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California First Leasing Corporation ‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗ |
Interim Report to Shareholders
Third Quarter and Nine Months Ended March 31, 2023
California First Leasing Corporation, (OTCQX: CFNB, “Company”), headquartered in Newport Beach, California, is an internally managed non-diversified closed-end investment company registered under the Investment Company Act of 1940, as amended. The Company continues its lease business while using equity and other investments to maximize current income and generate capital appreciation.
This interim report for the quarter and nine months ended March 31, 2023, prepared by management without audit, provides an update to the annual report for the fiscal year ended June 30, 2022. Accordingly, it does not contain all the information required to meet annual or semiannual disclosure obligations and should be reviewed in conjunction with the annual report filed with the Securities and Exchange Commission and available on the Company’s website at https://www.calfirstlease.com/investor/. The Company’s quarterly and year-to-date earnings and net asset value per share can fluctuate widely due to including gains and losses on equity securities that are determined based on stock prices on the last day of a fiscal quarter.
Selected Financial Data
|
(in thousands, except per share data) |
Three Months Ended |
Nine Months Ended | ||||||||||
|
March 31, |
March 31, | |||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 | |||||
|
Dividends and interest income |
$ |
1,763 |
$ |
996 |
$ |
4,243 |
$ |
3,028 | ||||
|
Net realized gain (loss) on investments |
(46) |
8,691 |
(2,076) |
8,558 | ||||||||
|
Net change in unrealized securities gain (loss) |
3,880 |
(13,054) |
6,241 |
(1,203) | ||||||||
|
Realized and unrealized securities gain (loss) |
$ |
3,334 |
$ |
(4,363) |
$ |
4,165 |
$ |
7,355 | ||||
|
Net investment income (loss) |
5,097 |
(3,367) |
8,408 |
10,383 | ||||||||
|
Lease income |
1,751 |
782 |
4,024 |
2,714 | ||||||||
|
Operating Expenses |
781 |
720 |
2,139 |
2,265 | ||||||||
|
Income taxes (benefit) |
1,348 |
(1,080) |
2,190 |
2,534 | ||||||||
|
Net Income (loss) |
$ |
4,719 |
$ |
(2,225) |
$ |
8,103 |
$ |
8,298 | ||||
|
Net asset value per share, beginning of period |
$ |
21.22 |
$ |
22.86 |
$ |
20.60 |
$ |
22.39 | ||||
|
Net income |
0.49 |
(0.22) |
0.81 |
0.81 | ||||||||
|
Dividends paid |
- |
- |
- |
0.56 | ||||||||
|
Net gain on share repurchase |
- |
- |
0.30 |
- | ||||||||
|
Net asset value per share, end of period |
$ |
21.71 |
$ |
22.64 |
$ |
21.71 |
$ |
22.64 | ||||
|
Weighted number of shares outstanding |
9,703 |
10,284 |
10,057 |
10,284 | ||||||||
|
Shares outstanding, end of period |
9,703 |
10,284 |
9,703 |
10,284 | ||||||||
|
At March 31, |
At June 30, |
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|
Balance Sheet Data |
2023 |
|
2022 |
2022 |
||||||||
|
Cash and cash equivalents |
$ |
45,453 |
$ |
33,684 |
$ |
53,808 |
||||||
|
Equity securities |
149,569 |
180,103 |
131,637 |
|||||||||
|
Lease and loan assets |
20,388 |
30,243 |
28,032 |
|||||||||
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Total assets |
216,330 |
245,541 |
216,516 |
|||||||||
|
Shareholders' equity |
$ |
210,621 |
$ |
232,839 |
$ |
211,880 |
||||||
Equity Investment Portfolio
The investment in equity securities at March 31, 2023 and fiscal year end June 30, 2022 is summarized in four industry groups below.
