CFNB 10-Q Quarterly Report March 31, 2015

CALIFORNIA FIRST NATIONAL BANCORP

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10-Q 1 f10q_051315.htm FORM 10-Q f10q_051315.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[Mark One]
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended		March 31, 2015


[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File No.: 0-15641

California First National Bancorp

(Exact name of registrant as specified in charter)

	California		33-0964185
	(State or other jurisdiction of		(I.R.S. Employer
	Incorporation or organization)		Identification No.)

	28 Executive Park
	Irvine, California		92614
	(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (949) 255-0500

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No þ

The number of shares outstanding of the Registrant’s Common Stock, par value $.01 per share, as of May 8, 2015 was 10,459,924.

CALIFORNIA FIRST NATIONAL BANCORP

INDEX

PART 1. FINANCIAL INFORMATION		PAGE NUMBER

Item 1.	Financial Statements

	Consolidated Balance Sheets -
	March 31, 2015 and June 30, 2014	3

	Consolidated Statements of Earnings -
	Three and nine months ended March 31, 2015 and 2014	4

	Consolidated Statements of Comprehensive Income -
	Three and nine months ended March 31, 2015 and 2014	5

	Consolidated Statements of Cash Flows -
	Nine months ended March 31, 2015 and 2014	6

	Consolidated Statement of Stockholders’ Equity -
	Nine months ended March 31, 2015 and 2014	7

	Notes to Consolidated Financial Statements	8 - 17

Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	18 - 26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26 - 27

Item 4.	Controls and Procedures	28

PART 2. OTHER INFORMATION

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	28

Signature		29

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, the information concerning our possible future consolidated results of operations, business and growth strategies, financing plans, our competitive position and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by forward-looking words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “plan”, “may”, “should”, “will”, “would”, “project” and similar expressions. These forward-looking statements are based on information currently available to us and are subject to inherent risks and uncertainties, and certain factors could cause actual results to differ materially from those anticipated. Particular uncertainties arise from the behavior of financial markets, including fluctuations in interest rates and securities prices, from unanticipated changes in the risk characteristics of the lease and loan portfolio, the level of defaults and a change in the provision for credit losses, and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. Forward-looking statements speak only as of the date made. The Company undertakes no obligations to update any forward-looking statements. Management does not undertake to update our forward-looking statements to reflect events or circumstances arising after the date on which they are made.

CALIFORNIA FIRST NATIONAL BANCORP

CONSOLIDATED BALANCE SHEETS

(thousands, except for share amounts)

	March 31, 2015			June 30, 2014
	(Unaudited)
ASSETS

Cash and due from banks	$	63,888		$	40,122
Investments		3,337			2,552
Securities available-for-sale		69,391			26,764
Receivables		1,212			680
Property acquired for transactions in process		25,618			40,578
Leases and loans:
Net investment in leases		299,669			329,935
Commercial loans		214,010			131,158
Allowance for credit losses		(6,075	)		(5,299	)
Net investment in leases and loans		507,604			455,794

Net property on operating leases		908			1,991
Income taxes receivable		317			1,658
Other assets		1,285			771
Discounted lease rentals assigned to lenders		11,635			8,640
	$	685,195		$	579,550

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Demand and savings deposits	$	73,102		$	65,583
Time certificates of deposit		366,432			290,227
Short-term borrowings		26,858			6,858
Accounts payable		3,389			4,655
Accrued liabilities		2,497			2,553
Lease deposits		1,514			2,005
Non-recourse debt		11,635			8,640
Deferred income taxes, net		12,459			15,284
		497,886			395,805

Commitments and contingencies

Stockholders' equity:
Preferred stock; 2,500,000 shares authorized; none issued		-			-
Common stock; $.01 par value; 20,000,000 shares authorized; 10,459,924 (March 2015) and 10,459,924 (June 2014) issued and outstanding		105			105
Additional paid in capital		3,376			3,372
Retained earnings		183,145			179,844
Accumulated other comprehensive income, net of tax		683			424
		187,309			183,745
	$	685,195		$	579,550

The accompanying notes are an integral part of these consolidated financial statements.

CALIFORNIA FIRST NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

(thousands, except for per share amounts)

	Three months ended March 31,				Nine months ended March 31,
	2015		2014		2015		2014

Finance and loan income	$	5,421	$	4,546	$	15,737	$	13,622
Investment interest income		366		303		1,021		1,117
Total interest income		5,787		4,849		16,758		14,739

Interest expense
Deposits		991		728		2,745		2,284
Borrowings		22		-		37		-
Net interest income		4,774		4,121		13,976		12,455

Provision for credit losses		100		-		775		-

Net interest income after provision for credit losses		4,674		4,121		13,201		12,455

Non-interest income
Operating and sales-type lease income		51		383		252		1,268
Gain on sale of leases and leased property		787		129		4,488		2,589
Gain on sale of investment securities		-		-		347		-
Other income, net		129		114		3,092		371
Total non-interest income		967		626		8,179		4,228

Non-interest expenses
Compensation and employee benefits		2,142		2,190		6,493		5,892
Occupancy		158		157		475		523
Professional services		171		146		476		446
Other		441		477		1,425		1,527
Total non-interest expenses		2,912		2,970		8,869		8,388

Earnings before income taxes		2,729		1,777		12,511		8,295
Income taxes		1,051		587		4,817		3,090

Net earnings	$	1,678	$	1,190	$	7,694	$	5,205

Basic earnings per common share	$	0.16	$	0.11	$	0.74	$	0.50
Diluted earnings per common share	$	0.16	$	0.11	$	0.74	$	0.50

Dividends declared per common share outstanding	$	-	$	-	$	0.42	$	0.40
Weighted average common shares outstanding		10,460		10,458		10,460		10,451
Diluted common shares outstanding		10,460		10,461		10,460		10,454

The accompanying notes are an integral part

of these consolidated financial statements.

CALIFORNIA FIRST NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three months ended March 31,						Nine months ended March 31,
	2015			2014			2015			2014

Net earnings	$	1,678		$	1,190		$	7,694		$	5,205

Other comprehensive income (loss):

Unrealized (losses)/gains on securities available-for-sale		750			(39	)		768			(222	)

Other than temporary impairment loss on securities available-for-sale		-			-			91			-

Reclassification adjustment of realized gain included in net income on securities available-for-sale		-			-			(438	)		-

Tax effect		(289	)		14			(162	)		83

Total other comprehensive income/(loss)		461			(25	)		259			(139	)

Total comprehensive income	$	2,139		$	1,165		$	7,953		$	5,066

The accompanying notes are an integral part

of these consolidated financial statements.

CALIFORNIA FIRST NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Nine Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings	$	7,694		$	5,205
Adjustments to reconcile net earnings to cash flows provided by (used for) operating activities:
Provision for credit losses		775			-
Depreciation and net amortization (accretion)		(346	)		63
Gain on sale of leased property and sales-type lease income		(2,105	)		(407	)
Net gain recognized on investment securities		(438	)		-
Impairment loss on investment securities		91			-
Deferred income taxes, including income taxes payable		(3,004	)		(3,493	)
Decrease in income taxes receivable		1,341			2,679
Net (decrease) increase accounts payable and accrued liabilities		(56	)		133
Other, net		(392	)		583
Net cash provided by operating activities		3,560			4,763

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in leases, loans and transactions in process		(271,380	)		(230,064	)
Payments received on lease receivables and loans		177,054			145,083
Proceeds from sales of leased property and sales-type leases		4,312			3,771
Proceeds from sales and assignments of leases		54,250			34,134
Purchase of investment securities		(59,964	)		(300	)
Pay down on investment securities		16,380			21,132
Proceeds from sale of investment securities		808			-
Net (increase) decrease in other assets		(585	)		6
Net cash used for investing activities		(79,125	)		(26,238	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in time certificates of deposit		76,205			(8,054	)
Net increase (decrease) in demand and savings deposits		7,519			(3,888	)
Net increase in short-term borrowings		20,000			-
Dividends to stockholders		(4,393	)		(4,179	)
Proceeds from exercise of stock options		-			156
Net cash provided by (used for) financing activities		99,331			(15,965	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		23,766			(37,440	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		40,122			75,469
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	63,888		$	38,029

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Increase in lease rentals assigned to lenders and related non-recourse debt	$	2,995		$	8,754
Estimated residual values recorded on leases	$	(2,046	)	$	(3,255	)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Net cash paid during the nine month period for:
Interest	$	2,697		$	2,296
Income Taxes	$	6,481		$	3,904

The accompanying notes are an integral part of these consolidated financial statements.

