**UNITED      STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-K**
****

**CALIFORNIA        FIRST NATIONAL BANCORP**

| **California**                                                                  | **33-0964185**                                        |
|---------------------------------------------------------------------------------|-------------------------------------------------------|
| (State                  or other jurisdiction of Incorporation or organization) | (I.R.S.                  Employer Identification No.) |
|                                                                            |                                                  |
| **18201                  Von Karman Avenue, Suite 800**                         |                                                  |
| **Irvine,                  CA**                                                 | **92612**                                             |
| (Address                  of principal executive offices)                       | (Zip                  Code)                           |
|                                                                            |                                                  |
| Registrant's                  telephone number, including area code:            | (949)                  255-0500                       |
|                                                                            |                                                  |
| Securities                  registered pursuant to Section 12(b) of the Act:    | None                                                  |
|                                                                            |                                                  |
| Securities                  registered pursuant to Section 12(g) of the Act:    | Common                  Stock                         |
|                                                                            | (Title                  of each class)                |

**DOCUMENTS        INCORPORATED BY REFERENCE**

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**California        First National Bancorp and Subsidiaries**

**TABLE        OF CONTENTS**

| PART                  I            |                                                                                                                                                            |  PAGE |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Item                  1.           | Business                                                                                                                                                        | 2-11       |
|                               |                                                                                                                                                            |       |
| Item 1A.                           | Risk Factors                                                                                                                                                    | 11-14      |
|                               |                                                                                                                                                            |       |
| Item                  1B.          | Unresolved                  Staff Comments                                                                                                                      | 14         |
|                               |                                                                                                                                                            |       |
| Item                  2.           | Properties                                                                                                                                                      | 14         |
|                               |                                                                                                                                                            |       |
| Item                  3.           | Legal                  Proceedings                                                                                                                              | 14         |
|                               |                                                                                                                                                            |       |
| Item                  4.           | Submission                  of Matters to a Vote of Security Holders                                                                                            | 14         |
|                               |                                                                                                                                                            |       |
| PART                  II           |                                                                                                                                                            |       |
| Item                  5.           | Market                  for Company's Common Equity and Related Stockholder Matters and                  Issuer                  Purchases of Equity Securities | 15-16      |
|                               |                                                                                                                                                            |       |
| Item                  6.           | Selected                  Financial Data                                                                                                                        | 17         |
|                               |                                                                                                                                                            |       |
| Item                  7.           | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations                                         | 18-27      |
|                               |                                                                                                                                                            |       |
| Item                  7A.          | Quantitative                  and Qualitative Disclosures About Market Risk                                                                                     | 28         |
|                               |                                                                                                                                                            |       |
| Item                  8.           | Financial                  Statements and Supplementary Data                                                                                                    | 29-51      |
|                               |                                                                                                                                                            |       |
| Item                  9.           | Changes                  in and Disagreements with Accountants on                  Accounting and Financial Disclosure                                          | 51         |
|                               |                                                                                                                                                            |            |
| Item                  9A.          | Controls                  and Procedures                                                                                                                        | 51         |
|                               |                                                                                                                                                            |       |
| Item 9B.                           | Other Information                                                                                                                                               | 51         |
|                               |                                                                                                                                                            |       |
| PART                  III          |                                                                                                                                                            |       |
| Item                  10.          | Directors                  and Executive Officers of the Registrant                                                                                             | 52         |
|                               |                                                                                                                                                            |       |
| Item                  11.          | Executive                  Compensation                                                                                                                         | 52         |
|                               |                                                                                                                                                            |       |
| Item                  12.          | Security                  Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                                                 | 52         |
|                               |                                                                                                                                                            |       |
| Item                  13.          | Certain                  Relationships and Related Transactions                                                                                                 | 52         |
|                               |                                                                                                                                                            |       |
| Item                  14.          | Principal                  Accountant Fees and Services                                                                                                         | 52         |
|                               |                                                                                                                                                            |       |
| PART                  IV           |                                                                                                                                                            |       |
| Item                  15.          | Exhibits and                  Financial Statement Schedules                                                                                                     | 53         |
|                               |                                                                                                                                                            |       |
| Signatures                         |                                                                                                                                                            | 54         |
| Schedule                  II       |                                                                                                                                                            | 55         |
| Index                  to Exhibits | 56                                                                                                                                                              |

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**California            First National Bancorp and Subsidiaries**

**PART        I**

**ITEM        1. BUSINESS**

**Forward-Looking        Statements**

| ·   | General                economic or industry conditions could be less favorable than expected,                resulting in a reduced demand for capital assets, deterioration in                credit                quality, deterioration in the recoverability of our investment in                leased                property and lease residual values, and a change in the allowance                for                lease losses; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Changes                in the domestic interest rate environment, including the continuation                of a                flat yield curve, could reduce net interest income and higher interest                rates can negatively affect certain lessees, which could increase                lease                losses; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | As                CalFirst Bank grows and represents a greater portion of the Company’s                assets, the Company’s sensitivity to changes in interest rates is                increasing; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                Company’s subsidiaries have retained an increasing number of lease                transactions in their own portfolios which has increased the Company’s                exposure to credit risk; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | CalFirst                Bank may not attract or retain sufficient deposits at attractive                interest                rates to fund its lease portfolio, and therefore could require additional                investment by the Company and produce lower lease growth; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Security                breaches, systems failures, computer viruses or other similar events                could                damage CalFirst Bank’s reputation, or Internet banks in general, and                inhibit the ability to raise deposits; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                conditions of the securities markets could change, adversely affecting                certain lessees and the value or credit quality of the Company's                assets,                or the availability and terms of non-recourse financing obtained                to                complete certain lease transactions; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                Company’s Common Stock trades on the NASDAQ Global Market System, but                the volume of trading has been very limited and the low volume of                trading                severely limits the liquidity of the Common                Stock; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Changes                in the extensive laws, regulations and policies governing financial                services companies could alter the Company's business environment                or                affect operations; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Catastrophic                events could impair the Company’s business operations or systems, or that                of its lessees, resulting in losses; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | All                the above factors could impact the Company’s ability to remain in                compliance with commitments made to federal bank regulators in connection                with the formation of CalFirst Bank. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**California            First National Bancorp and Subsidiaries**

**Leasing        Activities**

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**California            First National Bancorp and Subsidiaries**

**Marketing        Strategy**

**Capital        Leases**

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**California              First National Bancorp and Subsidiaries**

**Lease        Portfolio**

**Credit        Risk Management**

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**California              First National Bancorp and              Subsidiaries**

**Allowance        for Lease Losses**

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**California              First National Bancorp and              Subsidiaries**

**Banking        Operations**

**Deposit        Products**

**Operations**

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**California              First National Bancorp and              Subsidiaries**

**Investments**

**Customers**

**Competition**

**Supervision        and Regulation**

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**California              First National Bancorp and Subsidiaries**

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**California              First National Bancorp and Subsidiaries**

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**California              First National Bancorp and Subsidiaries**

**Employees**

**Available        Information **

**ITEM 1A. RISK FACTORS **

**Industry Risk Factors**

**The Company's business and financial results are subject to general business and economic conditions.**

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**California First National Bancorp and Subsidiaries**

**Changes in the domestic interest rate environment could reduce the Company's net direct finance and interest income.**

**Changes in the laws, regulations and policies governing financial services companies could alter the Company's business environment and adversely affect operations.**

**The Company and the Bank are regulated by governmental entities.**

**The financial services industry is highly competitive, and competitive pressures could intensify and adversely affect the Company's financial results.**

**Acts or threats of terrorism and political or military actions taken by the United States or other governments could adversely affect general economic or industry conditions.**

**Company Risk Factors**

**The Company's allowance for lease losses may not be adequate to cover actual losses.**

**The Company may suffer losses in its lease portfolio despite its underwriting practices.**

**The change in residual value of leased assets may have an adverse impact on the Company's financial results.**

**The financial services business involves significant operational risks.** Operational risk is the risk of loss resulting from the Company's operations, including, but not limited to, the risk of fraud by employees or persons outside of the Company, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system and compliance requirements and business continuation and disaster recovery. This risk of loss also includes the potential legal actions that could arise as a result of an operational deficiency or as a result of noncompliance with applicable regulatory standards, adverse business decisions or their implementation, and customer attrition due to potential negative publicity. In the event of a breakdown in the internal control system, improper operation of systems or improper employee actions, the Company could suffer financial loss, face regulatory action and suffer damage to its reputation. 

