California First National Bancorp (NASDAQ: CFNB) (“CalFirst Bancorp”) today announced that net earnings for the third quarter ended March 31, 2011 increased 41% to $3.7 million from net earnings of $2.6 million for the third quarter of fiscal 2010. For the nine months ended March 31, 2011, net earnings of $8.4 million were 8% below the $9.1 million reported for the first nine months of fiscal 2010. Diluted earnings per share for the third quarter of fiscal 2011 were up 40% to $0.35 per share, compared to $0.25 per share for the third quarter of the prior year. Diluted earnings per share for the first nine months of fiscal 2011 of $0.81 were 8% below the $0.89 per share reported for the same period of the prior fiscal year.
Gross profit of $9.0 million for the third quarter ended March 31, 2011 was up 27% from $7.1 million for the third quarter of fiscal 2010. For the first nine months of fiscal 2011, gross profit of $22.7 million was 3% lower than $23.5 million earned in the nine months ended March 31, 2010. Included in third quarter 2011 results is a $940,000 gain realized on the sale of investment securities, while the first nine months of fiscal 2011 includes gains from the sale of investment securities of $2.3 million, compared to investment gains of $3.4 million for the first nine months of fiscal 2010. Excluding investment gains from all periods, gross profit for the third quarter of fiscal 2011 would be up 14%, while gross profit for the first nine months would be up 2% from the prior year.
Total direct finance, loan and interest income for the third quarter of fiscal 2011 increased 5% to $6.9 million compared to $6.6 million during the third quarter of the prior year. The increase was primarily due to a 30% increase in commercial loan income and 3% increase in direct finance income, offset by a 14% decrease in investment income. Commercial loan income reflected a 58% growth in average loan balances that offset a 121 basis point drop in average yields. The decline in investment income was due to a 21% drop in average investment balances to $121.6 million that offset a 24 basis point improvement in yields. The average yield on leases and loans held in the Company’s own portfolios decreased by 87 basis points to 7.4%. During the third quarter of fiscal 2011, interest expense on deposits and borrowings decreased by $213,000 to $881,000, reflecting a 11% increase in average deposit and borrowing balances to $244.6 million, offset by a 55 basis point decrease in average interest rates paid to 1.4%. For the third quarter of fiscal 2011, the Company made a $250,000 provision for credit losses compared to no provision made in the third quarter of the prior year. The provision related to the deterioration in the credit outlook for certain customers. All of these factors combined for a 5% increase in net direct finance, loan and interest income after provision for credit losses to $5.8 million.
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