CALIFORNIA FIRST NATIONAL BANCORP

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

(in thousands, except for share amounts)

	Shares		Amount		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Income			Total

Nine months ended March 31, 2014

Balance, June 30, 2013		10,447,227	$	104	$	3,213	$	176,972		$	590		$	180,879

Net earnings		-		-		-		5,205			-			5,205
Other comprehensive income		-		-		-		-			(139	)		(139	)
Shares issued - Stock options exercised		12,697		1		155		-			-			156
Stock based compensation expense		-		-		3		-			-			3
Dividends declared		-		-		-		(4,179	)		-			(4,179	)

Balance, March 31, 2014		10,459,924	$	105	$	3,371	$	177,998		$	451		$	181,925




Nine months ended March 31, 2015

Balance, June 30, 2014		10,459,924	$	105	$	3,372	$	179,844		$	424		$	183,745

Net earnings		-		-		-		7,694			-			7,694
Other comprehensive income		-		-		-		-			259			259
Stock based compensation expense		-		-		4		-			-			4
Dividends declared		-		-		-		(4,393	)		-			(4,393	)

Balance, March 31, 2015		10,459,924	$	105	$	3,376	$	183,145		$	683		$	187,309

The accompanying notes are an integral part

of these consolidated financial statements.

CALIFORNIA FIRST NATIONAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1- BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of California First National Bancorp (the “Company”) and its subsidiaries California First National Bank (“CalFirst Bank” or the “Bank”) and California First Leasing Corporation (“CalFirst Leasing”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended June 30, 2014. The material under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is written with the presumption that the readers have read or have access to the 2014 Annual Report on Form 10-K, which contains Management’s Discussion and Analysis of Financial Condition and Results of Operations as of June 30, 2014 and for the year then ended.

In the opinion of management, the unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the consolidated balance sheet as of March 31, 2015 and the statements of earnings, comprehensive income, cash flows and stockholders’ equity for the periods presented. The results of operations for the three and nine month periods ended March 31, 2015 are not necessarily indicative of the results of operations to be expected for the entire fiscal year ending June 30, 2015.

Certain reclassifications have been made to the fiscal 2014 financial statements to conform to the presentation of the third quarter of fiscal 2015 financial statements.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASU is a converged standard between the FASB and the International Accounting Standards Board that provides a single comprehensive revenue recognition model for all contracts with customers across transactions and industries. The new accounting guidance clarifies the principles for recognizing revenue from contracts with customers. The new accounting guidance, which does not apply to financial instruments, is effective for interim and annual reporting periods beginning after December 15, 2016. The FASB has proposed delaying this standard by one year. The Company does not expect the new guidance to have a material impact on its consolidated financial position or results of operations.

NOTE 3 – STOCK-BASED COMPENSATION

During the quarter and nine months ended March 31, 2015, the Company recognized pre-tax stock-based compensation expense of $1 , 1 00 and $3,300, respectively. Such expense related to options granted during fiscal 2013. The Company has not awarded any new grants in fiscal 2015 and has calculated the stock-based compensation expense based upon the original grant date fair value as allowed under ASC 718. The valuation variables utilized at the grant dates are discussed in the Company’s 2014 Annual Report on Form 10-K. As of March 31, 2015, approximately $1 0 ,000 of total unrecognized compensation expense related to unvested shares is expected to be recognized over the next 28 months.

Stock option activity for the periods indicated is summarized in the following table:

	For the nine months ended
	March 31, 2015				March 31, 2014
	Shares		Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding at beginning of period		10,000	$	16.00		22,697		$	13.91
Exercised		-		-		(12,697	)		12.26
Granted		-		-		-			-
Options outstanding at end of period		10,000	$	16.00		10,000		$	16.00
Options exercisable at end of period		4,000				2,000

Stock options outstanding and exercisable are summarized below:

As of March 31, 2015
Options Outstanding							Options Exercisable
Range of Exercise prices			Number Outstanding	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$16.00	-	$16.00	10,000	7.33	$	16.00	4,000	$	16.00

NOTE 4 – FAIR VALUE MEASUREMENT

ASC Topic 820: “Fair Value Measurements and Disclosures” defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. ASC Topic 820 establishes a three-tiered value hierarchy that prioritizes inputs based on the extent to which inputs used are observable in the market and requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. If a value is based on inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The three levels of inputs are defined as follows:

Level 1 - Valuation is based upon unadjusted quoted prices for identical instruments traded in active markets;

Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market;

Level 3 - Valuation is generated from model-based techniques that use inputs not observable in the market and based on the entity’s own judgment. Level 3 valuation techniques could include the use of option pricing models, discounted cash flow models and similar techniques, and rely on assumptions that market participants would use in pricing the asset or liability.

ASC 820 applies whenever other accounting pronouncements require presentation of fair value measurements, but does not change existing guidance as to whether or not an instrument is carried at fair value. As such, ASC 820 does not apply to the Company’s investment in leases. The Company’s financial assets measured at fair value on a recurring basis include primarily securities available-for-sale and at March 31, 2015 and June 30, 2014, there were no liabilities subject to ASC 820.

Securities available-for-sale include U.S. Treasury securities, corporate and municipal bonds, U.S. government agency (“Agency”) mortgaged-backed securities (“MBS”), mutual fund and equity investments and generally are reported at fair value utilizing Level 1 and Level 2 inputs. The fair value of corporate and municipal bonds and the MBS are obtained from independent quotation bureaus that use computerized valuation formulas to calculate current values based on observable transactions, but not a quoted bid, or are valued using prices obtained from the custodian, who uses third party data service providers (Level 2 input). U.S. Treasury securities, mutual funds and equity investments are valued by reference to the market closing or last trade price (Level 1 inputs). In the unlikely event that no trade occurred on the applicable date, an indicative bid or the last trade most proximate to the applicable date would be used (Level 2 input).

The Company’s assets, which are measured at fair value on a recurring basis as of March 31, 2015 and June 30, 2014 are summarized as follows:

Description of Assets / Liabilities	Total Fair Value		Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
As of March 31, 2015
Corporate debt securities	$	4,797	$	-	$	4,797	$	-
Securities of state and political subdivisions		416		-		416		-
U.S. Treasury notes		43,089		43,089		-		-
Agency MBS		19,620		-		19,620		-
Mutual fund investment		1,313		1,313		-		-
Equity investment		156		156		-		-
	$	69,391	$	44,558	$	24,833	$	-

As of June 30, 2014
Corporate debt securities	$	16,310	$	-	$	16,310	$	-
Securities of state and political subdivisions		427		-		427		-
U.S. Treasury notes		7,973		7,973		-		-
Mutual fund investment		1,261		1,261		-		-
Equity investment		793		793		-		-
	$	26,764	$	10,027	$	16,737	$	-

Certain financial instruments, such as impaired loans, are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances, usually if there is evidence of impairment. The Company had no such assets or liabilities at March 31, 2015 and June 30, 2014.

NOTE 5 – F AIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with ASC 825-50, the following table summarizes the estimated fair value of financial instruments as of March 31, 2015, and June 30, 2014, and includes financial instruments that are not accounted for or carried at fair value. In accordance with disclosure guidance, certain financial instruments, including all lease related assets and liabilities and all non-financial instruments are excluded from fair value of financial instrument disclosure requirements. Accordingly, the aggregate of the fair values presented does not represent the total underlying value of the Company. These fair value estimates are based on relevant market information and data, however, given there is no active market or observable market transactions for certain financial instruments, the Company has made estimates of fair values which are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values.

For cash and cash equivalents and demand deposits, because of their short-term nature, the carrying amounts approximate the fair value and are classified as Level 1 in the fair value hierarchy. Values for investments and available-for-sale securities are determined as set forth in Notes 4, 6 and 7. The fair value of loan participations that trade regularly in the secondary market is based upon current bid prices in such market at the measurement date and are classified as Level 2 in the fair value hierarchy. For other loans, the estimated fair value is calculated based on discounted cashflow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality and are classified as Level 3 in the fair value hierarchy. These calculations have been adjusted for credit risk based on the Company’s historical credit loss experience. The fair value of certificates of deposit and borrowings are estimated based on discounted cash flows using current offered market rates or interest rates for borrowings of similar maturity and are classified as Level 3 in the fair value hierarchy.

The estimated fair values of financial instruments were as follows:

	March 31, 2015				June 30, 2014
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(in thousands)
Financial Assets:
Cash and cash equivalents	$	63,888	$	63,888	$	40,122	$	40,122
Investments		3,337		3,352		2,552		2,567
Securities available-for-sale		69,391		69,391		26,764		26,764
Commercial loan participations		194,740		194,184		111,472		111,691
Other loans		16,623		16,769		17,714		17,929
Financial Liabilities:
Demand and savings deposits		73,102		73,102		65,583		65,583
Time certificate of deposits		366,432		366,197		290,227		290,044
Short-term borrowings	$	26,858	$	26,854	$	6,858	$	6,858

NOTE 6 – INVESTMENTS:

Investments are carried at cost and consist of the following:

	March 31, 2015				June 30, 2014
	Carrying Cost		Fair Value		Carrying Cost		Fair Value
	(in thousands)
Federal Reserve Bank Stock	$	1,955	$	1,955	$	1,955	$	1,955
Federal Home Loan Bank Stock		1,262		1,262		475		475
Mortgage-backed investment		120		135		122		137
	$	3,337	$	3,352	$	2,552	$	2,567

The investment in Federal Home Loan Bank of San Francisco (“FHLB”) stock is a required investment related to CalFirst Bank’s borrowing arrangements with the FHLB. The FHLB obtains its funding primarily through issuance of consolidated obligations of the Federal Home Loan Bank system. The U.S. Government does not guarantee these obligations, and each of the twelve FHLB’s are generally jointly and severally liable for repayment of each other’s debt. Therefore, the Company’s investment could be adversely impacted by the financial operations of the FHLB and actions by the Federal Housing Finance Agency. These investments have no stated maturity.