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**California First National Bancorp and Subsidiaries**

**Quarterly operating results may fluctuate significantly.**

**Negative publicity could damage the Company's reputation and adversely impact its business and financial results.**

**The Company's reported financial results are subject to certain assumptions and estimates and management's selection of accounting method.**

**Certain accounting policies are critical to presenting the Company's financial condition and results.**

**Changes in accounting standards could materially impact the Company's financial statements.**

**Loss of certain of certain key officers would adversely affect the Company's business.**

**The Company's business could suffer if the Company fails to attract and retain qualified people.**

**The Company relies on other companies to provide components of the Company's business infrastructure.**

**A natural disaster could harm the Company's business.**

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**California First National Bancorp and Subsidiaries**

**The Company faces systems failure risks as well as security risks, including "hacking" and "identity theft."**

**The Company relies on dividends from its subsidiaries for its liquidity needs.**

**The Company's stock price can be volatile.**

**The Company is a "controlled company" as defined by NASDAQ, with over 50% of the stock held by the Chief Executive Officer, over 65% held by two senior executives and fewer than 100 shareholders of record.**

**ITEM 1B. UNRESOLVED STAFF COMMENTS**

**ITEM 2. PROPERTIES**

**ITEM 3. LEGAL PROCEEDINGS**

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

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**California First National Bancorp and Subsidiaries**

**PART          II**

**ITEM        5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER        MATTERS**

**AND        ISSUER PURCHASES OF EQUITY SECURITIES**

|                            |   | For                  the years ended |   |
|---------------------------------|--------|--------------------------------------|--------|
|                            |   | June                  30, 2006       |   |  June                  30, 2005 |   |
|                            |   | High                                 |   | Low |   |  High |   | Low |   |
| First                  Quarter  |   | $                                    | 13.99  |   | $ | 11.19 |   | $ | 13.52 |   | $ | 12.85 |   |
| Second                  Quarter |   |                                 | 13.63  |   |   | 12.25 |   |   | 14.96 |   |   | 11.77 |   |
| Third                  Quarter  |   |                                 | 14.46  |   |   | 12.75 |   |   | 13.07 |   |   | 12.40 |   |
| Fourth                  Quarter |   | $                                    | 16.00  |   | $ | 13.70 |   | $ | 12.75 |   | $ | 9.95 |   |

|  Period                                    |   | Total numberof sharespurchased |   | Average pricepaid                  per share |   | Maximum number ofshares that may yet bepurchased                  under the plan |   |
|-------------------------------------------------|--------|--------------------------------|--------|----------------------------------------------|--------|----------------------------------------------------------------------------------|--------|
| April                  1, 2006 - April 30, 2006 |   |                           | -      |                                         | $      | -                                                                                |   |   | 612,956 |   |
| May                  1, 2006 - May 31, 2006     |   |                           | -      |                                         | $      | -                                                                                |   |   | 612,956 |   |
| June                  1, 2006 - June 30, 2006   |   |                           | -      |                                         | $      | -                                                                                |   |   | 612,956 |   |
|                                            |   |                           |   |                                         | $      | -                                                                                |   |   |   |   |

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**California First National Bancorp and Subsidiaries**

**Equity        Compensation Plan Information**

|     Plan                  category                                  |   |  Number                  of shares of commonstock to be issuedupon                  exercise of                  outstanding options (1) |    |   Weighted                  average exercise price ofoutstanding                  options |   | Number                  of shares of common stock remaining available for future issuance                  under                  equity compensation plans(excluding                  shares in first column) |   |
|-----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity                  compensation plansapproved                  by shareholders     |   |                                                                                                                                          | 945,767 |                                                                                                | $      | 9.02                                                                                                                                                                                                           |   |   | 634,003 |   |
| Equity                  compensation plansnot                  approved by shareholders |   |                                                                                                                                          | None    |                                                                                                |   | N/A                                                                                                                                                                                                            |   |   | N/A |   |
| Total                                                                                   |   |                                                                                                                                          | 945,767 |                                                                                                | $      | 9.02                                                                                                                                                                                                           |   |   | 634,003(1 | ) |

| (1)   | The                maximum number of shares that may be issued under the equity compensation                plan increases each year by an amount equal to 1% of the total number                of                issued and outstanding shares of Common Stock as of June 30 of the                fiscal                year immediately preceding such fiscal year. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**California              First National Bancorp and Subsidiaries**

**ITEM        6. SELECTED FINANCIAL DATA**

| **INCOME                  STATEMENT DATA**                                              |   | **YEARS                  ENDED JUNE 30,** |   |
|-----------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|  (in                  thousands, except per share amounts)                         |   | **2006**                                  |   | **2005** |   | **2004** |   | **2003** |   | **2002** |   |
|                                                                                    |   |                                      |   | (Restated) |   | (Restated) |   |   |   |   |   |
| Direct                  finance income (1)                                              |   | $                                         | 18,861 |   | $ | 15,493 |   | $ | 14,813 |   | $ | 15,657 |   | $ | 14,419 |   |
| Interest                  income on investments                                         |   |                                      | 1,329  |   |   | 1,009 |   |   | 578 |   |   | 1,068 |   |   | 1,551 |   |
| Total                  direct finance and interest income                               |   |                                      | 20,190 |   |   | 16,505 |   |   | 15,391 |   |   | 16,725 |   |   | 15,970 |   |
| Interest                  expense on deposits                                           |   |                                      | 2,593  |   |   | 1,054 |   |   | 430 |   |   | 237 |   |   | 129 |   |
| Provision                  for lease losses                                             |   |                                      | 482    |   |   | 359 |   |   | 164 |   |   | 554 |   |   | 5,354 |   |
| Net direct finance and interest incomeafter                  provision for lease losses |   |                                      | 17,115 |   |   | 15,092 |   |   | 14,797 |   |   | 15,934 |   |   | 10,487 |   |
|                                                                                    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  and sales-type lease income                                  |   |                                      | 4,498  |   |   | 4,379 |   |   | 5,255 |   |   | 6,384 |   |   | 8,822 |   |
| Gain                  on sale of leases and leased property                             |   |                                      | 10,390 |   |   | 8,961 |   |   | 9,625 |   |   | 7,926 |   |   | 15,122 |   |
| Other                  fee income                                                       |   |                                      | 780    |   |   | 1,091 |   |   | 930 |   |   | 876 |   |   | 1,302 |   |
| Total                  other income                                                     |   |                                      | 15,668 |   |   | 14,431 |   |   | 15,810 |   |   | 15,186 |   |   | 25,246 |   |
| Gross                  profit                                                           |   |                                      | 32,783 |   |   | 29,523 |   |   | 30,607 |   |   | 31,120 |   |   | 35,733 |   |
| Selling,                  general and administrative expenses (1)                  |   |                                      | 15,278 |   |   | 16,039 |   |   | 15,388 |   |   | 13,672 |   |   | 11,661 |   |
| Earnings                  before income taxes                                           |   |                                      | 17,505 |   |   | 13,484 |   |   | 15,219 |   |   | 17,448 |   |   | 24,072 |   |
| Income                  taxes                                                           |   |                                      | 6,783  |   |   | 5,057 |   |   | 5,859 |   |   | 6,717 |   |   | 9,268 |   |
| Net                  earnings                                                           |   | $                                         | 10,722 |   | $ | 8,427 |   | $ | 9,360 |   | $ | 10,731 |   | $ | 14,804 |   |
| Diluted                  earnings per share                                             |   | $                                         | 0.94   |   | $ | 0.74 |   | $ | 0.84 |   | $ | 0.96 |   | $ | 1.29 |   |
| Diluted                  common shares outstanding                                      |   |                                      | 11,461 |   |   | 11,340 |   |   | 11,190 |   |   | 11,223 |   |   | 11,435 |   |
|                                                                                    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  dividends per share                                               |   | $                                         | 0.42   |   | $ | 2.30 |   | $ | 0.40 |   | $ | 0.16 |   | $ | 0.16 |   |

| Dividend                  payout ratio    |   |   | 43.62 | % |   | 302.56 | % |   | 46.94 | % |   | 16.43 | % |   | 12.13 | % |
|-------------------------------------------|--------|--------|-------|---|--------|--------|---|--------|-------|---|--------|-------|---|--------|-------|---|
| Return                  on average assets |   |   | 3.70  | % |   | 3.06   | % |   | 3.41  | % |   | 3.72  | % |   | 4.68  | % |
| Return                  on average equity |   |   | 5.65  | % |   | 4.34   | % |   | 4.67  | % |   | 5.55  | % |   | 8.00  | % |

| **BALANCE                  SHEET DATA**                   |   | **AS                  OF JUNE 30,** |    |
|-----------------------------------------------------------|--------|-------------------------------------|---------|
| (in                  thousands, except per share amounts) |   | **2006**                            |    | **2005** |   | **2004** |   | **2003** |   | **2002** |   |
|                                                      |   |                                |    | (Restated) |   | (Restated) |   |   |   |   |   |
| Cash                  and liquid securities               |   | $                                   | 41,277  |   | $ | 44,226 |   | $ | 68,275 |   | $ | 67,340 |   | $ | 88,393 |   |
| Net                  investment in capital leases         |   |                                | 213,956 |   |   | 187,432 |   |   | 153,075 |   |   | 146,396 |   |   | 118,351 |   |
| Total                  assets                             |   |                                | 314,355 |   |   | 278,492 |   |   | 273,814 |   |   | 278,691 |   |   | 308,641 |   |
| Demand,                  savings and time deposits        |   |                                | 89,166  |   |   | 54,098 |   |   | 24,600 |   |   | 7,594 |   |   | 8,969 |   |
| Non-recourse                  debt                        |   |                                | 8,424   |   |   | 8,405 |   |   | 17,541 |   |   | 40,056 |   |   | 72,754 |   |
| Stockholders'                  equity                     |   | $                                   | 193,527 |   | $ | 186,738 |   | $ | 203,399 |   | $ | 197,276 |   | $ | 191,391 |   |
| Equity                    to total assets ratio           |   |                                | 61.56   | % |   | 67.05 | % |   | 74.28 | % |   | 70.79 | % |   | 62.01 | % |
| Book                  value per common share              |   | $                                   | 17.34   |   | $ | 16.83 |   | $ | 18.43 |   | $ | 18.04 |   | $ | 17.12 |   |

----

| (1) | During                  2006, the Company reclassified certain deferred initial direct                  costs                  associated with originating direct finance leases from direct finance                  income to                  selling, general and administrative (“SG&A”) expenses. The effect of                  this reclassification was to decrease SG&A expense reported and reduce                  total direct finance and interest income, with no effect on net                  income.                  Prior period financial information has been updated to reflect                  this                  reclassification. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**California                First National Bancorp and Subsidiaries**

