CFNB Reports 25% Decline in Six Month Earnings

IRVINE, Calif.--(Business Wire)--California First National Bancorp (NASDAQ:CFNB) ("CalFirst
Bancorp") today announced net earnings of $1.8 million for the second
quarter ended December 31, 2007, a 41% decrease from net earnings of
$3.1 million for the second quarter of fiscal 2007. For the six months
ended December 31, 2007, net earnings decreased 25% to $3.8 million,
compared to $5.1 million for the first six months of fiscal 2007.
Diluted earnings per share for the second quarter were down 40% to
$0.16 per share, compared to $0.27 per share for the second quarter of
the prior year. Diluted earnings per share were $0.34 for the first
six months of fiscal 2008, down 24% from $0.44 per share for the same
period of fiscal 2007.

The large percentage decline in second quarter and six-month net
earnings is largely due to the prior period results that included the
contribution of $1.4 million in pre-tax income from the recovery on
and resolution of problem accounts and the recognition of accelerated
income on early terminations. Without this, the decline in net income
would have been less than 10% for the six months.

Total direct finance, loan and interest income for the second
quarter ended December 31, 2007 decreased 2.5% to $7.0 million from
$7.2 million during the second quarter of the prior year. Excluding
the direct finance income related to the transactions noted above, the
Company's direct finance, loan and interest income was up 5%,
reflecting 6% growth in the loan and lease portfolio, offset somewhat
by lower yields. The average yield on leases and loans held in the
Company's own portfolio decreased 97 basis points to 10.7%, while the
average yield on cash and investments increased 7 basis points to
3.95%. During the second quarter of fiscal 2008, interest expense on
deposits increased by $284,000 or 24% to $1.5 million due to a 19%
increase in average deposit balances and a 22 basis point increase in
average interest rates paid. For the second quarter of fiscal 2008,
the Company recorded an allowance for lease losses of $90,000,
compared to a $250,000 net reduction in the allowance during the
second quarter of fiscal 2007. The 2008 provision related to the
deterioration in credit quality of certain lessees during the second
quarter, as well as growth in the portfolios. All of these factors led
to a 13% decrease in net direct finance and interest income after
provision for lease and loan losses to $5.4 million.

Total other income of $1.7 million reported for the second quarter
of fiscal 2008 was down 34% from $2.6 million for the same period of
the prior year. The decline reflects a $476,000 decrease in gains from
sales of leased property, and $391,000 decrease in income from lease
extensions. The lower income from end of term transactions largely
reflects lower excess values realized on the investment in residuals
coming to end of term during the period. Gross profit of $7.1 million
for the second quarter ended December 31, 2007 was down 19% from the
second quarter of the prior year. Excluding the transactions noted
above, the decline in gross profit would have been 5%.

For the six months ended December 31, 2007, gross profit of $14.2
million was down 10% from $15.8 million for the same period of the
prior year. This decrease reflected a $436,000, or 4%, decrease in net
direct finance, loan and interest income after provision for lease
losses and a $1.2 million, or 24%, decline in total other income.
Total direct finance, loan and interest income increased 3% to $13.6
million for the first six months of fiscal 2008. Excluding the noted
transactions from the fiscal 2007 results, it would have increased by
8%. The increase related to an 8% increase in the average investment
in leases and loans, offset by lower yields earned on the portfolio.
The average yield on leases and loans held in the Company's own
portfolio decreased 40 basis points to 10.56%, while the average yield
on cash and investments increased 16 basis points to 4.13%. For the
six months ended December 31, 2007, interest expense on deposits
increased by $543,000 to $2.8 million, reflecting a 34 basis point
increase in interest rates paid on average deposit balances that
increased by 16% from the year before to $109.1 million. For the first
six months of fiscal 2008, the Company recorded a provision for lease
losses of $130,000, compared to a net reduction in the allowance for
lease and loan losses of $220,000 in 2007.

Total other income for the first six months of fiscal 2008
decreased by $1.2 million, or 24%, to $3.6 million. This was due to a
$633,000 decline in gain on sale of leased property and $495,000
decrease in income from lease extensions. This decline reflected a
slight decrease in the investment in leases coming to end of term
during the period as well as lower values realized.

During the second quarter of fiscal 2008, CalFirst Bancorp's
selling, general and administrative expenses ("S,G&A") of $4.2 million
were up 9.9% from the prior year, while SG&A of $8.1 million for the
six months was up 6.9%. During both periods, increased costs related
to growth in the sales organization accounted for most of the
increase.