The mortgage-backed investment consists of an Agency issued security. The Company has determined that it has the ability to hold this investment until maturity and, given the Company’s intent to do so, anticipates that it will realize the full carrying value of its investment and carries the security at amortized cost.

NOTE 7 – SECURITIES AVAILABLE FOR SALE :

The amortized cost and fair value of securities available for sale at March 31, 2015 were as follows:

(in thousands)	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
U.S. Treasury notes	$	42,333	$	756	$	-		$	43,089
Corporate debt securities		4,771		26		-			4,797
Securities of state and political subdivisions		407		9		-			416
Agency MBS		19,508		116		(4	)		19,620
Mutual fund investment		1,215		98		-			1,313
Equity investment		52		104		-			156
Total securities available-for-sale	$	68,286	$	1,109	$	(4	)	$	69,391

The amortized cost and fair value of securities available for sale at June 30, 2014 were as follows:

(in thousands)	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
U.S. Treasury notes	$	7,930	$	43	$	-		$	7,973
Corporate debt securities		16,030		280		-			16,310
Securities of state and political subdivisions		409		18		-			427
Mutual fund investments		1,306		-		(45	)		1,261
Equity investment		422		371		-			793
Total securities available-for-sale	$	26,097	$	712	$	(45	)	$	26,764

The available-for-sale securities amortized cost and estimated fair value at March 31, 2015, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	(in thousands)
Due in one year or less	$	5,178	$	5,213
Due after one year but less than 5 years		42,333		43,089
Due after five years		19,508		19,620
No stated maturity		1,267		1,469
Total securities available-for-sale	$	68,286	$	69,391

During the nine months ended March 31, 2015, the Company realized a gain of $438,000 from the sale of one equity investment for proceeds of $808,000. The net gain is recognized using the specific identification method and is included in non-interest income. During the nine months ended March 31, 2014, the Company had no realized gains or losses from the sale of available-for-sale securities. The following table presents the fair value and associated gross unrealized loss on available-for-sale securities with a gross unrealized loss at March 31, 2015 and June 30, 2014.

	Less than 12 Months					12 Months or More					Total
	Unrealized Loss			Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss			Estimated Fair Value
	(in thousands)
At March 31, 2015
Agency MBS	$	(4	)	$	3,228	$	-		$	-	$	(4	)	$	3,228
Total	$	(4	)	$	3,228	$	-		$	-	$	(4	)	$	3,228

At June 30, 2014
Mutual fund investment	$	-		$	-	$	(45	)	$	1,261	$	(45	)	$	1,261
Total	$	-		$	-	$	(45	)	$	1,261	$	(45	)	$	1,261

The Company conducts a regular assessment of its investment portfolios to determine whether any securities are other-than-temporarily impaired. In estimating other-than-temporary impairment losses, management considers, among other factors, length of time and extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any recovery. In September 2014, the Company recorded a pre-tax impairment charge of $91,000 related to the mutual fund investment which had a $45,000 unrealized loss at June 30, 2014. While the Company has the ability and intent to retain this investment, given that the fund lowered its dividend by 11% in May 2014 and had traded below its recorded cost for over twelve months, the Company determined that an other than temporary impairment had occurred. The $4,000 unrealized loss at March 31, 2015 related to one Agency MBS is attributable to fluctuations in interest rates and not credit quality. Because the Company has the intent to hold this security and more likely than not will not need to sell it, the Company does not consider this investment to be other-than-temporarily impaired at March 31, 2015.

At March 31, 2015, U.S. Treasury notes and Agency MBS of $61.8 million are pledged to secure borrowings from the FHLB (see Note 11). At June 30, 2014, U.S Treasury notes with carrying values of $7.9 million were pledged to secure the borrowing from the FHLB.

NOTE 8 – NET INVESTMENT IN LEASES

Net investment in leases consists of the following:

	March 31, 2015			June 30, 2014
	(in thousands)
Minimum lease payments receivable	$	309,262		$	340,211
Estimated residual value		13,277			12,996
Less unearned income		(22,870	)		(23,272	)
Net investment in leases before allowances		299,669			329,935
Less allowance for lease losses		(3,348	)		(3,247	)
Less valuation allowance for estimated residual value		(80	)		(80	)
Net investment in leases	$	296,241		$	326,608

The minimum lease payments receivable and estimated residual value are discounted using the internal rate of return method related to each specific capital lease. Unearned income includes the offset of initial direct costs of $2.4 million at March 31, 2015 and $2.5 million at June 30, 2014.

NOTE 9 – COMMERCIAL LOANS

Commercial loans consist of the following:

	March 31, 2015			June 30, 2014
	(in thousands)
Commercial term loans	$	206,651		$	121,236
Commercial real estate loans		7,630			7,920
Revolving lines of credit		393			2,471
Total commercial loans		214,674			131,627
Less unearned income and discounts		(664	)		(469	)
Less allowance for loan losses		(2,647	)		(1,972	)
Net commercial loans	$	211,363		$	129,186

Commercial loans are reported at their outstanding unpaid principal balances reduced by the allowance for loan losses and net of any deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans. Interest income is accrued on the unpaid principal balance. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment to the yield of the related commercial loan.

In addition to the amount outstanding on revolving lines of credit set forth above, the Company had additional unused commitments on revolving lines of credit in the amount of $6.6 million at March 31, 2015 and $13.3 million at June 30, 2014. The Company has a recorded liability for unfunded loan commitments of $50,000 at March 31, 2015 and $25,000 at June 30, 2014 related to such commitments.

NOTE 10 – CREDIT QUALITY OF FINANCING RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

The following tables provide information on the credit profile of the components of the portfolio and allowance for credit losses related to “financing receivables” as defined under ASC Topic 310, Receivables. This disclosure on “financing receivables” covers the Company’s direct finance and sales-type leases and all commercial loans, but does not include operating leases and transactions in process. The portfolio is disaggregated into segments and classifications appropriate for assessing and monitoring the portfolios’ risk and performance. This disclosure does not encompass all risk assets or the entire allowance for credit losses.

Portfolio segments identified by the Company include leases and loans. These segments have been disaggregated into four classes: 1) commercial leases, 2) education, government and non-profit leases, 3) commercial and industrial loans and 4) commercial real estate loans. Relevant risk characteristics for establishing these portfolio classes generally include the nature of the borrower, structure of the transaction and collateral type. The Company’s credit process includes a policy of classifying all leases and loans in accordance with a risk rating classification system consistent with regulatory models under which leases and loans may be rated as “pass”, “special mention”, “substandard”, or “doubtful”. These risk categories reflect an assessment of the ability of the borrowers to service their obligation based on current financial position, historical payment experience, and collateral adequacy, among other factors. The Company uses the following definitions for risk ratings:

Pass – Includes credits of the highest quality as well as credits with positive primary repayment source but one or more characteristics that are of higher than average risk.

Special Mention – Have a potential weakness that if left uncorrected may result in deterioration of the repayment prospects for the lease or loan or of the Company’s credit position at some future date.

Substandard – Are inadequately protected by the paying capacity of the obligor or of the collateral, if any. Substandard credits have a well-defined weakness that jeopardize the liquidation of the debt or indicate the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – Based on current information and events, collection of all amounts due according to the contractual terms of the lease or loan agreement is considered highly questionable and improbable.

The risk classification of financing receivables by portfolio class is as follows:

(dollars in thousands)	Commercial Leases		Education Government Non-profit Leases		Commercial & Industrial Loans		Commercial Real Estate Loans		Total Financing Receivable
As of March 31, 2015:
Pass	$	211,777	$	73,241	$	196,577	$	7,621	$	489,216
Special Mention		13,851		27		9,812		-		23,690
Substandard		4		746		-		-		750
Doubtful		19		4		-		-		23
	$	225,651	$	74,018	$	206,389	$	7,621	$	513,679
Non-accrual	$	42	$	4	$	-	$	-	$	46

As of June 30, 2014:
Pass	$	245,360	$	76,569	$	108,453	$	2,344	$	432,726
Special Mention		6,440		566		9,881		-		16,887
Substandard		4		972		4,917		5,563		11,456
Doubtful		20		4		-		-		24
	$	251,824	$	78,111	$	123,251	$	7,907	$	461,093
Non-accrual	$	43	$	4	$	-	$	-	$	47

The accrual of interest income on leases and loans will be discontinued when the customer becomes ninety days or more past due on its lease or loan payments with the Company, unless the Company believes the investment is otherwise recoverable. Leases and loans may be placed on non-accrual earlier if the Company has significant doubt about the ability of the customer to meet its lease or loan obligations, as evidenced by consistent delinquency, deterioration in the customer’s financial condition or other relevant factors. Payments received while on non-accrual are applied to reduce the Company’s recorded value.