**ITEM        7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND **
**RESULTS OF OPERATIONS **

**General**

**Restatement**

**Accounting        for Lease Extensions**

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**California                  First National Bancorp and Subsidiaries**

| Increase                  (decrease) in thousands, except per share amounts |   | Fiscal                  Year Ended June 30, |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                             |   | 2005                                        |   | 2004 |   |
|                                                                        |   |                                        |   |   |   |
| Total                  other income                                         |   | $                                           | 404    |   | $ | (730 | ) |
| Provision                  for income taxes                                 |   |                                        | 152    |   |   | (281 | ) |
| Net                  earnings                                               |   | $                                           | 252    |   | $ | (449 | ) |
|                                                                        |   |                                        |   |   |   |   |   |
| Impact                  on earnings per share                               |   |                                        |   |   |   |   |   |
| Diluted                  earnings per share, as reported                    |   | $                                           | 0.72   |   | $ | 0.88 |   |
| Adjustment                                                                  |   |                                        | 0.02   |   |   | (0.04 | ) |
| Diluted                  earnings per share, restated                       |   | $                                           | 0.74   |   | $ | 0.84 |   |

**Consolidated        Statement of Cash Flows**

| (in                  thousands)                                                 |   | Years                  Ended June 30, |    |
|---------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                            |   | 2005                                  |    | 2004 |   |
| Net                  cash provided by operating activities, previously reported |   | $                                     | 9,447   |   | $ | 757 |   |
| Restatement                  of cash flows related to:                          |   |                                  |    |   |   |   |   |
| Net                  income                                                     |   |                                  | 252     |   |   | (449 | ) |
| Sale                  of property and sales-type leases                         |   |                                  | (13,958 | ) |   | (16,101 | ) |
| Transactions                  in process                                        |   |                                  | 3,571   |   |   | 10,194 |   |
| Other                                                                           |   |                                  | 699     |   |   | (172 | ) |
| Restated                  net cash provided by (used in) operating activities   |   | $                                     | 11      |   | $ | (5,771 | ) |
|                                                                            |   |                                  |    |   |   |   |   |
| Net                  cash used for investing activities, previously reported    |   | $                                     | (35,533 | ) | $ | (16,869 | ) |
| Restatement                  of cash flows related to:                          |   |                                  |    |   |   |   |   |
| Proceeds                  from sale of property and sales-type leases           |   |                                  | 13,958  |   |   | 16,101 |   |
| Investment                  in leases and transactions in process               |   |                                  | (3,571  | ) |   | (10,194 | ) |
| Other                                                                           |   |                                  | (951    | ) |   | 621 |   |
| Restated                  net cash used for investing activities                |   | $                                     | (26,097 | ) | $ | (10,341 | ) |

**Critical        Accounting Policies and Estimates**

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**California                  First National Bancorp and Subsidiaries**

**Residual        Values -- **

**Allowance        for Lease Losses -- **

**Deferred        Income Taxes and Income Tax Reserves --**

**Overview        of Results and Trends **

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**California                  First National Bancorp and Subsidiaries**

**Consolidated        Statement of Earnings Analysis **

**Summary        **

**Net        Direct Finance and Interest Income -- **

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**California                  First National Bancorp and Subsidiaries**

| (in                  thousands)                             |   | **2006                  compared to 2005** |   | **2005                  compared to 2004** |   |
|-------------------------------------------------------------|--------|--------------------------------------------|--------|--------------------------------------------|--------|
|                                                        |   | **Volume**                                 |   | **Rate**                                   |   | **Total** |   | **Volume** |   | **Rate** |   | **Total** |   |
| **Direct                  finance and interest income**     |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Net                  investment in capital leases           |   | $                                          | 2,875  |                                       | $      | 490 |   | $ | 3,365 |   | $ | 1,806 |   | $ | (1,123 | ) | $ | 683 |   |
| Discounted                  lease rentals                   |   |                                       | (322   | )                                          |   | (50 | ) |   | (372 | ) |   | (1,056 | ) |   | (19 | ) |   | (1,075 | ) |
| Federal                  funds sold                         |   |                                       | 109    |                                       |   | 253 |   |   | 362 |   |   | 33 |   |   | 165 |   |   | 198 |   |
| Investment                  securities                      |   |                                       | (43    | )                                          |   | 7 |   |   | (36 | ) |   | (12 | ) |   | 24 |   |   | 12 |   |
| Interest-bearing                  deposits with banks       |   |                                       | (245   | )                                          |   | 239 |   |   | (6 | ) |   | (122 | ) |   | 343 |   |   | 221 |   |
| Total                  finance and interest income          |   |                                       | 2,374  |                                       |   | 939 |   |   | 3,313 |   |   | 649 |   |   | (610 | ) |   | 39 |   |
| **Interest                  expense**                       |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-recourse                  debt                          |   |                                       | (322   | )                                          |   | (50 | ) |   | (372 | ) |   | (1,056 | ) |   | (19 | ) |   | (1,075 | ) |
| Demand                  and savings deposits                |   |                                       | 88     |                                       |   | 114 |   |   | 202 |   |   | 122 |   |   | 54 |   |   | 176 |   |
| Time                  deposits                              |   |                                       | 704    |                                       |   | 633 |   |   | 1,337 |   |   | 328 |   |   | 120 |   |   | 448 |   |
| Total                  interest expense                     |   |                                       | 470    |                                       |   | 697 |   |   | 1,167 |   |   | (606 | ) |   | 155 |   |   | (451 | ) |
| **Net                  direct finance and interest income** |   | $                                          | 1,904  |                                       | $      | 242 |   | $ | 2,146 |   | $ | 1,255 |   | $ | (765 | ) | $ | 490 |   |

|                                                                                                                    |   | **Year                  ended June 30, 2006** |    |     | **Year                  ended June 30, 2005** |   |   | **Year                  ended June 30, 2004** |    |
|-------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|----------|-----------------------------------------------|--------|--------|-----------------------------------------------|---------|
|                                                                                                                    |   | Average                                       |    |     |                                          | Yield/ |   |                                          | Average |   |   |   | Yield/ |   |   | Average |   |   |   | Yield/ |   |
| **Assets**                                                                                                              |   | Balance                                       |    | Interest |                                          | Rate   |   |                                          | Balance |   | Interest |   | Rate |   |   | Balance |   | Interest |   | Rate |   |
| Interest-earning                  assets                                                                                |   |                                          |    |     |                                          |   |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                  deposits with banks                                                                   |   | $                                             | 25,376  |     | $                                             | 631    |   |                                          | 2.5     | % |   | $ | 41,239 |   | $ | 637 |   |   | 1.5 | % |   | $ | 58,405 |   | $ | 416 |   |   | 0.7 | % |
| Federal                  funds sold                                                                                     |   |                                          | 14,619  |     |                                          | 636    |   |                                          | 4.4     | % |   |   | 10,475 |   |   | 274 |   |   | 2.6 | % |   |   | 7,275 |   |   | 76 |   |   | 1.0 | % |
| Investment                  securities                                                                                  |   |                                          | 1,258   |     |                                          | 62     |   |                                          | 4.9     | % |   |   | 2,231 |   |   | 98 |   |   | 4.4 | % |   |   | 2,598 |   |   | 86 |   |   | 3.3 | % |
| Net                  investment in capital leases   including discounted lease rentals (1,2)             |   |                                          | 206,972 |     |                                          | 19,329 |   |                                          | 9.3     | % |   |   | 180,224 |   |   | 16,335 |   |   | 9.1 | % |   |   | 176,359 |   |   | 16,727 |   |   | 9.5 | % |
| Total                  interest-earning assets                                                                          |   |                                          | 248,225 |     |                                          | 20,658 |   |                                          | 8.3     | % |   |   | 234,169 |   |   | 17,344 |   |   | 7.4 | % |   |   | 244,637 |   |   | 17,305 |   |   | 7.1 | % |
| Other                  assets                                                                                           |   |                                          | 41,780  |     |                                          |   |   |                                          |    |   |   |   | 41,181 |   |   |   |   |   |   |   |   |   | 29,841 |   |   |   |   |   |   |   |
|                                                                                                                    |   | $                                             | 290,005 |     |                                          |   |   |                                          |    |   |   | $ | 275,350 |   |   |   |   |   |   |   |   | $ | 274,478 |   |   |   |   |   |   |   |
| **Liabilities                  and Shareholders' Equity**                                                               |   |                                          |    |     |                                          |   |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities                                                                           |   |                                          |    |     |                                          |   |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                  and savings deposits                                                                            |   | $                                             | 11,817  |     |                                          | 414    |   |                                          | 3.5     | % |   | $ | 8,336 |   |   | 211 |   |   | 2.5 | % |   | $ | 1,842 |   |   | 35 |   |   | 1.9 | % |
| Time                  deposits                                                                                          |   |                                          | 54,627  |     |                                          | 2,179  |   |                                          | 4.0     | % |   |   | 29,773 |   |   | 843 |   |   | 2.8 | % |   |   | 16,272 |   |   | 395 |   |   | 2.4 | % |
| Non-recourse                  debt                                                                                      |   |                                          | 7,239   |     |                                          | 468    |   |                                          | 6.5     | % |   |   | 11,742 |   |   | 839 |   |   | 7.1 | % |   |   | 26,194 |   |   | 1,914 |   |   | 7.3 | % |
| Total                  interest-bearing liabilities                                                                     |   |                                          | 73,683  |     |                                          | 3,061  |   |                                          | 4.2     | % |   |   | 49,851 |   |   | 1,893 |   |   | 3.8 | % |   |   | 44,308 |   |   | 2,344 |   |   | 5.3 | % |
| Other                  liabilities                                                                                      |   |                                          | 26,562  |     |                                          |   |   |                                          |    |   |   |   | 31,278 |   |   |   |   |   |   |   |   |   | 29,952 |   |   |   |   |   |   |   |
| Shareholders'                  equity                                                                                   |   |                                          | 189,760 |     |                                          |   |   |                                          |    |   |   |   | 194,221 |   |   |   |   |   |   |   |   |   | 200,218 |   |   |   |   |   |   |   |
|                                                                                                                    |   | $                                             | 290,005 |     |                                          |   |   |                                          |    |   |   | $ | 275,350 |   |   |   |   |   |   |   |   | $ | 274,478 |   |   |   |   |   |   |   |
| Net                  interest income                                                                                    |   |                                          |    |     | $                                             | 17,597 |   |                                          |    |   |   |   |   |   | $ | 15,451 |   |   |   |   |   |   |   |   | $ | 14,961 |   |   |   |   |
|                                                                                                                         |   |                                          |    |     |                                          |   |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  direct finance and interest income to     average interest-earning assets |   |                                          |    |     |                                          |   |   |                                          | 7.1     | % |   |   |   |   |   |   |   |   | 6.6 | % |   |   |   |   |   |   |   |   | 6.1 | % |
|                                                                                                                         |   |                                          |    |     |                                          |   |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  interest-earning assets over     average interest-bearing liabilities |   |                                          |    |     |                                          |   |   |                                          | 336.9   | % |   |   |   |   |   |   |   |   | 469.7 | % |   |   |   |   |   |   |   |   | 552.1 | % |

