California First National Bancorp (NASDAQ: CFNB) (“CalFirst Bancorp”) today announced that net earnings for the fourth quarter ended June 30, 2011 of $2.5 million were up 24% from net earnings of $2.0 million for the fourth quarter of fiscal 2010. For the full fiscal year ended June 30, 2011, net earnings of $10.9 million were 2% below the $11.1 million reported for fiscal 2010. Diluted earnings per share for the fourth quarter of 2011 of $0.24 per share were 22% above the $0.19 per share for the fourth quarter of the prior year, while diluted earnings per share of $1.05 for fiscal 2011 were 3% below the $1.08 per share reported for the prior year.

Fourth quarter net earnings include a 35% reduction in the provision for income taxes related to a reduction in unrecognized tax benefits under ASC 740-10-25, Income Taxes – Recognition, and a reduction in the estimated tax rate for fiscal 2011 that was recorded in the period. Excluding this benefit, pre-tax earnings for the fourth quarter of fiscal 2011 were relatively unchanged from the prior year, while pre-tax earnings for the full fiscal year were 6% below the prior year.

Total direct finance, loan and interest income for the fourth quarter of fiscal 2011 increased 7% to $6.4 million from $6.0 million for the fourth quarter of fiscal 2010. The increase includes a $411,000, or 52%, increase in commercial loan income and $128,000 increase in direct finance income, which were offset by a $144,000 decrease in investment income. The average investment in commercial loans of $95.4 million during the fourth quarter of fiscal 2011 was up 59% from the prior year, while the average investment in leases of $223.2 million was up 14%. The average yield earned on leases and loans during the quarter decreased by 90 basis points to 7.03%, while the average yield earned on average investment balances of $161.5 million declined by 47 basis points to 2.08%. During the fourth quarter of fiscal 2011, interest expense on deposits and borrowings of $945,000 was unchanged from the prior year, but reflected a 31% increase in average balances to $278.7 million that was offset by a 41 basis point decrease in average interest rates paid to 1.36%. The Company did not make a provision for credit losses during the fourth quarter of fiscal 2011 or 2010, as the portfolio sustained no growth during both periods and the credit quality remained stable. As a result of the foregoing, net direct finance, loan and interest income after provision for credit losses during the fourth quarter of fiscal 2011 increased 7.7% to $5.5 million, compared to $5.1 million for the fourth quarter of fiscal 2010.

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