The aging of financing receivables by portfolio class is as follows:

(dollars in thousands)	31-89 Days		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivable		Over 90 Days & Accruing

As of March 31, 2015:
Commercial Leases	$	-	$	42	$	42	$	225,609	$	225,651	$	-
Education, Government, Non-profit Leases		-		4		4		74,014		74,018		-
Commercial and Industrial Loans		-		-		-		206,389		206,389		-
Commercial Real Estate Loans		-		-		-		7,621		7,621		-
	$	-	$	46	$	46	$	513,633	$	513,679	$	-

As of June 30, 2014:
Commercial Leases	$	-	$	43	$	43	$	251,781	$	251,824	$	-
Education, Government, Non-profit Leases		-		4		4		78,107		78,111		-
Commercial and Industrial Loans		-		-		-		123,251		123,251		-
Commercial Real Estate Loans		-		-		-		7,907		7,907		-
	$	-	$	47	$	47	$	461,046	$	461,093	$	-

The allowance balances and activity in the allowance related to financing receivables, by portfolio segment for the three and nine months ended March 31, 2015 and March 31, 2014 are presented in the following table:

(dollars in thousands)	Commercial Leases			Education Government Non-profit Leases		Commercial & Industrial Loans		Commercial Real Estate Loans			Total Financing Receivable
For the three months ended March 31, 2015:
Balance beginning of period	$	2,611		$	817	$	2,436	$	111		$	5,975
Charge-offs		-			-		-		-			-
Recoveries		-			-		-		-			-
Provision		-			-		100		-			100
Balance end of period	$	2,611		$	817	$	2,536	$	111		$	6,075

For the three months ended March 31, 2014:
Balance beginning of period	$	2,552		$	618	$	1,561	$	411		$	5,142
Charge-offs		-			-		-		-			-
Recoveries		-			-		-		-			-
Provision		-			-		-		-			-
Balance end of period	$	2,552		$	618	$	1,561	$	411		$	5,142

For the nine months ended March 31, 2015:
Balance beginning of period	$	2,510		$	817	$	1,761	$	211		$	5,299
Charge-offs		-			-		-		-			-
Recoveries		1			-		-		-			1
Provision		100			-		775		(100	)		775
Balance end of period	$	2,611		$	817	$	2,536	$	111		$	6,075

For the nine months ended March 31, 2014:
Balance beginning of period	$	2,546		$	618	$	1,561	$	411		$	5,136
Charge-offs		(8	)		-		-		-			(8	)
Recoveries		14			-		-		-			14
Provision		-			-		-		-			-
Balance end of period	$	2,552		$	618	$	1,561	$	411		$	5,142

The following table presents the recorded investment in loans and leases and the related allowance based on impairment method as of March 31, 2015 and June 30, 2014 by portfolio segment.

(dollars in thousands)	Commercial Leases		Education Government Non-profit Leases		Commercial & Industrial Loans		Commercial Real Estate Loans		Total Financing Receivable
As of March 31, 2015:
Allowance for lease and loan losses
Individually evaluated for impairment	$	608	$	121	$	-	$	-	$	729
Collectively evaluated for impairment		2,003		696		2,536		111		5,346
Total ending allowance balance	$	2,611	$	817	$	2,536	$	111	$	6,075

Finance receivables
Individually evaluated for impairment	$	5,821	$	750	$	-	$	-	$	6,571
Collectively evaluated for impairment		219,830		73,268		206,389		7,621		507,108
Total ending finance receivable balance	$	225,651	$	74,018	$	206,389	$	7,621	$	513,679

As of June 30, 2014:
Allowance for lease and loan losses
Individually evaluated for impairment	$	27	$	191	$	-	$	-	$	218
Collectively evaluated for impairment		2,483		626		1,761		211		5,081
Total ending allowance balance	$	2,510	$	817	$	1,761	$	211	$	5,299

Finance receivables
Individually evaluated for impairment	$	73	$	976	$	-	$	-	$	1,049
Collectively evaluated for impairment		251,751		77,135		123,251		7,907		460,044
Total ending finance receivable balance	$	251,824	$	78,111	$	123,251	$	7,907	$	461,093

NOTE 11 – BORROWINGS

CalFirst Bank is a member of the Federal Home Loan Bank of San Francisco and can take advantage of FHLB programs for overnight and term advances at published daily rates. Under terms of a blanket collateral agreement, advances from the FHLB are collateralized by qualifying real estate loans and investment securities. The Bank also has authority to borrow from the Federal Reserve Bank (“FRB”) discount window amounts secured by certain lease receivables. Borrowing capacity from the FHLB or FRB may fluctuate based upon the acceptability and risk rating of securities, loan and lease collateral and both the FRB and FHLB could adjust advance rates applied to such collateral at their discretion.

Short-term borrowings consist of funds with remaining maturities of one year or less and long-term debt consists of borrowings with remaining maturities greater than one year. The borrowings from the FHLB and weighted average interest rates at March 31, 2015 and June 30, 2014 were as follows:

	March 31, 2015					June 30, 2014
(dollars in thousands)	Amount		Weighted Average Rate			Amount		Weighted Average Rate

Short-term borrowings
FHLB advances	$	26,858		0.31	%	$	6,858		0.27	%

At March 31, 2015, there was estimated available borrowing capacity from the FHLB of $38.8 million related to qualifying real estate loans of $6.2 million and securities with a carrying value of $62.7 million. There were no borrowings from the FRB, leaving availability of approximately $103.3 million secured by $133.3 million of lease receivables.

NOTE 12 – SEGMENT REPORTING

The Company’s two subsidiaries, CalFirst Bank, an FDIC-insured national bank, and CalFirst Leasing are considered to be two different business segments. Below is a summary of each segment’s financial results for the quarters and nine months ended March 31, 2015 and 2014:

	CalFirst Bank		CalFirst Leasing		Bancorp and Eliminating Entries			Consolidated
			(in thousands)
Quarter ended March 31, 2015
Total interest income	$	5,368	$	419	$	-		$	5,787
Net interest income after provision for credit losses		4,207		467		-			4,674
Other income		899		68		-			967
Net income	$	1,730	$	168	$	(220	)	$	1,678

Quarter ended March 31, 2014
Total interest income	$	4,236	$	613	$	-		$	4,849
Net interest income after provision for credit losses		3,494		627		-			4,121
Other income		275		351		-			626
Net income	$	929	$	416	$	(155	)	$	1,190

Nine months ended March 31, 2015
Total interest income	$	15,296	$	1,461	$	1		$	16,758
Net interest income after provision for credit losses		11,527		1,673		1			13,201
Other income		3,581		4,598		-			8,179
Net income	$	5,071	$	3,345	$	(722	)	$	7,694

Nine months ended March 31, 2014
Total interest income	$	12,632	$	2,106	$	1		$	14,739
Net interest income after provision for credit losses		10,333		2,121		1			12,455
Other income		1,871		2,357		-			4,228
Net income	$	3,826	$	2,166	$	(787	)	$	5,205

Total assets at March 31, 2015	$	636,391	$	92,689	$	(43,885	)	$	685,195
Total assets at March 31, 2014	$	482,048	$	92,459	$	(27,666	)	$	546,841

CALIFORNIA FIRST NATIONAL BANCORP

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

California First National Bancorp, a California corporation (the “Company”), is a bank holding company headquartered in Orange County, California with a bank subsidiary, California First National Bank (“CalFirst Bank” or the “Bank”) and leasing subsidiary, California First Leasing Corp (“CalFirst Leasing”). The primary business of the Company is leasing and financing capital assets, while CalFirst Bank also participates in the syndicated commercial loan market, provides business loans to fund the purchase of assets leased by third parties and offers commercial loans directly to businesses. CalFirst Bank gathers deposits from a centralized location primarily through posting rates on the Internet. All banking and other operations are conducted from one central location.

The Company’s finance, loan and interest income includes interest income earned on the Company’s investment in lease receivables, residuals, commercial loans and investment securities. Non-interest income primarily includes gains realized on the sale of leased property and leases, income from sales-type and operating leases, gains and losses realized on investments, and other income. Income from sales-type leases relates to the re-lease of lease property (“lease extensions”) while income from operating leases generally involves lease extensions that are accounted for as an operating lease rather than as a sales-type lease.

