased property $2,606 $3,058 $10,390 $8,961
Other fee income $193 $188 $780 $1,091
------- ---------- -------- ----------
Total other income $4,464 $4,143 $15,668 $14,431
Gross Profit $9,165 $8,084 $32,783 $29,523
Selling, general and
administrative expenses $3,817 $3,827 $15,278 $16,039
------- ---------- -------- ----------
Earnings before income taxes $5,348 $4,257 $17,505 $13,484
Income taxes $2,072 $1,597 $6,783 $5,057
------- ---------- -------- ----------
Net earnings $3,276 $2,660 $10,722 $8,427
======= ========== ======== ==========
Basic earnings per common share $0.29 $0.24 $0.96 $0.76
Diluted earnings per common
share $0.28 $0.23 $0.94 $0.74
Weighted average common shares
outstanding 11,158 11,096 11,125 11,073
Diluted number of common shares
outstanding 11,537 11,356 11,461 11,340
Dividends declared per common
share
Outstanding $0.11 $0.10 $.42 $2.30
CALIFORNIA FIRST NATIONAL BANCORP
Consolidated Balance Sheets
(000's)
ASSETS June 30, 2006 June 30, 2005
------------- -------------
(restated)
Cash and short term investments $40,747 $43,321
Marketable securities 1,134 1,484
Net receivables 1,905 1,636
Property for transactions in process 41,680 34,052
Net investment in capital leases 213,956 187,432
Income tax receivable 4,744 -
Other assets 1,765 2,162
Discounted lease rentals assigned to
lenders 8,424 8,405
------------- -------------
$314,355 $278,492
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $3,263 $4,233
Income taxes payable, including deferred
taxes 9,739 15,705
Deposits 89,166 54,098
Other liabilities 10,236 9,313
Non-recourse debt 8,424 8,405
------------- -------------
Total liabilities 120,828 91,754
Stockholders' Equity 193,527 186,738
------------- -------------
$314,355 $278,492
============= =============
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