Commenting on the results, Patrick E. Paddon, President and Chief
Executive Officer, indicated, "During the first six months, we saw
continued growth in direct finance income from the lease portfolio,
though at a lower rate. Lease and loan transactions booked during the
second quarter of $44 million were 17% lower than the year before, but
bookings of $86 million for the six months were just 11% lower than
last year. The net investment in capital leases and loans of $246.1
million at December 31, 2007 is up 6% from June 30, 2007. The
performance of the portfolios generally has been good, although we are
seeing some deterioration with certain credits. Transactions in
process of $28.0 million are down from $35 million at year-end, but
are up from $25 million a year ago. The volume of new leases and loans
originated during the second quarter are up about 20% from the second
quarter of last year, while originations for the six months are about
even with last year. As a result, our backlog of approved but unbooked
leases is about 5% below the level of a year ago, but such amount
excludes $13.5 million of unfunded loan commitments."

California First National Bancorp is a bank holding company with
leasing and bank operations based in Orange County, California.
California First Leasing Corporation leases and finances computer
networks and other high technology assets through a centralized
marketing program designed to offer cost-effective leasing
alternatives. California First National Bank ("CalFirst Bank") is a
FDIC-insured national bank that gathers deposits using telephone, the
Internet, and direct mail from a centralized location, and will lease
capital assets to businesses and organizations and provide business
loans to fund the purchase of assets leased by third parties.

This press release contains forward-looking statements, which
involve management assumptions, risks and uncertainties. Consequently,
if such management assumptions prove to be incorrect or such risks or
uncertainties materialize, the Company's actual results could differ
materially from the results forecast in the forward-looking
statements. For further discussion regarding management assumptions,
risks and uncertainties, readers should refer to the Company's 2007
Annual Report on Form 10-K and the 2008 quarterly reports on Form
10-Q.

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CALIFORNIA FIRST NATIONAL BANCORP

Consolidated Statement of Earnings
(000's except per share data)
----------------------------------------------------------------------

Three Months Ended Six Months Ended
December 31, December 31,
2007 2006 2007 2006
--------- -------- ------- --------

Direct finance and loan income $ 6,478 $ 6,659 $12,571 $12,123
Interest income on investments $ 492 $ 493 $ 988 $ 979
--------- -------- ------- --------
Total direct finance, loan and
interest income $ 6,970 $ 7,152 $13,559 $13,102

Interest expense on deposits $ 1,466 $ 1,183 $ 2,813 $ 2,270
Provision for lease and loan
losses $ 90 $ (250) $ 130 $ (220)
--------- -------- ------- --------
Net direct finance, loan and
interest income, after provision
for lease and loan losses $ 5,414 $ 6,219 $10,616 $11,052

Other income
----------------------------------
Operating and sales-type lease
income $ 870 $ 1,261 $ 1,697 $ 2,192
Gain on sale of leases and leased
property $ 710 $ 1,081 $ 1,640 $ 2,188
Other fee income $ 132 $ 254 $ 286 $ 412
--------- -------- ------- --------
Total other income $ 1,712 $ 2,596 $ 3,623 $ 4,792

Gross Profit $ 7,126 $ 8,815 $14,239 $15,844

Selling, general and
administrative expenses $ 4,232 $ 3,849 $ 8,120 $ 7,599
--------- -------- ------- --------

Earnings before income taxes $ 2,894 $ 4,966 $ 6,119 $ 8,245

Income taxes $ 1,085 $ 1,900 $ 2,295 $ 3,154
--------- -------- ------- --------

Net earnings $ 1,809 $ 3,066 $ 3,824 $ 5,091
========= ======== ======= ========

Basic earnings per share $ 0.16 $ 0.27 $ 0.34 $ 0.46
Diluted earnings per share $ 0.16 $ 0.27 $ 0.34 $ 0.44

Weighted average common shares
outstanding 11,098 11,179 11,118 11,174
Diluted number of common shares
outstanding 11,342 11,511 11,393 11,529
*T

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CALIFORNIA FIRST NATIONAL BANCORP

Consolidated Balance Sheets
(000's)
----------------------------------------------------------------------

ASSETS December 31, 2007 June 30, 2007
----------------- ----------------

Cash and short term investments $ 50,453 $ 46,122
Investment securities 3,279 2,563
Net receivables 1,552 1,345
Property for transactions in
process 27,952 34,720
Net investment in leases and loans 246,062 231,830
Income tax receivable 1,802 4,331
Other assets 2,141 2,037
Discounted lease rentals assigned
to lenders 5,334 6,239
----------------- ----------------
$338,575 $329,187
================= ================

LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable $ 5,387 $ 3,865
Income taxes payable, including
deferred taxes 4,149 7,480
Deposits 116,067 105,470
Other liabilities 8,818 8,466
Non-recourse debt 5,334 6,239
----------------- ----------------
Total liabilities 139,755 131,520
Stockholders' Equity 198,820 197,667
----------------- ----------------
$338,575 $329,187
================= ================
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California First National Bancorp
S. Leslie Jewett, (949) 255-0500
ljewett@calfirstbancorp.com

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