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California First National Bancorp (NASDAQ: CFNB) (“CalFirst Bancorp”) today announced net earnings of $2.1 million for the second quarter ended December 31, 2011, a decline of 34% from net earnings of $3.1 million for the second quarter of fiscal 2011. For the six months ended December 31, 2011, net earnings were down just 5% to $4.5 million from $4.8 million for the first six months of fiscal 2011. Diluted earnings per share in the second quarter of $0.20 were down 34% from $0.30 from the second quarter of fiscal 2011, while diluted earnings per share of $0.44 for the first six months of fiscal 2012 were down 5% from $0.46 per share for the same period of fiscal 2011.
The decline in net earnings from the second quarter and first six months of fiscal 2011 is largely due to large gains realized on the sale of investment securities during the prior year periods. Excluding investment gains from both periods, gross profit during second quarter declined by 6%, while gross profit for the first six months of fiscal 2012 is up 10% from the prior year.
Gross profit of $6.4 million for the second quarter ended December 31, 2011 declined from the second quarter of the prior year by $1.6 million, or 20%. Total direct finance, loan and interest income for the second quarter of fiscal 2012 decreased 9% to $5.9 million from $6.5 million during the second quarter of the prior year. A $662,000, or 39%, decline in commercial loan income accounted for the decrease and was due to a 14% decrease in average loan balances and a 196 basis point decline in average yield. Interest expense paid on deposits and borrowings during the second quarter of fiscal 2012 decreased by $57,000, or 7%, reflecting a 34 basis point drop in average interest rates paid offset by a 21% increase in average balances. For the second quarter of fiscal 2012, the Company did not record an allowance for credit losses, compared to a $500,000 provision during the second quarter of fiscal 2011. The lack of provision in 2012 is due to a 9% decline in the commercial loan portfolio from $93.7 million at June 30, 2011 to $85.0 million at December 31, 2011, along with some improvement in credit metrics. All of these factors led to a $60,000, or 1%, decrease in net direct finance and interest income after provision for credit losses to $5.1 million.