The Company's operating results are subject to quarterly fluctuations resulting from a variety of factors, including the size and credit quality of the lease and loan portfolios, the volume and profitability of leased property being re-marketed through re-lease or sale, the interest rate environment, the market for investment securities, the volume of new lease or loan bookings, including variations in the mix and funding of such bookings, and economic conditions in general. The Company’s principal market risk exposure currently is related to interest rates and the impact the interest rate environment has on its net interest margin. The Company’s current balance sheet structure is short-term in nature, with approximately 60% of interest-earning assets and 82% of interest bearing liabilities repricing within one year. The Company’s interest margin is susceptible to the disparate impact of varying movements in market interest rates as many of the Company’s leases, loans and liquid investments are tied to U.S. Treasury rates and Libor that often do not move in step with bank deposit rates. As a result, this can cause a greater change in net interest income than indicated by the repricing asset and liability comparison.

The Company conducts its business in a manner designed to mitigate risks. However, the assumption of risk is a key source of earnings in the leasing and banking industries and the Company is subject to risks through its leases and loans held in its own portfolio, investment securities, lease transactions in process, and residual investments. The Company takes steps to manage risks through the implementation of strict credit management processes and on-going risk management review procedures.

Critical Accounting Policies and Estimates

The preparation of the Company’s financial statements requires management to make certain critical accounting estimates that impact the stated amount of assets and liabilities at a financial statement date and the reported amount of income and expenses during a reporting period. These accounting estimates are based on management’s judgment and are considered to be critical because of their significance to the financial statements and the possibility that future events may differ from current judgments, or that the use of different assumptions could result in materially different estimates. The critical accounting policies and estimates have not changed from and should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended June 30, 2014.

The Company's estimates are reviewed continuously to ensure reasonableness. However, the amounts the Company may ultimately realize could differ from such estimated amounts.

Overview of Results and Trends

The following discussion is provided in addition to the required analysis of earnings in order to discuss trends in our business. We believe this analysis provides additional meaningful information on a comparative basis.

Net earnings of $1.7 million for the third quarter ended March 31, 2015 were 41.1% above the third quarter of fiscal 2014 due to a $1.0 million, or 119%, increase in commercial loan income and higher non-interest income related to gains recognized on the sale of leases. Net earnings for the first nine months of fiscal 2015 of $7.7 million were up 47.8% from $5.2 million for the same period of the prior year. The stronger growth in nine month net income includes the pre-tax recovery of $2,743,918 from the settlement of claims filed in a TFT-LCD (thin-film transistor liquid display) products antitrust case recognized during the second quarter of fiscal 2015. Third quarter 2015 net income includes the impact of income taxes accrued at 38.5% compared to 33.0% in the third quarter of fiscal 2014, while for the nine months, fiscal 2015 taxes are accrued at 38.5% compared to 37.3% in the nine months ended March 31, 2014.

For the third quarter of fiscal 2015, new lease and loan bookings of $79.5 million were up 30.5% from the third quarter of the prior year. Commercial loans bookings in the third quarter of fiscal 2015 of $40.2 million increased 269.7% from the $10.9 million booked in the third quarter of the prior year. Lease bookings included $37.7 million of direct leases, down from $48.2 million during the third quarter of fiscal 2014 and lease purchases of $1.6 million that compared to $1.9 million of lease purchases during the third quarter of fiscal 2014. For the nine months ended March 31, 2015, total bookings of $269.4 million were up 41.7% from $190.2 million booked in the prior year, and included lease bookings of $157.6 million, consisting of direct leases of $150.4 million and $7.2 million of lease purchases, and the addition of $111.9 million in commercial loans. As a result, the net investment in leases and loans of $507.6 million at March 31, 2015 is up 11.4% from June 30, 2014 and up 15.7% from March 31, 2014.

The Company’s portfolio of investment securities increased to $72.7 million at March 31, 2015 from $29.3 million at June 30, 2014. The increase during the first nine months of fiscal 2015 primarily related to the acquisition of U.S. Treasury notes and U.S. government agency mortgage-backed securities.

Consolidated Statement of Earnings Analysis

Summary – For the third quarter ended March 31, 2015, net earnings of $1.7 million increased $488,000 compared to the third quarter ended March 31, 2014. For the first nine months of fiscal 2015, net earnings of $7.7 million increased $2.5 million, or 47.8%, compared to the first nine months of fiscal 2014. Diluted earnings per share of $0.16 per share for the third quarter of fiscal 2015 were up 41.1% from the $0.11 per share for the third quarter of fiscal 2014. For the nine months ended March 31, 2014, diluted earnings per share of $0.74 increased 47.7%, compared to $0.50 per share for the same prior year period.

Net Interest Income – Net interest income is the difference between interest earned on the investment in leases, loans, securities and other interest earning investments and interest paid on deposits and other borrowings. Net direct finance, loan and interest income is affected by changes in the volume and mix of interest earning assets, the movement of interest rates, and funding and pricing strategies.

The following table presents the components of the increases (decreases) in net interest income before provision for credit losses by volume and rate:

	Quarter ended March 31, 2015 vs 2014									Nine Months ended March 31, 2015 vs 2014
	Volume			Rate			Total			Volume			Rate			Total
	(in thousands)
Interest income
Net investment in leases	$	(297	)	$	123		$	(174	)	$	(711	)	$	514		$	(197	)
Commercial loans		993			56			1,049			2,640			(328	)		2,312
Investment securities		275			(220	)		55			305			(397	)		(92	)
Interest-earning deposits with banks		2			6			8			(16	)		12			(4	)
		973			(35	)		938			2,218			(199	)		2,019
Interest expense
Demand and savings deposits		5			(1	)		4			(9	)		-			(9	)
Time deposits		185			74			259			389			81			470
Short-term borrowings		-			22			22			-			37			37
		190			95			285			380			118			498
Net interest income	$	783		$	(130	)	$	653		$	1,838		$	(317	)	$	1,521

Net interest income was $4.8 million for the quarter ended March 31, 2015, a $653,000, or 15.8% increase compared to the same quarter of the prior year. Total interest income for the third quarter of fiscal 2015 increased 19.3% to $5.8 million from $4.8 million during the third quarter of the prior year. The increase was primarily due to higher commercial loan income offset slightly by lower finance income . Commercial loan income increased by $1.05 million on a 112.6% increase in average loan balances to $203.9 million and a 11 basis point improvement in yield to 3.79%. A decrease of $174,500 in finance income reflected an 8.1% decrease in the average investment in leases to $301.4 million offset by a 16 basis point improvement in average yield to 4.63%. Investment interest income increased by $63,100 as average investment balances increased 97.4% from $30.9 million to $61.1 million but average yields fell to 2.21% from 3.66%, contributing to a reduction in the overall yield on cash and investments by 22 basis points to 1.24% for the quarter ended March 31, 2015. During the third quarter of fiscal 2015, interest expense on deposits and borrowings increased by $285,250, or 39%, reflecting a 32% increase in average balances to $443.7 million and a 5 basis point increase in average interest rate paid to 0.91%. The average rate paid during the third quarter benefitted from increased borrowings from the FHLB at an average rate of 0.32% that offset an increase in average deposit costs from 0.87% to 0.95%.

(dollars in thousands)	Quarter ended March 31, 2015						Quarter ended March 31, 2014
Assets	Average Balance (1)		Interest		Yield/ Rate		Average Balance (1)		Interest		Yield/ Rate
Interest-earning assets
Interest-earning deposits with banks	$	56,554	$	28	0.20	%	$	52,006	$	20	0.15	%
Investment securities		61,062		338	2.21	%		30,929		283	3.66	%
Commercial loans		203,926		1,930	3.79	%		95,905		881	3.67	%
Net investment in leases		301,380		3,491	4.63	%		327,990		3,665	4.47	%
Total interest-earning assets		622,922		5,787	3.72	%		506,830		4,849	3.83	%
Other assets		44,249						43,657
	$	667,171					$	550,487

Liabilities and Shareholders' Equity
Interest-bearing liabilities
Demand and savings deposits	$	71,890		86	0.48	%	$	67,106		82	0.49	%
Time deposits		344,908		905	1.05	%		268,285		646	0.96	%
Other borrowings		26,858		22	0.32	%		-		-	0.00	%
Total interest-bearing liabilities		443,656		1,013	0.91	%		335,391		728	0.87	%
Non-interest bearing demand deposits		1,921						1,849
Other liabilities		35,244						31,795
Shareholders' equity		186,350						181,452
	$	667,171					$	550,487
Net interest income			$	4,774					$	4,121

Net interest spread (2)					2.81	%					2.96	%
Net interest margin (3)					3.07	%					3.25	%
Average interest earning assets over average interest bearing liabilities					140.4	%					151.1	%

(1)	Average balances are based on month-end balances, include non-accrual leases, and are presented net of unearned income.
(2)	Net interest spread is the difference between the average rates on interest-earning assets and interest-bearing liabilities.
(3)	Net interest margin represents net interest income as a percent of average interest earning assets.