----

| (1)   | During                2006, the Company reclassified certain deferred initial direct costs                from                direct finance income to selling, general and administrative (“SG&A”)                expenses. The effect of this reclassification was to reduce total                direct                finance and interest income, with no effect on net income. Prior                period                financial information has been updated to reflect this                reclassification. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)   | Direct                finance income and interest expense on average discounted lease rentals                and non-recourse debt of $7.2 million, $11.7 million and $26.2 million                at                June 30, 2006, 2005 and 2004, respectively, offset each other and                do not                contribute to the Company’s net interest and finance income. Average                balance is based on month-end balances, includes non-accrual leases,                and                is presented net of unearned income. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**California                  First National Bancorp and Subsidiaries**

**Provision        for Lease Losses -- **

**Other        Income**

**Selling,        General, and Administrative Expenses**

**Income        Taxes**

**Financial        Condition Analysis**

**Lease        Portfolio Analysis**

----

**California                  First National Bancorp and Subsidiaries**

|                                                          |   | **June                  30,**   |   |
|---------------------------------------------------------------|--------|---------------------------------|--------|
| **Non-performing                  Capital Leases**            |   | **2006**                        |   | **2005** |   | **2004** |   | **2003** |   | **2002** |   |
|                                                          |   | (in                  thousands) |   |
| Non-accrual                  leases                           |   | $                               | 1,010  |   | $ | 945 |   | $ | 2,011 |   | $ | 3,979 |   | $ | 1,296 |   |
| Restructured                  leases                          |   |                            | 996    |   |   | - |   |   | 354 |   |   | 1,122 |   |   | 90 |   |
| Leases                  past due 90 days (other than above)   |   |                            | -      |   |   | - |   |   | - |   |   | - |   |   | 278 |   |
| Total                  non-performing capital leases          |   | $                               | 2,006  |   | $ | 945 |   | $ | 2,365 |   | $ | 5,101 |   | $ | 1,664 |   |
|                                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing                  assets as % of net investment |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| in                  capital leases before allowances          |   |                            | 0.9    | % |   | 0.5 | % |   | 1.5 | % |   | 3.4 | % |   | 1.3 | % |

----

**California                  First National Bancorp and Subsidiaries**

**Allowance        for Lease Losses**

| **Years                  Ended June 30,**                                                                                     |   | **2006**                                |    | **2005** |   | **2004** |   | **2003** |    | **2002** |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|----------|--------|----------|--------|----------|---------|----------|--------|
|                                                                                                                          |   | (dollars                  in thousands) |    |
| Property                  acquired for transactions in process before allowance                                               |   | $                                       | 41,748  |     | $      | 34,120   |   | $        | 30,558  |     | $      | 20,365 |   | $ | 20,648 |   |
| Net                  investment in capital leases before allowance                                                            |   |                                    | 217,525 |     |   | 190,859  |   |     | 156,458 |     |   | 150,609 |   |   | 123,774 |   |
| Net                  investment in “risk assets”                                                                  |   | $                                       | 259,273 |     | $      | 224,979  |   | $        | 187,016 |     | $      | 170,974 |   | $ | 144,422 |   |
|                                                                                                                          |   |                                    |    |     |   |     |   |     |    |     |   |   |   |   |   |   |
| Allowance                  for lease losses at beginning of year                                                              |   | $                                       | 3,495   |     | $      | 3,461    |   | $        | 4,291   |     | $      | 5,502 |   | $ | 3,401 |   |
| Charge-off                  of lease receivables                                                                              |   |                                    | (391    | )        |   | (377     | )      |     | (1,359  | )        |   | (2,215 | ) |   | (3,440 | ) |
| Recovery                  of amounts previously written off                                                                   |   |                                    | 51      |     |   | 52       |   |     | 365     |     |   | 450 |   |   | 187 |   |
| Provision                  for lease losses                                                                                   |   |                                    | 482     |     |   | 359      |   |     | 164     |     |   | 554 |   |   | 5,354 |   |
| Allowance                  for lease losses at end of year                                                                    |   | $                                       | 3,637   |     | $      | 3,495    |   | $        | 3,461   |     | $      | 4,291 |   | $ | 5,502 |   |
|                                                                                                                               |   |                                    |    |     |   |     |   |     |    |     |   |   |   |   |   |   |
| Allowance                  for lease losses as percent of net investment                  in capital leases before allowances |   |                                    | 1.7     | %        |   | 1.8      | %      |     | 2.2     | %        |   | 2.9 | % |   | 4.5 | % |
| Allowance                  for lease losses as percent of net investment in “risk                  assets”        |   |                                    | 1.4     | %        |   | 1.6      | %      |     | 1.9     | %        |   | 2.5 | % |   | 3.8 | % |

----

**California                  First National Bancorp and Subsidiaries**

**Liquidity        and Capital Resources **

| (dollars                  in thousands)               |   | **Years                  ended June 30,** |   |
|-------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                  |   | **2006**                                  |   | **2005** |   | **2004** |   |
|                                                  |   | Average                                   |   | Average |   | Average |   | Average |   | Average |   | Average |   |
|                                                  |   | Balance                                   |   | Rate                  Paid |   | Balance |   | Rate                  Paid |   | Balance |   | Rate                  Paid |   |
| Non-interest                  bearing demand deposits |   | $                                         | 1,202  |   |   | n/a |   | $ | 1,163 |   |   | n/a |   | $ | 670 |   |   | n/a |   |
| Interest-bearing                  demand deposits     |   |                                      | 48     |   |   | 0.50 | % |   | 95 |   |   | 0.50 | % |   | 51 |   |   | 0.50 | % |
| Savings                  deposits                     |   |                                      | 11,769 |   |   | 3.51 | % |   | 8,241 |   |   | 2.56 | % |   | 1,791 |   |   | 1.93 | % |
| Time                  deposits less than $100,000     |   |                                      | 31,024 |   |   | 3.94 | % |   | 18,288 |   |   | 2.88 | % |   | 10,701 |   |   | 2.40 | % |
| Time                  deposits, $100,000 or more      |   | $                                         | 23,603 |   |   | 4.05 | % | $ | 11,485 |   |   | 2.75 | % | $ | 5,571 |   |   | 2.48 | % |

|                                            |   | June                  30, 2006  |   |
|-------------------------------------------------|--------|---------------------------------|--------|
|                                            |   | Less                  than      |   | Greater                  than |   |
|                                            |   | $100,000                        |   | $100,000 |   |
|                                            |   | (in                  thousands) |   |
| Under                  3 months                 |   | $                               | 3,685  |   | $ | 5,336 |   |
| 3                  -                  6 months  |   |                            | 5,279  |   |   | 7,855 |   |
| 6                  -                  12 months |   |                            | 22,688 |   |   | 18,647 |   |
| After                  12 months                |   |                            | 8,869  |   |   | 7,029 |   |
|                                            |   | $                               | 40,521 |   | $ | 38,867 |   |

