Profile: California First National Bancorp (CFNB.O)

California First National Bancorp is a bank holding company with a leasing subsidiary, California First Leasing Corp (CalFirst Leasing) and a bank subsidiary, California First National Bank (CalFirst Bank or the Bank). CalFirst Leasing and CalFirst Bank focuses on leasing and financing capital assets through centralized marketing programs designed to offer leasing alternatives. Leased assets are re-marketed at lease expiration. CalFirst Bank also provides business loans to fund the purchase of assets leased by third parties, including CalFirst Leasing, and provides commercial loans to businesses, including real estate-based term loans, secured and unsecured revolving lines of credit, and purchases participations in commercial loan syndications. CalFirst Bank gathers deposits from a centralized location primarily through posting rates on the Internet.

Leasing Activities

The Company leases and finances capital assets used by businesses and organizations, with a focus on technology equipment and software systems. The leases are structured individually and can provide end-of-term options to accommodate a variety of its customers’ objectives. Approximately 29% of the leases booked during the fiscal year ended June 30, 2009 (fiscal 2009), involved computer workstations and networks, mid-range computers and computer software. Other property groups in fiscal 2009 included furniture and fixtures (29%), manufacturing equipment (21%), transportation (8%), telecommunications systems (5%) and medical equipment (3%).

Leasing and loan customers are primarily middle-market companies, subsidiaries and divisions of Fortune 1000 companies, private and state-related educational institutions, municipalities and other not-for-profit organizations and institutions located throughout the United States. The computer systems and network products leased are manufactured by Apple, Inc., Cisco Systems, Inc., Dell Inc., Hewlett-Packard Company, International Business Machines Corporation and Lenova Group, Ltd. The software leased is acquired from vendors, such as Microsoft Corporation, Oracle Corporation, Jenzabar, Inc., Parametric Technology Corporation, Infor Global Solutions, MSC Software Corporation and SAP AG.

Leased property includes automated manufacturing and distribution management systems that include complex computer-controlled manufacturing and production systems, printing presses and warehouse distribution systems. Telecommunications systems include digital private branch equipment, switching equipment, voice over Internet protocol (VoIP) systems, wireless networks and satellite tracking systems. Retail point-of-sale and inventory tracking systems integrate computers, scanners and software. Other electronic equipment leased includes ultrasound and medical imaging systems, computer-based patient monitoring systems, testing equipment, and copying equipment. A variety of personal property in the non-high technology area, including machine tools, school buses, trucks, exercise equipment, and office and dormitory furniture are also leased.

Banking Operations

The Bank is focused on gathering deposits from depositors for the primary purpose of funding its investment in capital leases and loans. The Bank’s deposits have been gathered primarily through the Internet. The Bank offers two types of interest-bearing checking accounts, savings accounts and three month to three-year certificates of deposit (CDs) to taxable and individual retirement account (IRA) depositors. CDs are offered with varying maturities in order to achieve a match of the average life of the Bank’s lease portfolio and loan portfolio. The Bank offers interest rates on deposit accounts that are higher than the national average. In addition to leases and loans, the Company had total investments of $174.8 million at June 30, 2009, which includes interest-earning deposits with banks, short-term money market securities, federal funds sold, as well as United States Treasury and Agency Securities, trust preferred securities, corporate bonds, Federal Reserve Bank and Federal Home Loan Bank stock and other investments. The Bank’s deposit customers are individuals who places a portion of their savings in government-insured investments and businesses.