For the nine months ended March 31, 2015, net interest income was $14.0 million, a $1.5 million or 12.2% increase from $12.5 million earned during the same period of the prior year. Total interest income for the first nine months of fiscal 2015 increased 13.7% to $16.8 million due to a $2.3 million increase in commercial loan income that offset a $197,700 decrease in finance income. Over the first nine months of fiscal 2015, average commercial loan balances increased 108% to $171.9 million with the average yield declining by 25 basis points to 3.70%. The average investment in leases declined by 6% to $310.4 million while the average yield earned increased 22 basis points to 4.71%. Investment interest income for the nine months declined by $96,000, or 8.5%, as average investment balances increased 29% to $50.0 million, but new treasury and mortgage securities replacing maturing corporate securities resulted in average yields declining by 106 basis points to 2.53%. Average cash balances declined 21% to $52.8 million but yields improved 3 basis points, resulting in the overall yield on average cash and investments of $102.8 million declining only 9 basis points to 1.32% for the nine months ended March 31, 2015. Interest expense paid for the nine months ended March 31, 2015 increased by $497,900, 21.8%, to $2.8 million due to a 19% increase in average deposits and borrowings to $405.5 million while the average rate paid increased 2 basis points to 0.91%. The average rate paid during the first nine months of fiscal 2015 benefitted from increased FHLB borrowings at an average rate of 0.31% that offset an increase in average deposit costs from 0.90% to 0.94%.

	Nine months ended March 31, 2015						Nine months ended March 31, 2014
Assets	Average Balance (1)		Interest		Yield/ Rate		Average Balance (1)		Interest		Yield/ Rate
Interest-earning assets
Interest-earning deposits with banks	$	52,758	$	73	0.18	%	$	66,485	$	77	0.15	%
Investment securities		50,019		948	2.53	%		38,661		1,040	3.59	%
Commercial loans		171,871		4,767	3.70	%		82,813		2,455	3.95	%
Net investment in leases		310,448		10,970	4.71	%		331,574		11,167	4.49	%
Total interest-earning assets		585,096		16,758	3.82	%		519,533		14,739	3.78	%
Other assets		46,419						34,541
	$	631,515					$	554,074

Liabilities and Shareholders' Equity
Interest-bearing liabilities
Demand and savings deposits	$	66,543		246	0.49	%	$	69,042		255	0.49	%
Time deposits		322,856		2,499	1.03	%		270,850		2,029	1.00	%
Other borrowings		16,092		37	0.31	%		-		-	0.00	%
Total interest bearing liabilities		405,491		2,782	0.91	%		339,892		2,284	0.90	%
Non-interest bearing demand deposits		2,041						1,829
Other liabilities		38,484						30,838
Shareholders' equity		185,499						181,515
	$	631,515					$	554,074
Net interest income			$	13,976					$	12,455

Net interest spread (2)					2.91	%					2.88	%
Net interest margin (3)					3.18	%					3.20	%
Average interest earning assets over average interest bearing liabilities					144.3	%					152.9	%

(1)	Average balances are based on month-end balances, include non-accrual leases, and are presented net of unearned income.
(2)	Net interest spread is the difference between the average rates on interest-earning assets and interest-bearing liabilities.
(3)	Net interest margin represents net interest income as a percent of average interest earning assets.

The average yield on all interest-earning assets during the third quarter of fiscal 2015 decreased by 11 basis points to 3.72% from 3.83% for the third quarter ended March 31, 2014, while the average rate paid on all interest-bearing liabilities increased by 5 basis points to .91% from 0.87%. As a result, the net interest margin decreased to 3.07% for the third quarter of fiscal 2015 from 3.25% in fiscal 2014. For the first nine months of fiscal 2015, the net interest margin of 3.18% is down from 3.20% for the first nine months of fiscal 2014. While net interest income has increased in both 2015 periods due to growth in assets, the resulting net yield declined as growth was strongest in lower yielding assets while funding costs have started to rise.

Provision for Credit Losses – The Company made a $100,000 provision for credit losses during the third quarter of fiscal 2015, which compared to no provision made during the quarter ending March 31, 2014. The third quarter 2015 provision related to the 11% growth in the loan portfolio during the quarter and a slight increase in credit risk of the lease portfolio. During the first nine months of fiscal 2015, the Company made a $775,000 provision for credit losses compared to no provision made during the same period in fiscal 2014. The provision for the first nine months of fiscal 2015 relates to the 63% growth in the commercial loan portfolio over the nine months and some increased credit risk in the lease portfolio. At March 31, 2015, the allowance for credit losses of $6.1 million is considered to be consistent with the credit profile of the consolidated portfolio.

Non-interest Income – For the third quarter of fiscal 2015, n on-interest income increased 54.5% to $967,200 from $626,100 for the third quarter of the prior year. This increase was principally due to a $688,800 gain on sale of leases that offset a $363,000 decline in income from leases reaching the end of term during the period as the amount of residual realization from lease extensions declined. Non-interest income of $8.2 million for the first nine months of fiscal 2015 was up 94% from $4.2 million for the first nine months of fiscal 2014. Non-interest income for the nine months ended March 31, 2015 includes a $2.7 million recovery during the second quarter from the settlement of claims filed in antitrust litigation against certain manufacturers of thin-film transistor liquid display panels (“LCD Litigation”). Excluding that income, the increase in non-interest income during the first nine months of 2015 primarily related to $718,000 increase in gains from sales of leases and a $347,000 securities gain. Income realized from end-of-term leases during the first nine months of fiscal 2015 was up $166,000 from the same period in fiscal 2014.

Non-interest Expenses – During the third quarter of fiscal 2015, non-interest expenses of $2.9 million were 2.0% lower than the third quarter of fiscal 2014. The drop in expenses during the third quarter related to lower current compensation expenses. For the first nine months of fiscal 2015, non-interest expenses of $8.9 million were up 5.7% from $8.4 million for the first nine months of fiscal 2014. The increase in non-interest expenses for the nine months is primarily due to higher compensation expenses offset by lower recruiting, general and occupancy expenses.

Taxes – Income taxes were accrued at a tax rate of 38.5% for the third quarter and first nine months of fiscal 2015 which represents the estimated effective tax rate for the fiscal year ending June 30, 2015, compared to 33.0% for the third quarter of fiscal 2014 and 37.25% for the nine months ended March 31, 2014. The reduced tax rate in the third quarter of fiscal 2014 incorporated a lower state tax rate for fiscal 2014 than projected earlier in that fiscal year.

Financial Condition Analysis

Consolidated total assets at March 31, 2015 of $685.2 million increased 18.2% from $579.6 million at June 30, 2014. The growth in total assets is due to an increase of $82.2 million in the commercial loan portfolio, a $42.6 million increase in securities available-for-sale and $23.8 million increase in cash and due from banks, offset by a decrease of $30.4 million in net investment in leases and $15.0 million decline in property acquired for transaction in process.

Lease Portfolio

During the first nine months of fiscal 2015, 80.0% of the direct leases booked by the Company were held in its own portfolios, with 20.0% participated with other financial institutions. In addition, during the nine months ended March 31, 2015 the Company sold or assigned receivables of $15.2 million held in its portfolio at June 30, 2014. As a result, the Company’s net investment in leases at March 31, 2015 of $296.2 million was down 9.3% from $326.6 million at June 30, 2014, a reduction of $30.4 million, and 12.1% from $337.0 million at March 31, 2014.

The Company often makes payments to purchase leased property prior to the commencement of the lease. The disbursements for these lease transactions in process are generally made to facilitate the lessees’ property implementation schedule. The lessee is contractually obligated by the lease to make rental payments directly to the Company during the period that the transaction is in process, and the lessee generally is obligated to reimburse the Company for all disbursements under certain circumstances. Income is not recognized while a transaction is in process and prior to the commencement of the lease. At March 31, 2015, the Company’s investment in property acquired for transactions in process of $25.6 million was down 36.9% from $40.6 million at June 30, 2014, and down 18.3% from $31.3 million at March 31, 2014.

Commercial Loan Portfolio

The Company’s commercial loan portfolio increased by $82.2 million, or 63.6%, to $211.4 million at March 31, 2015 from $129.2 million at June 30, 2014. The increase in the Company’s commercial loan portfolio included the investment of $111.9 million in new commercial loan participations offset by loan payoffs and repayments aggregating to $29.7 million. In addition, at March 31, 2015 the Company had unfunded commercial loan commitments of $34.0 million compared to $14.8 million at June 30, 2014.

Asset Quality

The Company monitors the performance of all leases and loans held in its own portfolio, transactions in process, as well as lease transactions assigned to lenders, if the Company retains a residual investment in the leased property subject to those leases. An ongoing review of all leases and loans ten or more day’s delinquent is conducted. Leases and loans that are delinquent with the Company or an assignee are coded in the Company’s accounting and tracking systems in order to provide management visibility, periodic reporting, and appropriate reserves. The accrual of interest income on leases and loans generally will be discontinued when the lease or loan becomes ninety days or more past due on its payments with the Company, unless the Company believes the investment is otherwise recoverable. Leases and loans may be placed on non-accrual earlier if the Company has significant doubts about the ability of the customer to meet its obligations, as evidenced by consistent delinquency, deterioration in the customer’s financial condition or other relevant factors.