----

**California                  First National Bancorp and Subsidiaries**

**Contractual        Obligations and Commitments**

|                                                |   | **Due                  by Period**      |    |
|-----------------------------------------------------|--------|-----------------------------------------|---------|
|                                                |   |                                    |    | **Less                  Than** |   |   |   | **After** |   |
| **Contractual                  Obligations**        |   | **Total**                               |    | **1                  Year** |   | **1-5                  Years** |   | **5                  Years** |   |
|                                                |   | (dollars                  in thousands) |    |
| Time                  deposits less than $100,000   |   | $                                       | 40,521  |   | $ | 31,652 |   | $ | 8,869 |   | $ | - |   |
| Time                  deposits $100,000 or more     |   |                                    | 38,867  |   |   | 31,838 |   |   | 7,029 |   |   | - |   |
| Deposits                  without a stated maturity |   |                                    | 9,778   |   |   | 9,778 |   |   | - |   |   | - |   |
| Operating                  lease rental expense     |   |                                    | 2,327   |   |   | 1,029 |   |   | 1,298 |   |   | - |   |
| Lease                  property purchases (1)       |   |                                    | 71,798  |   |   | 71,798 |   |   | - |   |   | - |   |
| Total                  contractual commitments      |   | $                                       | 163,291 |   | $ | 146,095 |   | $ | 17,196 |   | $ | - |   |

| **Contractual                  Cash Receipts**     |   |   |    |   |   |    |   |   |    |
|----------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|
|                                               |   |   |    |
| Lease                  payments receivable (2)     |   | $      | 234,337 |   | $      | 115,952 |   | $      | 116,786 |   | $ | 1,599 |   |
| Cash                  and cash equivalents         |   |   | 40,747  |   |   | 40,747  |   |   | -       |   |   | - |   |
| Total                  projected cash availability |   |   | 275,084 |   |   | 156,699 |   |   | 116,786 |   |   | 1,599 |   |
|                                               |   |   |    |   |   |    |   |   |    |   |   |   |   |
| Net                  projected cash inflow         |   | $      | 111,793 |   | $      | 10,604  |   | $      | 99,590  |   | $ | 1,599 |   |

----

| (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                fiscal 2008. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)   | Based                upon contractual cash flows; amounts could differ due to prepayments,                lease restructures, charge-offs and other factors. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Recent        Accounting Pronouncements**

----

**California                First National Bancorp and Subsidiaries**

**ITEM        7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET        RISK**

----

**California                  First National Bancorp and Subsidiaries**

**ITEM        8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

|                                                                                                                       | Page                    Number |
|----------------------------------------------------------------------------------------------------------------------------|--------------------------------|
|                                                                                                                       |                           |
| Report                    of Independent Registered Public Accounting Firm                                                 | 30                             |
|                                                                                                                       |                           |
| Consolidated                    Balance Sheets at June 30, 2006 and 2005                                                   | 31                             |
|                                                                                                                       |                           |
| Consolidated                    Statements of Earnings for the years ended June                    30, 2006, 2005 and 2004 | 32                             |
|                                                                                                                       |                                |
| Consolidated Statements of Stockholders' Equity for the years ended June 30, 2006, 2005 and 2004                           | 33                             |
|                                                                                                                            |                           |
| Consolidated Statements of Cash Flows for the years ended June 30, 2006, 2005 and 2004                                     | 34                             |
|                                                                                                                       |                           |
| Notes to Consolidated Financial Statements                                                                                 | 35-51                          |
|                                                                                                                            |                           |
| Consolidated Financial Statement Schedule for the years ended June 30, 2006, 2005 and 2004                                 |                           |
| Schedule II - Valuation and Qualifying Accounts                                                                            | 55                             |

----

**California                  First National Bancorp and                  Subsidiaries**

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**Vavrinek,        Trine, Day & Co., LLP**

----

**California                First National Bancorp and                Subsidiaries**

**CONSOLIDATED        BALANCE SHEETS**

|                                                                                                                                                                      |        | June 30, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------|
| ASSETS                                                                                                                                                               |   | 2006     |    | 2005 |   |
|                                                                                                                                                                 |   |     |    | (Restated) |   |
| Cash and due from banks                                                                                                                                              |   | $        | 23,217  |   | $ | 30,711 |   |
| Federal funds sold and securities purchased under                                                                                                                    |   |     |    |   |   |   |   |
|   agreements to resell                                                                                                                                     |   |     | 17,530  |   |   | 12,610 |   |
| Total cash and cash equivalents (Note 1)                                                                                                                             |   |     | 40,747  |   |   | 43,321 |   |
| Investment securities (Note 3)                                                                                                                                       |   |     | 1,134   |   |   | 1,484 |   |
| Receivables (Note 4)                                                                                                                                                 |   |     | 1,905   |   |   | 1,636 |   |
| Property acquired for transactions in process (Note 1)                                                                                                               |   |     | 41,680  |   |   | 34,052 |   |
| Net investment in capital leases (Note 5)                                                                                                                            |   |     | 213,956 |   |   | 187,432 |   |
| Property on operating leases, less accumulated depreciation of $530 (2006) and $371 (2005)                                                                           |   |     | 46      |   |   | 68 |   |
| Income tax receivable (Note 8)                                                                                                                                       |   |     | 4,744   |   |   | - |   |
| Other assets                                                                                                                                                         |   |     | 1,719   |   |   | 2,094 |   |
| Discounted lease rentals assigned to lenders (Note 5)                                                                                                                |   |     | 8,424   |   |   | 8,405 |   |
|                                                                                                                                                                 |   |     |    |   |   |   |   |
|                                                                                                                                                                 |   | $        | 314,355 |   | $ | 278,492 |   |
|                                                                                                                                                                 |   |     |    |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                           |   |     |    |   |   |   |   |
|                                                                                                                                                                 |   |     |    |   |   |   |   |
| Liabilities:                                                                                                                                                         |   |     |    |   |   |   |   |
|   Accounts payable                                                                                                                                         |   | $        | 3,263   |   | $ | 4,232 |   |
|   Accrued liabilities                                                                                                                                      |   |     | 4,702   |   |   | 3,950 |   |
|   Demand and savings deposits                                                                                                                              |   |     | 9,778   |   |   | 14,132 |   |
|   Time certificates of deposit                                                                                                                             |   |     | 79,388  |   |   | 39,966 |   |
|   Lease deposits                                                                                                                                           |   |     | 5,534   |   |   | 5,364 |   |
|   Non-recourse debt (Note 5)                                                                                                                               |   |     | 8,424   |   |   | 8,405 |   |
|   Deferred income taxes - including income taxes payable, net (Note 8)                                                                                     |   |     | 9,739   |   |   | 15,705 |   |
|                                                                                                                                                                 |   |     |    |   |   |   |   |
|                                                                                                                                                                 |   |     | 120,828 |   |   | 91,754 |   |
|                                                                                                                                                                 |   |     |    |   |   |   |   |
| Commitments and contingencies (Note 11)                                                                                                                              |   |     |    |   |   |   |   |
|                                                                                                                                                                 |   |     |    |   |   |   |   |
| Stockholders' equity (Note 9):                                                                                                                                       |   |     |    |   |   |   |   |
|   Preferred stock; 2,500,000 shares authorized; none issued                                                                                                |   |     | -       |   |   | - |   |
|   Common stock; $.01 par value; 20,000,000 shares authorized;     11,161,508 (2006) and 11,098,683 (2005) issued and outstanding  |   |     | 112     |   |   | 111 |   |
|   Additional paid in capital                                                                                                                               |   |     | 3,756   |   |   | 3,013 |   |
|   Retained earnings                                                                                                                                        |   |     | 189,659 |   |   | 183,614 |   |
|                                                                                                                                                                 |   |     | 193,527 |   |   | 186,738 |   |
|                                                                                                                                                                 |   | $        | 314,355 |   | $ | 278,492 |   |

----

**California                First National Bancorp and                Subsidiaries**

**CONSOLIDATED        STATEMENTS OF EARNINGS**

|                                                                                                                                                          |   | Years                  ended June 30, |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|
|                                                                                                                                                          |   | 2006                                  |       | 2005 |   | 2004 |   |
|                                                                                                                                                          |   |                                  |       | (Restated) |   | (Restated) |   |
| Direct                  finance income                                                                                                                        |   | $                                     | 18,861     |   | $ | 15,496 |   | $ | 14,813 |   |
| Interest                  income on investments                                                                                                               |   |                                  | 1,329      |   |   | 1,009 |   |   | 578 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Total                  direct finance and interest income                                                                                                     |   |                                  | 20,190     |   |   | 16,505 |   |   | 15,391 |   |
|                                                                                                                                                          |   |                                  |            |   |   |  |   |   |  |   |
| Interest                  expense on deposits                                                                                                                 |   |                                  | 2,593      |   |   | 1,054 |   |   | 430 |   |
| Provision                  for lease losses                                                                                                                   |   |                                  | 482        |   |   | 359 |   |   | 164 |   |
|   Net                  direct finance and interest income after    provision                  for                  lease losses |   |                                  | 17,115     |   |   | 15,092 |   |   | 14,797 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Other                  income                                                                                                                                 |   |                                  |       |   |   |   |   |   |   |   |
|   Operating                  and sales-type lease income                                                                                            |   |                                  | 4,498      |   |   | 4,379 |   |   | 5,255 |   |
|   Gain                  on sale of leases and leased property                                                                                       |   |                                  | 10,390     |   |   | 8,961 |   |   | 9,625 |   |
|   Other                  fee income                                                                                                                 |   |                                  | 780        |   |   | 1,091 |   |   | 930 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Total                  other income                                                                                                                           |   |                                  | 15,668     |   |   | 14,431 |   |   | 15,810 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Gross                  profit                                                                                                                                 |   |                                  | 32,783     |   |   | 29,523 |   |   | 30,607 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses                                                                                                 |   |                                  | 15,278     |   |   | 16,039 |   |   | 15,388 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Earnings                  before income taxes                                                                                                                 |   |                                  | 17,505     |   |   | 13,484 |   |   | 15,219 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Income                  taxes                                                                                                                                 |   |                                  | 6,783      |   |   | 5,057 |   |   | 5,859 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Net                  earnings                                                                                                                                 |   | $                                     | 10,722     |   | $ | 8,427 |   | $ | 9,360 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Basic                  earnings per common share                                                                                                              |   | $                                     | 0.96       |   | $ | 0.76 |   | $ | 0.85 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Diluted                  earnings per common share                                                                                                            |   | $                                     | 0.94       |   | $ | 0.74 |   | $ | 0.84 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Dividends                  declared per common share outstanding                                                                                              |   | $                                     | 0.42       |   | $ | 2.30 |   | $ | 0.40 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Average                  common shares outstanding - basic                                                                                                    |   |                                  | 11,125,473 |   |   | 11,073,194 |   |   | 10,976,103 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |
| Average                  common shares outstanding - diluted                                                                                                  |   |                                  | 11,460,912 |   |   | 11,340,255 |   |   | 11,190,249 |   |
|                                                                                                                                                          |   |                                  |       |   |   |   |   |   |   |   |

