California First National Bancorp (NASDAQ: CFNB) (“CalFirst Bancorp”) today announced that net earnings for the fourth quarter ended June 30, 2010 of $2.0 million were down 23% from net earnings of $2.6 million for the fourth quarter of fiscal 2009. For the full fiscal year ended June 30, 2010, net earnings of $11.1 million were up 20% from $9.3 million reported for fiscal 2009. Diluted earnings per share for the fourth quarter of 2010 of $0.19 per share were 24% below the $0.25 per share for the fourth quarter of the prior year, while diluted earnings per share of $1.08 for the year were up 21% from $0.89 per share reported for the prior year.
The improvement in net earnings for the fiscal year-ended June 30, 2010 is largely due to a $4.3 million positive swing related to gains recognized on investment securities, as well as to a $1.8 million, or 14%, reduction in non-interest expenses. Fourth quarter results reflect a benefit from a 6% reduction in non-interest expense, but such amount could not offset reduced lease, loan and investment income.
Total direct finance, loan and interest income for the fourth quarter of fiscal 2010 decreased 23% to $6.0 million from $7.9 million for the fourth quarter of fiscal 2009. The decrease includes a $905,000, or 18%, decrease in direct finance income related to a 10% decline in the average investment in leases, a $675,000 decrease in investment income earned as average investment balances declined 28% to $75.9 million, and $264,000 decline in commercial loan income on a loan portfolio that declined 8% to $65.4 million at June 30, 2010. In addition to declining balances, the average yield on leases and loans held in the Company’s own portfolios decreased by 72 basis points to 7.93%, while the average yield on cash and investments decreased by 156 basis points to 2.5%, reflecting lower interest rates generally and a high percentage of funds in low yielding deposit accounts. During the fourth quarter of fiscal 2010, interest expense on deposits and borrowings decreased by $690,000 to $942,000, reflecting an 18% decline in average deposit and borrowing balances to $212.8 million and a 76 basis point decrease in average interest rates paid to 1.8%. During the fourth quarter of fiscal 2010, the Company did not make a provision for credit losses as the portfolio sustained no growth during the period and the credit quality remained stable. This was in contrast to a $500,000 provision taken during the fourth quarter of fiscal 2009 when the Company was seeing deterioration in credit quality of certain customers. As a result of the foregoing, net direct finance, loan and interest income after provision for credit losses during the fourth quarter of fiscal 2010 decreased 11% to $5.1 million, compared to $5.8 million for the fourth quarter of fiscal 2009.