The following table summarizes the Company’s non-performing leases and loans.

	March 31, 2015			June 30, 2014
Non-performing Leases and Loans	(dollars in thousands)
Non-accrual leases and loans	$	46		$	47
Restructured leases		-			-
Leases past due 90 days (other than above)		-			-
Total non-performing leases and loans	$	46		$	47
Non-performing assets as % of net investment in leases and loans before allowances		0.01	%		0.01	%

The change in non-performing assets at March 31, 2015 from June 30, 2014 reflects a payment received on a non-accrual lease while no new leases were added. In addition to the non-performing leases and loans identified above, there was $6.5 million of investment in leases and loans at March 31, 2015 classified as substandard or with credits that currently are experiencing financial difficulties or that management believes may experience financial difficulties in the future. This amount compared to $6.6 million at June 30, 2014 and $6.1 million at March 31, 2014. Although these credits have been identified as potential problems, they may never become non-performing. These potential problem leases and loans are considered in the determination of the allowance for credit losses.

Allowance for Credit Losses

The allowance for credit losses provides coverage for probable and estimable losses in the Company’s lease and loan portfolios. The allowance recorded is based on a quarterly review of all leases and loans outstanding and transactions in process. Lease receivables, loans or residuals are charged off when they are deemed completely uncollectible. The determination of the appropriate amount of any provision is based on management’s judgment at that time and takes into consideration all known relevant internal and external factors that may affect the portfolios.

	Nine months ended March 31,
	2015			2014
	(dollars in thousands)

Property acquired for transactions in process before allowance	$	25,618		$	31,349
Net investment in leases and loans before allowance		513,679			443,701
Net investment in “risk assets”	$	539,297		$	475,050

Allowance for credit losses at beginning of period	$	5,299		$	5,147
Charge-off of lease receivables		-			(8	)
Recovery of amounts previously written off		1			14
Provision for credit losses		775			-
Allowance for credit losses at end of period	$	6,075		$	5,153

Components of allowance for credit losses:
Allowance for lease losses	$	3,348		$	2,930
Residual valuation allowance		80			251
Allowance for loan losses		2,647			1,972
	$	6,075		$	5,153
Allowance for credit losses as a percent of net investment in leases and loans before allowances		1.18	%		1.16	%
Allowance for credit losses as a percent of net investment in “risk assets”		1.13	%		1.08	%

The allowance for credit losses increased $776,000 to $6.1 million (1.18% of net investment in leases and loans before allowances) at March 31, 2015 from $5.3 million (1.15% of net investment in leases and loans before allowances) at June 30, 2014. This allowance consisted of $768,000 allocated to specific accounts that were identified as problems and $5.3 million that was available to cover losses inherent in the portfolio. This compared to $250,000 allocated to specific accounts at June 30, 2014 and $5.05 million available for losses inherent in the portfolio at that time. The increase in the specific allowance at March 31, 2015 primarily relates to two lease customers that filed bankruptcy during the quarter. The Company considers the allowance for credit losses of $6.1 million at March 31, 2015 adequate to cover losses specifically identified as well as inherent in the lease and loan portfolios. However, no assurance can be given that the Company will not, in any particular period, sustain lease and loan losses that are sizeable in relation to the amount reserved, or that subsequent evaluations of the lease and loan portfolio, in light of factors then prevailing, including economic conditions and the on-going credit review process, will not require significant increases in the allowance for credit losses. Among other factors, economic and political events may have an adverse impact on the adequacy of the allowance for credit losses by increasing credit risk and the risk of potential loss even further.

Investment Securities Available-for-sale

Total available-for-sale investment securities were $69.4 million as of March 31, 2015 compared with $26.8 million at June 30, 2014. The amortized cost and fair value of the Company’s securities portfolio available-for-sale at March 31, 2015 and June 30, 2014 are as follows:

	As of March 31, 2015				As of June 30, 2014
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale
U.S. Treasury notes	$	42,333	$	43,089	$	7,930	$	7,973
Corporate debt securities		4,771		4,797		16,030		16,310
Securities of state and political subdivisions		407		416		409		427
Agency MBS		19,508		19,620		-		-
Mutual fund investment		1,215		1,313		1,306		1,261
Equity investment		52		156		422		793
Total securities available-for-sale	$	68,286	$	69,391	$	26,097	$	26,764

During the first nine months of fiscal 2015, the Company’s portfolio of securities available-for-sale increased $42.6 million through new purchases of $59.5 million offset by maturities, sales and pay downs of securities of $16.7 million and an impairment charge of $91,000. The Company recorded a pre-tax impairment charge of $91,000 related to a mutual fund investment held in the securities available-for-sale portfolio. While the Company intends to retain this investment for a sufficient time to recover its investment, the investment fund lowered its dividend by 11% in May 2014 and had traded below its recorded cost for over twelve months, thus the Company determined that an other than temporary impairment had occurred and recorded a valuation adjustment in the first quarter of fiscal 2015. At March 31, 2015, the weighted average maturity of the portfolio is 6.7 years and the corresponding weighted average yield was 1.95%.

Liquidity and Capital Resources

The Company funds its operating activities through internally generated funds, bank deposits, FHLB borrowings and non-recourse debt. At March 31, 2015 and June 30, 2014, the Company’s cash and due from banks were $63.9 million and $40.1 million, respectively.

Deposits at CalFirst Bank totaled $439.5 million at March 31, 2015, up 23.5% from $355.8 million at June 30, 2014 and up 31.6% from $334.1 million at March 31, 2014. The $105.4 million increase from March 31, 2014 was used to fund the growth in the Bank’s portfolios and maintain liquidity. The following table presents average balances and average rates paid on deposits for the nine months ended March 31, 2015 and 2014:

	Nine months ended March 31,
	2015						2014
	Ending Balance		Average Balance		Average Rate Paid		Ending Balance		Average Balance		Average Rate Paid
	(in thousands)
Non-interest bearing demand deposits	$	2,601	$	2,041	n/a		$	2,174	$	1,829	n/a
Interest-bearing demand deposits		2,987		1,750	0.20	%		1,442		1,696	0.20	%
Money market deposits		67,514		64,793	0.50	%		64,442		67,346	0.50	%
Time deposits, less than $100,000		63,765		58,255	1.03	%		50,345		51,569	1.00	%
Time deposits, $100,000 or more	$	302,667	$	264,601	1.03	%	$	215,683	$	219,281	1.00	%

The following table shows the maturities of certificates of deposits at March 31, 2015:

	$250,000 or less		More than $250,000
	(in thousands)
Under 3 months	$	64,734	$	11,799
3 – 6 months		51,923		13,448
7 – 12 months		111,280		28,760
13 – 24 months		60,415		10,677
25 – 36 months		12,071		1,325
	$	300,423	$	66,009

The Bank has borrowing agreements with the Federal Home Loan Bank of San Francisco (“FHLB”) and as such, can take advantage of FHLB programs for overnight and term advances at published daily rates. The Bank has short-term borrowings outstanding of $26.9 million at March 31, 2015 at an average rate of 0.32% and had no outstanding balance at March 31, 2014. Under terms of the blanket collateral agreement, advances from the FHLB are collateralized by qualifying securities and real estate loans, with an estimated $38.8 million still available under the agreement as of March 31, 2015. The Bank also has the authority to borrow from the Federal Reserve Bank (“FRB”) discount window amounts secured by certain lease receivables with unused borrowing availability at March 31, 2015 of approximately $103.3 million.

An additional source of liquidity for financing and managing the lease portfolio comes from selling, participating or assigning certain lease term payments to banks or other financial institutions. If the transaction is characterized as a sale of the financial asset or meets the parameters of a participating interest, the lease is removed from the balance sheet and a resulting gain or loss recognized. If the Company retains a controlling interest in the lease, the assignment is considered a secured borrowing with the associated financing characterized as non-recourse debt. The assigned lease payments are discounted at fixed rates such that the lease payments are sufficient to fully amortize the aggregate outstanding debt. At March 31, 2015, the Company had outstanding non-recourse debt aggregating $11.6 million relating to discounted lease rentals assigned to unaffiliated lenders, up from $8.6 million at June 30, 2014 and $9.5 million at March 31, 2014. In the past, the Company has been able to obtain adequate non-recourse funding commitments, and the Company believes it will be able to do so in the future.

The following table presents capital and capital ratio information for the Company and CalFirst Bank as of March 31, 2015 and June 30, 2014. Information for March 31, 2015 reflects the transition to the Basel III capital standard from previous regulatory capital adequacy guidelines under the Basel I framework. The Basel III capital standard phases in through 2019 and revises the definition of capital, increases minimum capital ratios, introduces regulatory capital buffers above those minimums, introduces a common equity Tier 1 capital ratio and revises the rules for calculating risk-weighted assets. Under Basel III, the Bank could make a one-time election to opt out of the requirement to include components of accumulated other comprehensive income (loss) in common equity Tier 1 capital. The Bank has elected to opt-out of the accumulated other comprehensive income (loss) requirement. The adoption of the new capital standard had an immaterial impact on capital levels and related ratios and the Company and Bank continue to exceed regulatory capital requirements and are considered “well-capitalized” under guidelines established by the FRB and OCC.