----

**California                First National Bancorp and                Subsidiaries**

**CONSOLIDATED        STATEMENTS OF STOCKHOLDERS' EQUITY**

|                                                                                                                                                                                         |   |                          |       |                     |   | Additional |   |          |   | Accumulated |   |    |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|------------|--------------------------|--------|------------|--------|---------------|--------|-------------|--------|---------|--------|
|                                                                                                                                                                                         |   | Common                  Stock |       | Paid                  in |   | Retained   |   | Comprehensive |   |        |   |
|                                                                                                                                                                                         |   | Shares                        |       | Amount                   |   | Capital    |   | Earnings      |   | Income      |   | Total   |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |
| Balance,                  June 30, 2003                                                                                                                                                      |   |                          | 10,933,509 |                     | $      | 109        |   | $             | 1,449  |        | $      | 195,718 |   | $ | - |   | $ | 197,276 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|   Net                  earnings (restated)                                                                                                                                         |   |                          | -          |                     |   | -          |   |          | -      |        |   | 9,360   |   |   | - |   |   | 9,360 |   |
|   Unrealized                  gains on                                                                                                                                             |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|     investment                  securities, net of tax                                                                                                                   |   |                          | -          |                     |   | -          |   |          | -      |        |   | -       |   |   | 125 |   |   | 125 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|  Shares                  issued -                                                                                                                                                       |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|     Stock                  options exercised                                                                                                                             |   |                          | 105,316    |                     |   | 1          |   |          | 1,031  |        |   | -       |   |   | - |   |   | 1,032 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|  Dividends                  declared                                                                                                                                                    |   |                          | -          |                     |   | -          |   |          | -      |        |   | (4,394  | )      |   | - |   |   | (4,394 | ) |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
| Balance,                  June 30, 2004                                                                                                                                                      |   |                          | 11,038,825 |                     |   | 110        |   |          | 2,480  |        |   | 200,684 |   |   | 125 |   |   | 203,399 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|   Net                  earnings (restated)                                                                                                                                         |   |                          | -          |                     |   | -          |   |          | -      |        |   | 8,427   |   |   | - |   |   | 8,427 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|   Reclassification                  adjustment -                                                                                                                                   |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|     Realized                  gain                  on investment         security,                  net                  of tax |   |                          | -          |                     |   | -          |   |          | -      |        |   | -       |   |   | (125 | ) |   | (125 | ) |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|  Shares                  issued -                                                                                                                                                       |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|     Stock                  options exercised                                                                                                                             |   |                          | 59,858     |                     |   | 1          |   |          | 533    |        |   | -       |   |   | - |   |   | 534 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|  Dividends                  declared                                                                                                                                                    |   |                          | -          |                     |   | -          |   |          | -      |        |   | (25,497 | )      |   | - |   |   | (25,497 | ) |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
| Balance,                  June 30, 2005                                                                                                                                                      |   |                          | 11,098,683 |                     |   | 111        |   |          | 3,013  |        |   | 183,614 |   |   | - |   |   | 186,738 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|   Net                  earnings                                                                                                                                                    |   |                          | -          |                     |   | -          |   |          | -      |        |   | 10,722  |   |   | - |   |   | 10,722 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|  Shares                  issued -                                                                                                                                                       |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|   Stock                  options exercised                                                                                                                                         |   |                          | 62,825     |                     |   | 1          |   |          | 556    |        |   | -       |   |   | - |   |   | 557 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|  Stock                  based compensation expense                                                                                                                                      |   |                          |       |                     |   |       |   |          | 187    |        |   |    |   |   |   |   |   | 187 |   |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
|  Dividends                  declared                                                                                                                                                    |   |                          | -          |                     |   | -          |   |          | -      |        |   | (4,677  | )      |   | - |   |   | (4,677 | ) |
|                                                                                                                                                                                         |   |                          |       |                     |   |       |   |          |   |        |   |    |   |   |   |   |   |   |   |
| Balance,                  June 30, 2006                                                                                                                                                      |   |                          | 11,161,508 |                     | $      | 112        |   | $             | 3,756  |        | $      | 189,659 |   | $ | - |   | $ | 193,527 |   |

----

**California                  First National Bancorp and                  Subsidiaries**

**CONSOLIDATED        STATEMENTS OF CASH FLOWS**

|                                                                                             |   | Years Ended June 30, |     |
|--------------------------------------------------------------------------------------------------|--------|----------------------|----------|
|                                                                                             |   | 2006                 |     | 2005 |   | 2004 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                            |   |                 |     | (Restated) |   | (Restated) |   |
| Net Earnings                                                                                     |   | $                    | 10,722   |   | $ | 8,427 |   | $ | 9,360 |   |
| Adjustments to reconcile net earnings to cash flows provided by (used for) operating activities: |        |                      |          |  |  |  |  |
| Depreciation                                                                                     |   |                 | 844      |   |   | 839 |   |   | 712 |   |
| Stock-based compensation expense                                                                 |   |                 | 187      |   |   | - |   |   | - |   |
| Leased property on operating leases, net                                                         |   |                 | (259     | ) |   | (170 | ) |   | (346 | ) |
| Interest accretion of estimated residual values                                                  |   |                 | (1,414   | ) |   | (1,519 | ) |   | (1,704 | ) |
| Gain on sale of leased property and sales-type lease income                                      |   |                 | (11,034  | ) |   | (8,730 | ) |   | (8,889 | ) |
| Provision for lease losses                                                                       |   |                 | 482      |   |   | 359 |   |   | 164 |   |
| Deferred income taxes, including income taxes payable                                            |   |                 | (5,966   | ) |   | (1,580 | ) |   | (5,178 | ) |
| (Increase) decrease in receivables                                                               |   |                 | (269     | ) |   | (172 | ) |   | 500 |   |
| Increase in income taxes receivable                                                              |   |                 | (4,744   | ) |   | - |   |   | - |   |
| Net (decrease) increase in accounts payable and accrued liabilities                              |   |                 | (217     | ) |   | 2,221 |   |   | 1,053 |   |
| Increase (decrease) in customer lease deposits                                                   |   |                 | 171      |   |   | 336 |   |   | (1,443 | ) |
| Net cash (used for) provided by operating activities                                             |   |                 | (11,497  | ) |   | 11 |   |   | (5,771 | ) |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                            |   |                 |     |   |   |   |   |   |   |   |
| Investment in leases and transactions in process                                                 |   |                 | (157,969 | ) |   | (154,664 | ) |   | (127,330 | ) |
| Payments received on lease receivables                                                           |   |                 | 118,828  |   |   | 112,667 |   |   | 104,784 |   |
| Proceeds from sales of leased property and sales-type leases                                     |   |                 | 16,955   |   |   | 13,958 |   |   | 16,101 |   |
| Purchase of investment securities                                                                |   |                 | (26      | ) |   | (31 | ) |   | (3,413 | ) |
| Pay down of investment securities                                                                |   |                 | 376      |   |   | 2,379 |   |   | 212 |   |
| Net increase in other assets                                                                     |   |                 | (189     | ) |   | (406 | ) |   | (695 | ) |
| Net cash used for investing activities                                                           |   |                 | (22,025  | ) |   | (26,097 | ) |   | (10,341 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                            |   |                 |     |   |   |   |   |   |   |   |
| Net increase in time certificates of deposit                                                     |   |                 | 39,422   |   |   | 18,983 |   |   | 14,556 |   |
| Net (decrease) increase in demand and money market deposits                                      |   |                 | (4,354   | ) |   | 10,515 |   |   | 2,450 |   |
| Dividends to stockholders                                                                        |   |                 | (4,677   | ) |   | (25,497 | ) |   | (4,394 | ) |
| Proceeds from exercise of stock options                                                          |   |                 | 557      |   |   | 534 |   |   | 1,032 |   |
| Net cash provided by financing activities                                                        |   |                 | 30,948   |   |   | 4,535 |   |   | 13,644 |   |
| NET CHANGE IN CASH AND CASH EQUIVALENTS                                                          |   |                 | (2,574   | ) |   | (21,551 | ) |   | (2,468 | ) |
| CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD                                               |   |                 | 43,321   |   |   | 64,872 |   |   | 67,340 |   |
| CASH & CASH EQUIVALENTS AT END OF PERIOD                                                     |   | $                    | 40,747   |   | $ | 43,321 |   | $ | 64,872 |   |
| SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES                              |   |                 |     |   |   |   |   |
| Increase (decrease) in lease rentals assigned to lenders and related non-recourse debt           |   | $                    | 19       |   | $ | (9,136 | ) | $ | (22,514 | ) |
| Estimated residual values recorded on leases                                                     |   | $                    | (2,603   | ) | $ | (2,704 | ) | $ | (3,580 | ) |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                |   |                 |     |   |   |   |   |   |   |   |
| Cash paid during the year for:                                                                   |   |                 |     |   |   |   |   |   |   |   |
| Interest                                                                                         |   | $                    | 2,605    |   | $ | 1,067 |   | $ | 431 |   |
| Income Taxes                                                                                     |   | $                    | 17,493   |   | $ | 6,644 |   | $ | 11,036 |   |

