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California First National Bancorp Reports Operating Results (10-Q)

February 12, 2010 | About:
10qk

10qk

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California First National Bancorp (CFNB) filed Quarterly Report for the period ended 2009-12-31.

California First National Bancorp has a market cap of $129.8 million; its shares were traded at around $12.75 with a P/E ratio of 11.4 and P/S ratio of 3.5. The dividend yield of California First National Bancorp stocks is 15.1%.

Highlight of Business Operations:

Net earnings for the second quarter of fiscal 2010 were up 22%, while results for the six months ended December 31, 2009 were up 51%. The increase in net earnings for both periods is primarily due to gains realized on the sale of investment securities: $1.8 million in the second quarter and $3.4 million during the six-month period. A 17% and 19% reduction in selling, general and administrative expenses for the respective periods also contributed to the improvement in earnings and helped offset a reduction in direct finance income.

New lease bookings during the second quarter of fiscal 2010 were 32% ahead of the prior year level, but due to lower volume during the first quarter, total six month bookings of $73.8 million were 11% lower than the prior year. As a result, the net investment in leases of $203.8 million at December 31, 2009 was down 5% from the balance at June 30, 2009. New commercial loans boarded during the first six months of fiscal 2010 were only $3.9 million, and following the early payoff of certain loans, the loan portfolio declined to $66.3 million at December 31, 2009 from $71.1 million at June 30, 2009. New lease originations for the first six months of fiscal 2010 were up 19% from the prior year, and while new loan activity is minimal, the backlog of approved lease and loan commitments of $64.6 million is 11% greater than a year ago.

The Company s portfolio of investment securities of $77.0 million at December 31, 2009 was down from $119.6 million at June 30, 2009, but up from $64.1 million at December 31, 2008. The decrease during the six months of fiscal 2010 resulted from the sale of approximately $68.3 million of investment securities for the net gain of $3.4 million noted above. Offsetting the sale of these investment securities was the acquisition of corporate bonds and unrealized gains within the investment portfolio.

Summary -- For the second quarter ended December 31, 2009, net earnings of $3.1 million increased $552,000, or 21.9%, from $2.5 million for the second quarter ended December 31, 2008. For the first six months of fiscal 2010, net earnings of $6.5 million increased $2.2 million, or 51.2%, compared to the first six months of fiscal 2009. Diluted earnings per share increased 20.9% to $0.30 per share for the second quarter of fiscal 2010, compared to $0.25 per share for the second quarter of the prior year. For the six months ended December 31, 2009, diluted earnings per share of $0.64 increased 55.6%, compared to $0.41 per shared for the same prior year period.

Net direct finance, loan and interest income was $5.4 million for the quarter ended December 31, 2009, a $650,000, or 10.8%, decrease compared to the same quarter of the prior year. Total direct finance, loan and interest income for the second quarter ended December 31, 2009 decreased 13.4% to $6.6 million from $7.7 million earned during the second quarter of fiscal 2009. The decrease was primarily due to a $885,000 or 16% decrease in direct finance income that resulted from an 8% decline in the average net investment in leases, and a $205,000, or 18%, decrease in loan income resulting from a 307 basis point drop in yields earned on an average commercial loan portfolio that was up 29% to $71.5 million. Interest income from investments was relatively unchanged as a 222 basis point drop in the average yield to 2.73% was offset by a 93% increase in average investment balances to $160.7 million. During the second quarter of fiscal 2010, interest expense paid on deposits and borrowings decreased by $375,000 or 29% reflecting a 31% increase in average balances to $240.3 million that was offset by a 148 basis point drop in average interest rates paid to 2.14%.

For the six months ended December 31, 2009, net direct finance and interest income was $11.3 million, a $245,000 or 2.2% increase from the $11.1 million earned during the same period of the prior year. Total direct finance, loan and interest income for the first six months of fiscal 2010 decreased 1.3% to $14.2 million, but included a $1.1 million increase in investment income offset by a $1.4 million decline in direct finance income. The increased investment income reflected a $90 million increase in the average investment in cash and securities to $171.7 million, which was offset somewhat by a 76 basis point drop in the average yields earned to 3.11%. The decline in direct finance income was due to a 6% decline in average balances to $202.1 million and a 66 basis point drop in average rates earned to 9.41%. Commercial loan income for the first six months of fiscal 2010 was up $76,000, or 4%, as a 42% increase in average balances to $72.2 million offset a 203 basis point drop in the average yield to 5.45%. For the six months ended December 31, 2009, interest expense on deposits and borrowings decreased by $431,000 or 15% to $2.8 million, reflecting a 156 basis point decrease in interest rates paid on average balances that increased by 48% from the year before to $255.4 million.

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