| (in thousands) |
Unrealized |
|||||||||||
|
|
Cost Basis |
|
Gains |
|
(Losses) |
|
FMV | |||||
|
as of March 31, 2023 |
||||||||||||
|
Commercial / Industrial |
$ |
79,284 |
$ |
20,265 |
$ |
(7,911) |
$ |
91,638 | ||||
|
Consumer |
26,186 |
417 |
(3,982) |
22,621 | ||||||||
|
Financial |
16,477 |
2,166 |
(1,561) |
17,082 | ||||||||
|
Healthcare |
14,983 |
3,245 |
- |
18,228 | ||||||||
|
$ |
136,930 |
$ |
26,093 |
$ |
(13,454) |
$ |
149,569 | |||||
|
as of June 30, 2022 |
||||||||||||
|
Commercial / Industrial |
$ |
65,534 |
$ |
11,062 |
$ |
(7,537) |
$ |
69,059 | ||||
|
Consumer |
29,533 |
363 |
(2,359) |
27,537 | ||||||||
|
Financial |
15,191 |
1,472 |
(1,219) |
15,444 | ||||||||
|
Healthcare |
14,983 |
4,614 |
- |
19,597 | ||||||||
|
$ |
125,241 |
$ |
17,511 |
$ |
(11,115) |
$ |
131,637 | |||||
|
|
California First Leasing Corporation |
Interim Report as of March 31, 2023 |
SCHEDULE OF INVESTMENTS
|
Industry - Percent of Net Assets |
Company |
Shares |
Market Value |
|||
|
Auto & Truck Dealerships --0.46% |
Lithia Mtrs Inc |
4,265 |
$ |
976,386 |
||
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Auto Manufacturers --3.57% |
Ford Motor Company |
597,300 |
7,525,980 |
|||
|
Auto Parts --0.47% |
Allison Transmission |
21,890 |
990,304 |
|||
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Banks - Diversified --3.65% |
Bank of America Corporation |
117,500 |
3,360,500 |
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|
JP Morgan Chase & Co |
4,380 |
570,758 |
||||
|
Wells Fargo & Co |
100,400 |
3,752,952 |
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|
7,684,210 |
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|
Capital Markets --2.89% |
Goldman Sachs |
18,600 |
6,084,246 |
|||
|
Credit Services --0.74% |
Credit Acceptance Corporation (1) |
1,220 |
531,969 |
|||
|
PayPal Holdings Inc (1) |
13,600 |
1,032,784 |
||||
|
1,564,753 |
||||||
|
Drug Manufacturers --4.37% |
Bristol Myers Squibb |
132,800 |
9,204,368 |
|||
|
Entertainment --0.43% |
Netflix.com Inc. (1) |
2,650 |
915,522 |
|||
|
Financial --0.34% |
Pimco Muni Income Fund III |
85,459 |
710,164 |
|||
|
Healthcare Plans --4.28% |
Cigna Corp New |
30,710 |
7,847,326 |
|||
|
United Health Group |
2,489 |
1,176,277 |
||||
|
9,023,603 |
||||||
|
Insurance - Diversified --0.49% |
Berkshire Hathaway Inc (1) |
3,364 |
1,038,702 |
|||
|
Internet Content & Information --6.58% |
Alphabet Inc. (1) |
105,100 |
10,902,023 |
|||
|
Meta Platforms Inc. (1) |
13,907 |
2,947,450 |
||||
|
13,849,473 |
||||||
|
Internet Retail --0.24% |
Alibaba Grp Hldg (1) |
4,900 |
500,682 |
|||
|
Oil & Gas E & P --2.88% |
Ovintiv Inc. |
168,325 |
6,073,166 |
|||
|
Oil & Gas Equipment & Services --3.01% |
Schlumberger LTD |
129,000 |
6,333,900 |
|||
|
Oil & Gas Integrated --8.37% |
Exxon Mobil |
160,800 |
17,633,328 |
|||
|
Scientific & Technical Instruments --0.53% |
Sensata Technologies |
22,300 |
1,115,446 |
|||
|
Semiconductor Equip & Materials --5.95% |
Applied Materials |
102,000 |
12,528,660 |
|||
|
Semiconductors --10.49% |
Advanced Micro Devices Inc. (1) |
31,100 |
3,048,111 |
|||
|
Marvell Technology Inc. |
129,500 |
5,607,350 |
||||
|
Micron Technology Inc. |
81,300 |
4,905,642 |
||||
|
Qualcomm Inc |
66,850 |
8,528,723 |
||||
|
22,089,826 |
||||||
|
Specialty Business Services --1.15% |
Global Payments Inc. |
23,050 |
2,425,782 |
|||
|
Specialty Chemicals --1.77% |
Dupont De Nemours |
51,940 |
3,727,734 |
|||
|
Steel --2.08% |
Cleveland-Cliffs Inc. (1) |
239,000 |
4,380,870 |
|||
|
Telecom Services --3.75% |
Charter Communications Inc (1) |
3,199 |
1,143,994 |
|||
|
Verizon Communications |
173,750 |
6,757,138 |
||||
|
7,901,132 |
||||||
|
Thermal Coal --0.23% |
Consol Energy Inc. |
8,400 |
489,468 |
|||
|
Tobacco --2.28% |
British American Tobacco |
136,700 |
4,800,904 |
|||
|
Total-Equity Securities |
$ |
149,568,608 |
||||
|
Short-term Investments -- 21.58% |
||||||
|
Bank Deposit --0.25% |
Liberty Bank, N.A. |
525,440 |
||||
|
Fixed Income --14.16% |
U.S. Treasury Bills (4.73%) * |
|
29,823,831 |
| ||
|
Money Market Mutual Funds --7.17% |
JP Morgan Prime MMkt 3605 (4.93%)** |
|
11,134,196 |
| ||
|
|
Goldman FSQ Money Market (4.78%)** |
|
3,969,332 |
| ||
|
|
Total Short-term Investments |
|
|
|
45,452,799 |
|
|
|
|
|
|
|
|
|
|
Total Equity Securities and Short-term Investments |
|
|
$ |
195,021,407 |
| |
|
|
|
|
|
|
|
|
|
Net Assets at March 31, 2023 |
|
|
|
$ |
210,621,227 |
|
|
(1) Non-income producing |
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|
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*Weighted average yield to maturity for bills maturing from 4/25/23 to 6/8/23. |
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| |
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**Rate is the annualized seven-day yield of the fund at period end. |
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5000 Birch Street, Suite 500, Newport Beach, California 92660
Phone: 800-496-4640 949-255-0500 www.calfirstlease.com