----

**California                First National Bancorp and                Subsidiaries**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note        1 - Summary of Significant Accounting Policies**
**:**

----

**California                  First National Bancorp and                  Subsidiaries**

* *

----

**California                First National Bancorp and                Subsidiaries**

|                                                                    |   | Years                  ended June 30,                               |       |
|-------------------------------------------------------------------------|--------|---------------------------------------------------------------------|------------|
|                                                                    |   | 2006                                                                |       | 2005 |   | 2004 |   |
|                                                                    |   | (in                  thousands, except share and per share amounts) |       |
| Net                  earnings                                           |   | $                                                                   | 10,722     |   | $ | 8,427 |   | $ | 9,360 |   |
| Weighted                  average number of common shares outstanding   |   |                                                                |       |   |   |   |   |   |   |   |
| assuming                  no exercise of outstanding options            |   |                                                                | 11,125,473 |   |   | 11,073,194 |   |   | 10,976,103 |   |
| Dilutive                  stock options using the treasury stock method |   |                                                                | 335,439    |   |   | 267,061 |   |   | 214,146 |   |
| Dilutive                  common shares outstanding                     |   |                                                                | 11,460,912 |   |   | 11,340,255 |   |   | 11,190,249 |   |
|  Basic                  earnings per common share                  |   | $                                                                   | 0.96       |   | $ | 0.76 |   | $ | 0.85 |   |
|  Diluted                  earnings per common share                |   | $                                                                   | 0.94       |   | $ | 0.74 |   | $ | 0.84 |   |

|                                              |   | Years                  ended June 30, |   |
|---------------------------------------------------|--------|---------------------------------------|--------|
|                                              |   | 2006                                  |   | 2005 |   | 2004 |   |
| Antidilutive                  stock option shares |   |                                  | 77,918 |   |   | 151,795 |   |   | 177,250 |   |

----

**California                  First National Bancorp and                  Subsidiaries**

**Note        2 - Restatement**

|                                             |   | Year                  ended June 30, 2005                         |   | Year                  ended June 30, 2004 |   |
|--------------------------------------------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                             |   | As                  Previously                                    |   | Restatement                               |   | As |   | As                  Previously |   | Restatement |   | As |   |
|                                             |   | Reported                                                          |   | Adjustment                                |   | Restated |   | Reported |   | Adjustment |   | Restated |   |
|                                             |   | (dollars                  in thousands, except per share amounts) |   |
| Operating                  and sales-type income |   | $                                                                 | 3,975  |                                      | $      | 404 |   | $ | 4,379 |   | $ | 5,985 |   | $ | (730 | ) | $ | 5,255 |   |
|                                             |   |                                                              |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  before income taxes    |   | $                                                                 | 13,080 |                                      | $      | 404 |   | $ | 13,484 |   | $ | 15,949 |   | $ | (730 | ) | $ | 15,219 |   |
| Income                  taxes                    |   |                                                              | 4,905  |                                      |   | 152 |   |   | 5,057 |   |   | 6,140 |   |   | (281 | ) |   | 5,859 |   |
| Net                  earnings                    |   | $                                                                 | 8,175  |                                      | $      | 252 |   | $ | 8,427 |   | $ | 9,809 |   | $ | (449 | ) | $ | 9,360 |   |
|                                             |   |                                                              |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per share        |   | $                                                                 | 0.74   |                                      | $      | 0.02 |   | $ | 0.76 |   | $ | 0.89 |   | $ | (0.04 | ) | $ | 0.85 |   |
| Diluted                  earnings per share      |   | $                                                                 | 0.72   |                                      | $      | 0.02 |   | $ | 0.74 |   | $ | 0.88 |   | $ | (0.04 | ) | $ | 0.84 |   |

----

**California                  First National Bancorp and                  Subsidiaries**

| (in                  thousands)                                                                        |   | Year                  ended June 30, 2005 |    | Year                  ended June 30, 2004 |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|-------------------------------------------|--------|
|                                                                                                   |   | As                  Previously            |    | Restatement                               |   | As |   | As                  Previously |   | Restatement |   | As |   |
|                                                                                                   |   | Reported                                  |    | Adjustments                               |   | Restated |   | Reported |   | Adjustments |   | Restated |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                                                 |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |
| Net                  Earnings                                                                          |   | $                                         | 8,175   |                                      | $      | 252 |   | $ | 8,427 |   | $ | 9,809 |   | $ | (449 | ) | $ | 9,360 |   |
| Adjustments                  to reconcile net earnings to cash flows                                   |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     provided                  by                  (used for) operating activities: |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                           |   |                                      | 60      |                                      |   | 779 |   |   | 839 |   |   | 204 |   |   | 508 |   |   | 712 |   |
| Sale                  of leased property previously on operating leases, net                           |   |                                      | 62      |                                      |   | (62 | ) |   | - |   |   | 53 |   |   | (53 | ) |   | - |   |
| Leased                  property on operating leases, net                                              |   |                                      | -       |                                      |   | (170 | ) |   | (170 | ) |   | - |   |   | (346 | ) |   | (346 | ) |
| Interest                  accretion of estimated residual values                                       |   |                                      | (1,519  | )                                         |   | - |   |   | (1,519 | ) |   | (1,704 | ) |   | - |   |   | (1,704 | ) |
| Decrease                  in estimated residual values                                                 |   |                                      | 5,228   |                                      |   | (5,228 | ) |   | - |   |   | 7,212 |   |   | (7,212 | ) |   | - |   |
| Gain                  on sale of leased property and sales-type lease income                           |   |                                      | -       |                                      |   | (8,730 | ) |   | (8,730 | ) |   | - |   |   | (8,889 | ) |   | (8,889 | ) |
| Property                  acquired for transactions in process to be sold                              |   |                                      | (3,571  | )                                         |   | 3,571 |   |   | - |   |   | (10,194 | ) |   | 10,194 |   |   | - |   |
| Deferred                  income taxes, including income taxes payable                                 |   |                                      | (1,732  | )                                         |   | 152 |   |   | (1,580 | ) |   | (4,897 | ) |   | (281 | ) |   | (5,178 | ) |
| All                  other operating cash flows                                                        |   |                                      | 2,744   |                                      |   | - |   |   | 2,744 |   |   | 274 |   |   | - |   |   | 274 |   |
| Net                  cash provided by (used for) operating activities                                  |   |                                      | 9,447   |                                      |   | (9,436 | ) |   | 11 |   |   | 757 |   |   | (6,528 | ) |   | (5,771 | ) |
|                                                                                                   |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                                                 |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  increase in minimum lease payments receivable                                     |   |                                      | (35,014 | )                                         |   | 35,014 |   |   | - |   |   | (9,186 | ) |   | 9,186 |   |   | - |   |
| Purchase                  of leased property on operating leases                                       |   |                                      | (60     | )                                         |   | 60 |   |   | - |   |   | (261 | ) |   | 261 |   |   | - |   |
| Investment                  in leases and transactions in process                                      |   |                                      | -       |                                      |   | (154,664 | ) |   | (154,664 | ) |   | - |   |   | (127,330 | ) |   | (127,330 | ) |
| Payments                  received on lease transactions                                               |   |                                      | -       |                                      |   | 112,667 |   |   | 112,667 |   |   | - |   |   | 104,784 |   |   | 104,784 |   |
| Estimated                  residual values recorded on leases                                          |   |                                      | (2,955  | )                                         |   | 2,955 |   |   | - |   |   | (3,991 | ) |   | 3,991 |   |   | - |   |
| Proceeds                  from sales of leased property and sales-type leases                          |   |                                      | -       |                                      |   | 13,958 |   |   | 13,958 |   |   |   |   |   | 16,101 |   |   | 16,101 |   |
| Purchase                  of investment securities                                                     |   |                                      | (31     | )                                         |   | - |   |   | (31 | ) |   | (3,413 | ) |   | - |   |   | (3,413 | ) |
| Pay                  down of investment securities                                                     |   |                                      | 2,379   |                                      |   | - |   |   | 2,379 |   |   | 212 |   |   | - |   |   | 212 |   |
| Net                  decrease in other assets                                                          |   |                                      | 148     |                                      |   | (554 | ) |   | (406 | ) |   | (230 | ) |   | (465 | ) |   | (695 | ) |
| Net                  cash used for investing activities                                                |   |                                      | (35,533 | )                                         |   | 9,436 |   |   | (26,097 | ) |   | (16,869 | ) |   | 6,528 |   |   | (10,341 | ) |
|                                                                                                   |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                                                 |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  cash provided by financing activities                                             |   |                                      | 4,535   |                                      |   | - |   |   | 4,535 |   |   | 13,644 |   |   | - |   |   | 13,644 |   |
|                                                                                                   |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  CHANGE IN CASH AND CASH EQUIVALENTS                                               |   |                                      | (21,551 | )                                         |   | - |   |   | (21,551 | ) |   | (2,468 | ) |   | - |   |   | (2,468 | ) |
| CASH                  & CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    |   |                                      | 64,872  |                                      |   | - |   |   | 64,872 |   |   | 67,340 |   |   | - |   |   | 67,340 |   |
| CASH                  & CASH EQUIVALENTS AT END OF PERIOD                                          |   | $                                         | 43,321  |                                      | $      | - |   | $ | 43,321 |   | $ | 64,872 |   | $ | - |   | $ | 64,872 |   |
|                                                                                                   |   |                                      |    |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL                  SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES                   |        |                                           |         |                                           |        |  |  |
| Estimated                  residual values recorded on leases                                          |   | $                                         | -       |                                      | $      | (2,704 | ) | $ | (2,704 | ) | $ | - |   | $ | (3,580 | ) | $ | (3,580 | ) |

