CFNB California First Leasing Corporation (QX)

California First Leasing Corporation

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Interim Report to Shareholders

First Quarter Ended September 30, 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 ended September 30, 2023, prepared by management without audit, provides an update to the annual report for the fiscal year ended June 30, 2023. 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 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. 

Three Months ended September 30:

2023

2022

Dividend and interest income

$

1,469

$

1,184

Net realized gain (loss) on investment

(256)

(1,421)

Net change in unrealized securities gain (loss)

410

(10,544)

Realized and unrealized security gain (loss)

154

(11,965)

    Net investment income (loss)

$ 

1,623

$ 

(10,781)

Lease income

617

745

Operating expenses

658

688

Income tax expense (benefit)

326

(2,287)

     Net Income (loss)

$

1,255

$

(8,437)

 Sept. 30

 Sept. 30

June 30

Balance Sheet Data

2023

2022

2023

Cash and cash equivalents

$

39,095

$

48,836

$

43,065

Equity securities

172,819

132,413

163,653

Lease and loan assets

16,416

22,807

20,152

Total assets

228,815

206,895

227,438

Shareholders' equity

$

220,636

$

203,444

$

219,380

Beginning Net Asset Value (NAV) per share

$

22.61

$

20.60

$

20.60

   Net income (loss) per share

0.13

(0.82)

1.69

   Net gain on share repurchase

-

-

0.32

Net Asset Value per share, end of period

$

22.74

$

19.78

$

22.61

Common Shares Outstanding

9,703

10,284

9,703

Equity Investment Portfolio

The distribution of equity securities across four industry groups as of September 30, 2023 and fiscal year ended June 30, 2023 along with the comparative gains or losses by group is summarized below.

Unrealized

Cost Basis

Gains

(Losses)

FMV

(in thousands)

as of September 30, 2023

Commercial / Industrial

$

88,589

$

29,117

$

(4,582)

$

113,124

Consumer

25,280

1,375

(5,461)

21,194

Financial

20,436

2,287

(1,970)

20,753

Healthcare

14,983

2,765

-

17,748

$

149,288

$

35,544

$

(12,013)

$

172,819

as of June 30, 2023

Commercial / Industrial

$

80,292

$

25,935

$

(5,532)

$

100,695

Consumer

28,781

2,621

(4,403)

26,999

Financial

16,476

2,234

(1,057)

17,653

Healthcare

14,983

3,323

-

18,306

$

140,532

$

34,113

$

(10,992)

$

163,653

Industry - Percent of Net Assets

Company

Shares

Market Value

Auto & Truck Dealerships -- 1.04%

Lithia Motors Inc

7,804

$

2,304,755

Auto Parts -- 1.13%

Allison Transmission

42,290

2,497,647

Banks - Diversified -- 3.72%

Bank of America Corporation

117,500

3,217,150

JP Morgan Chase & Co

4,380

635,188

Wells Fargo & Co

106,400

4,347,504

8,199,842

Capital Markets -- 3.40%

Goldman Sachs

23,200

7,506,824

Credit Services -- 1.50%

Credit Acceptance Corp (1)

1,220

561,346

PayPal Holdings Inc (1)

47,100

2,753,466

3,314,812

Drug Manufacturers -- 3.49%

Bristol Myers Squibb

132,800

7,707,712

Entertainment -- 0.45%

Netflix.com Inc. (1)

2,650

1,000,640

Financial -- 0.25%

Pimco Muni Income Fund III

85,459

552,920

Footwear & Accessories -- 0.21%

On Holding AG (1)

17,000

472,940

Healthcare Plans -- 4.55%

Cigna Corp New

30,710

8,785,210

United Health Group

2,489

1,254,929

10,040,139

Insurance - Diversified -- 0.53%

Berkshire Hathaway Inc (1)

3,364

1,178,409

Internet Content & Information -- 9.34%

Alphabet Inc. (1)

105,100

13,753,386

Match Group Inc (1)

68,500

2,683,488

Meta Platforms Inc (1)

13,907

4,175,020

20,611,894

Internet Retail -- 0.19%

Alibaba Grp Hldg (1)

4,900

425,026

Oil & Gas E & P -- 3.45%

Ovintiv Inc.

159,925

7,607,632

Oil & Gas Equipment & Services -- 3.41%

Schlumberger LTD

129,000

7,520,700

Oil & Gas Integrated -- 8.57%

Exxon Mobil

160,800

18,906,864

Scientific & Technical Instruments -- 0.85%

Sensata Technologies

49,350

1,866,417

Semiconductor Equip & Materials -- 7.27%

Applied Materials

102,000

14,121,900

Teradyne Incorporated

19,000

1,908,740

16,030,640

Semiconductors -- 11.32%

Advanced Micro Devices Inc (1)

37,100

3,814,622

Marvell Technology Inc

123,000

6,657,990

Micron Technology Inc

81,300

5,530,839

Qualcomm Inc

58,650

6,513,669

Taiwan Semiconductor Co

28,250

2,454,925

24,972,045

Specialty Business Services -- 1.86%

Global Payments Inc.

35,650

4,113,654

Specialty Chemicals -- 2.59%

Dupont De Nemours

53,940

4,023,385

Intl Flavors & Fragrance

24,750

1,687,208

5,710,592

Steel -- 1.69%

Cleveland-Cliffs Inc. (1)

239,000

3,735,570

Telecom Services -- 4.54%

Charter Communications Inc (1)

9,962

4,381,487

Verizon Communications

173,750

5,631,238

10,012,724

Thermal Coal -- 1.01%

Consol Energy Inc

21,300

2,234,583

Tobacco -- 1.95%

British American Tobacco

136,700

4,293,747

    Total Equity Securities – 78.33% 

2,460,200

 $

172,818,728

Short-term Investments

Bank Deposits -- 0.38%

Liberty Bank, N.A.

845,429

U.S. Treasuries -- 12.13%

U.S. Treasury Bills (5.33%) *

26,771,783

Money Market Mutual Funds -- 5.20%

JP Morgan Prim MMkt 3605 (5.42%) **

10,271,854

Goldman FSQ Month Market (5.34%) **

1,206,067

     Total Short-term Investments – 17.72% 

$

39,095,132

     Total Investments – 96.05%                                                                         

$

211,913,861

Net Assets at September 30, 2023

$

220,635,839

(1) Non-income producing security

 *   Weighted average yield to maturity of bills maturing 10/05/23 to 11/28/23.

**   Rate is the annualized seven-day yield of the fund at period end.