	March 31,					June 30,
	2015					2014
	(dollars in thousands)
California First National Bancorp	Amount		Ratio			Amount		Ratio
Common equity Tier 1 capital	$	186,626		30.87	%	$	183,321		31.84	%
Tier 1 risk-based capital	$	186,626		30.87	%	$	183,321		31.84	%
Total risk-based capital	$	192,751		31.88	%	$	188,645		32.76	%
Tier 1 leverage capital	$	186,626		28.27	%	$	183,321		32.80	%

California First National Bank
Common equity Tier 1 capital	$	107,851		18.89	%	$	102,780		19.61	%
Tier 1 risk-based capital	$	107,851		18.89	%	$	102,780		19.61	%
Total risk-based capital	$	113,610		19.90	%	$	107,639		20.54	%
Tier 1 leverage capital	$	107,851		17.47	%	$	102,780		21.09	%

Contractual Obligations and Commitments

The following table summarizes various contractual obligations as of March 31, 2015. Commitments to purchase property for leases are binding and generally have fixed expiration dates or other termination clauses. Commercial loan commitments are agreements to lend to a customer or purchase a participation provided there is no violation of any condition in the contract. These commitments generally have fixed expiration dates or other termination clauses. Since the Company expects some of the commitments to expire without being funded, the total amounts do not necessarily represent the Company’s future liquidity requirements.

		Due by Period
Contractual Obligations		Total		Less Than 1 Year		1-5 Years		After 5 Years
	(in thousands)
Lease property purchases (1)		$	50,915	$	50,915	$	-	$	-
Commercial loan and lease purchase commitments			38,969		38,969		-		-
FHLB Borrowings			26,858		26,858		-		-
Operating lease rental payments			2,345		650		1,695		-
Total contractual commitments		$	119,087	$	117,392	$	1,695	$	-

___________________________________________

(1)

Disbursements to purchase property on approved leases are estimated to be completed within one year, but it is likely that some portion could be deferred to later periods.

The need for cash for operating activities will increase as the Company expands. The Company believes that existing cash balances, cash flow from operations, cash flows from its financing and investing activities, and assignments (on a non-recourse basis) of lease payments will be sufficient to meet its foreseeable financing needs.

Inflation has not had a significant impact upon the operations of the Company.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss of value in a financial instrument arising from changes in market indices such as interest rates, credit spreads and securities prices. The Company’s principal market risk exposure is interest rate risk, which is the exposure due to differences in the repricing characteristics of interest-earning assets and interest-bearing liabilities. Market risk also arises from the impact that fluctuations in interest rates may have on security prices that may result in changes in the values of financial instruments, such as available-for-sale securities that are accounted for at fair value. As the banking operations of the Company have grown and CalFirst Bank’s deposits have increased significantly, the Company is subject to greater interest rate risk. The Bank has an Asset/Liability Management Committee and policies established to manage its interest rate risk. CalFirst Leasing has no interest-bearing debt, and non-recourse debt does not represent an interest rate risk to the Company because it is fully amortized through direct payments from lessees to the purchaser of the lease receivable.

At March 31, 2015, the Company had $65.4 million of cash or invested in securities of very short duration. The Company’s investment in gross lease payments receivable and commercial loans of $537.2 million consists of leases with fixed rates and loans with variable rates, however, $331.3 million of such investment matures or reprices within one year of March 31, 2015. Of the $72.7 million investment in securities, $6.7 million mature within twelve months. This compares to interest bearing deposit and borrowing liabilities of $463.8 million, of which $379.3 million, or 82%, mature within one year. Based on the foregoing, at March 31, 2015 the Company had assets of $401.9 million subject to changes in interest rates over the next twelve months, compared to repricing liabilities of $379.3 million.

The consolidated gap analysis below sets forth the maturity and repricing characteristics of interest-earning assets and interest-bearing liabilities for selected time bands. The mismatch between repricing or maturities within a time band is commonly referred to as the “gap” for that period. A positive gap (asset sensitive), where interest rate sensitive assets exceed interest rate sensitive liabilities, generally will result in the net interest margin increasing in a rising rate environment and decreasing in a falling rate environment. A negative gap (liability sensitive) will generally have the opposite result on the net interest margin. The gap analysis at March 31, 2015 presented below indicates that net interest income should increase during periods of rising interest rates and decrease during periods of falling interest rates. However, the static gap analysis does not assess the relative sensitivity of assets and liabilities to changes in interest rates and other factors that could have an impact on interest rate sensitivity or net interest income. Sudden and substantial changes in interest rates may adversely impact income to the extent that the interest rates associated with the assets and liabilities do not change at the same speed, to the same extent, or on the same basis.

Consolidated Interest Rate Sensitivity

	Time to Maturity, Reprice, or Replacement at March 31, 2015
(in thousands)	3 Months or Less			Over 3 to 12 Months			Over 1 Through 5 years			Over 5 years			Non-rate Sensitive			Total

Rate Sensitive Assets (RSA):
Cash due from banks	$	63,888		$	-		$	-		$	-		$	-		$	63,888
Investment securities		1,469			5,214			43,089			22,956			-			72,728
Net investment in leases		32,889			99,312			182,218			8,119			(26,297	)		296,241
Commercial loans		198,244			900			15,530			-			(3,311	)		211,363
Non-interest earning assets		-			-			-			-			40,975			40,975
Totals		296,490			105,426			240,837			31,075			11,367		$	685,195
Cumulative total for RSA	$	296,490		$	401,916		$	642,753		$	673,828

Rate Sensitive Liabilities (RSL):
Demand and savings deposits	$	70,501		$	-		$	-		$	-		$	2,601		$	73,102
Time deposits		76,533			205,411			84,488			-			-			366,432
Borrowings		6,858			20,000			-			-			-			26,858
Non-interest bearing liabilities		-			-			-			-			31,494			31,494
Stockholders' equity		-			-			-			-			187,309			187,309
Totals		153,892		$	225,411		$	84,488		$	-		$	221,404		$	685,195
Cumulative total for RSL	$	153,892		$	379,303		$	463,791		$	463,791

Interest rate sensitivity gap	$	142,598		$	(119,985	)	$	156,349		$	31,075
Cumulative GAP	$	142,598		$	22,613		$	178,962		$	210,037

RSA divided by RSL (cumulative)		192.66	%		105.96	%		138.59	%		145.29	%
Cumulative GAP / total assets		20.81	%		3.30	%		26.12	%		30.65	%

In addition to the consolidated gap analysis, the Bank measures its asset/liability position through duration measures and sensitivity analysis, and calculates the potential effect on earnings using maturity gap analysis. The interest rate sensitivity modeling includes the creation of prospective twelve month "baseline" and "rate shocked" net interest income simulations. After a "baseline" net interest income is determined, using assumptions that the Bank deems reasonable, market interest rates are raised or lowered by 100 to 300 basis points instantaneously, parallel across the entire yield curve, and a "rate shocked" simulation is run. Interest rate sensitivity is then measured as the difference between calculated "baseline" and "rate shocked" net interest income.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

As of the end of the period covered by this report, the Company's management, including its principal executive officer and its principal financial officer, evaluated the effectiveness of the Company's disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Company’s Chief Executive Officer and Executive Vice President concluded that the Company's disclosure controls and procedures were effective as of March 31, 2015 to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There were no changes made during the most recent fiscal quarter to the Company's internal controls over financial reporting that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A.

RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes share repurchase activity for the quarter ended March 31, 2015:

Period	Total number of shares Purchased		Average price paid per share		Maximum Number of shares that may yet be purchased under the plan (1)


January 1, 2015 - January 31, 2015		-	$	-		368,354
February 1, 2015 - February 28, 2015		-	$	-		368,354
March 1, 2015 - March 31, 2015		-	$	-		368,354
		-	$	-

1)	In April 2001, the Board of Directors authorized management, at its discretion, to repurchase up to 1,000,000 shares of common stock.

ITEM 6.

EXHIBITS

(a) Exhibits		Page
31.1	Rule 13a-14(a)/15d-14(a) Certifications of Principal Executive Officer	30
31.2	Rule 13a-14(a)/15d-14(a) Certifications of Principal Financial Officer	31
31.3	Section 1350 Certifications by Principal Executive Officer and Principal Financial Officer	32

CALIFORNIA FIRST NATIONAL BANCORP

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			California First National Bancorp Registrant




DATE:	May 13, 2015	BY:	/s/ S. Leslie Jewett
			S. Leslie Jewett Executive Vice President (Principal Financial and Accounting Officer)

TABLE OF CONTENTS

CFNB 10-Q Quarter ended March 31, 2015