----

**California                First National Bancorp and                Subsidiaries**

**Note        3 - Investment Securities**
**:**

|                                         |   |   |   | Amortized                       |   | Gross                  Unrealized |   | Fair   |   | Carrying |   |
|----------------------------------------------|--------|--------|--------|---------------------------------|--------|-----------------------------------|--------|--------|--------|----------|--------|
|                                         |   |   |   | Cost                            |   | Gains                             |   | Losses |   | Value    |   | Value |   |
|                                         |   |   |   | (in                  thousands) |   |
|  Held-to-maturity:                      |   |   |   |                            |   |                              |   |   |   |     |   |
| Federal                  Reserve Bank Stock  |   |   |   |                            | $      | 605                               |   |   | -      |     | $      | - |   | $ | 605 |   | $ | 605 |   |
| Mortgage-backed                  security    |   |   |   |                            |   | 529                               |   |   | -      |     |   | (38 | ) |   | 491 |   |   | 529 |   |
| Total                  investment securities |   |   |   |                            | $      | 1,134                             |   |   | -      |     | $      | (38 | ) | $ | 1,096 |   | $ | 1,134 |   |

|                                         |   | Amortized                       |   | Gross                  Unrealized |   | Fair   |   | Carrying |   |
|----------------------------------------------|--------|---------------------------------|--------|-----------------------------------|--------|--------|--------|----------|--------|
|                                         |   | Cost                            |   | Gains                             |   | Losses |   | Value    |   | Value |   |
|                                         |   | (in                  thousands) |   |
|  Held-to-maturity:                      |   |                            |   |                              |   |   |   |     |   |   |   |
| Federal                  Reserve Bank Stock  |   | $                               | 579    |                              | $      | -      |   | $        | -      |   | $ | 579 |   | $ | 579 |   |
| Mortgage-backed                  security    |   |                            | 905    |                              |   | -      |   |     | (13    | ) |   | 892 |   |   | 905 |   |
| Total                  investment securities |   | $                               | 1,484  |                              | $      | -      |   | $        | (13    | ) | $ | 1,471 |   | $ | 1,484 |   |

|                                |   | Amortized                       |   | Fair   |   |
|-------------------------------------|--------|---------------------------------|--------|--------|--------|
|                                |   | Cost                            |   | Value  |   |
|                                |   | (in                  thousands) |   |
| Held-to-maturity:                   |   |                            |   |   |   |   |   |
| Due                  after 10 years |   | $                               | 1,134  |   | $      | 1,096 |   |
|                                |   | $                               | 1,134  |   | $      | 1,096 |   |

----

**California                  First National Bancorp and                  Subsidiaries**

**Note        4 - Receivables**
**:**

|                                       |   | June                  30,       |   |
|--------------------------------------------|--------|---------------------------------|--------|
|                                       |   | 2006                            |   | 2005 |   |
|                                       |   | (in                  thousands) |   |
| Other                  lessee receivables  |   | $                               | 1,732  |   | $ | 1,353 |   |
| Financial                  institutions    |   |                            | -      |   |   | 117 |   |
| Miscellaneous                  receivables |   |                            | 173    |   |   | 166 |   |
|                                       |   | $                               | 1,905  |   | $ | 1,636 |   |

**Note        5 - Capital Leases**
**:**

|                                                                   |   | June                  30, |    |
|------------------------------------------------------------------------|--------|---------------------------|---------|
| (in                  thousands)                                        |   | 2006                      |    | 2005 |   |
|                                                                   |   |                      |    | (Restated) |   |
| Minimum                  lease payments receivable                     |   | $                         | 234,337 |   | $ | 198,777 |   |
| Estimated                  residual value                              |   |                      | 12,644  |   |   | 14,432 |   |
|                                                                   |   |                      | 246,981 |   |   | 213,209 |   |
| Less                  allowance for lease losses                       |   |                      | (3,339  | ) |   | (2,962 | ) |
| Less                  valuation allowance for estimated residual value |   |                      | (230    | ) |   | (465 | ) |
|                                                                   |   |                      | 243,412 |   |   | 209,782 |   |
| Less                  unearned income                                  |   |                      | (29,456 | ) |   | (22,350 | ) |
| Net                  investment in capital leases                      |   | $                         | 213,956 |   | $ | 187,432 |   |

| Years                  ending June                  30, |   | MinimumLease                  Payments Receivable |    | Estimated Residual                  Value |   | Total  |   |
|--------------------------------------------------------------|--------|---------------------------------------------------|---------|------------------------------------------------|--------|--------|--------|
|                                                         |   | (in                  thousands)                   |    |
| 2007                                                         |   | $                                                 | 115,952 |                                           | $      | 3,411  |   | $ | 119,363 |   |
| 2008                                                         |   |                                              | 62,496  |                                           |   | 3,288  |   |   | 65,784 |   |
| 2009                                                         |   |                                              | 34,472  |                                           |   | 3,843  |   |   | 38,315 |   |
| 2010                                                         |   |                                              | 15,164  |                                           |   | 960    |   |   | 16,124 |   |
| 2011                                                         |   |                                              | 4,654   |                                           |   | 765    |   |   | 5,419 |   |
| Thereafter                                                   |   |                                              | 1,599   |                                           |   | 377    |   |   | 1,976 |   |
|                                                         |   |                                              | 234,337 |                                           |   | 12,644 |   |   | 246,981 |   |
| Less                  unearned income                        |   |                                              | (26,796 | )                                              |   | (2,660 | )      |   | (29,456 | ) |
| Less                  allowances                             |   |                                              | (3,339  | )                                              |   | (230   | )      |   | (3,569 | ) |
|                                                         |   | $                                                 | 204,202 |                                           | $      | 9,754  |   | $ | 213,956 |   |

----

**California                  First National Bancorp and                  Subsidiaries**

| Years                  ending                                 |   | Capital                         |   |
|---------------------------------------------------------------|--------|---------------------------------|--------|
|  June                  30,                               |   | Leases                          |   |
|                                                          |   | (in                  thousands) |   |
| 2007                                                          |   | $                               | 2,497  |   |
| 2008                                                          |   |                            | 2,217  |   |
| 2009                                                          |   |                            | 1,491  |   |
| 2010                                                          |   |                            | 869    |   |
| 2011                                                          |   |                            | 400    |   |
| Total                  non-recourse debt                      |   |                            | 7,474  |   |
| Deferred                  interest expense                    |   |                            | 950    |   |
| Discounted                  lease rentals assigned to lenders |   | $                               | 8,424  |   |

**Note        6 - Credit Facilities**
**:**

**Note        7 - Fair Value of Financial Instruments:**

----

**California                  First National Bancorp and                  Subsidiaries**

|                                          |   | June                  30, 2006 |   | June                  30, 2005 |   |
|-----------------------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                                          |   | Carrying                       |   | Estimated                      |   | Carrying |   | Estimated |   |
|  (in thousands)                          |   | Amount                         |   | Fair                  Value    |   | Amount |   | Fair                  Value |   |
| Financial                  Assets:            |   |                           |   |                           |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents    |   | $                              | 40,747 |                           | $      | 40,747 |   | $ | 43,321 |   | $ | 43,321 |   |
| Investment                  securities        |   |                           | 1,134  |                           |   | 1,096 |   |   | 1,484 |   |   | 1,471 |   |
| Financial                  Liabilities:       |   |                           |   |                           |   |   |   |   |   |   |   |   |   |
| Demand                  and savings deposits  |   |                           | 9,778  |                           |   | 9,778 |   |   | 14,132 |   |   | 14,132 |   |
| Time                  certificates of deposit |   | $                              | 79,388 |                           | $      | 76,106 |   | $ | 39,966 |   | $ | 38,746 |   |

**Note        8 - Income Taxes**
**:**

|                                             |   | Years                  ended June 30, |   |
|--------------------------------------------------|--------|---------------------------------------|--------|
|  (in thousands)                             |   | 2006                                  |   | 2005 |   | 2004 |   |
| Current                  tax expense:            |   |                                  |   |   |   |   |   |
| Federal                                          |   | $                                     | 11,153 |   | $ | 8,250 |   | $ | 4,876 |   |
| State                                            |   |                                  | 1,229  |   |   | 1,813 |   |   | 2,530 |   |
|                                             |   |                                  | 12,382 |   |   | 10,063 |   |   | 7,406 |   |
| Deferred                  tax expense (benefit): |   |                                  |   |   |   |   |   |   |   |   |
| Federal                                          |   |                                  | (5,026 | ) |   | (3,945 | ) |   | (1,885 | ) |
| State                                            |   |                                  | (573   | ) |   | (1,061 | ) |   | 338 |   |
|                                             |   |                                  | (5,599 | ) |   | (5,006 | ) |   | (1,547 | ) |
|                                             |   | $                                     | 6,783  |   | $ | 5,057 |   | $ | 5,859 |   |

|                                                         |   | June                  30, |   |
|--------------------------------------------------------------|--------|---------------------------|--------|
|  (in thousands)                                         |   | 2006                      |   | 2005 |   |
| Deferred                  income tax liabilities:            |   |                      |   |   |   |   |   |
| Tax                  operating leases                        |   | $                         | 9,933  |   | $ | 15,622 |   |
| Deferred                  selling expenses                   |   |                      | 1,753  |   |   | 1,854 |   |
| Depreciation                  other than on operating leases |   |                      | 44     |   |   | 261 |   |
| Total                  liabilities                           |   |                      | 11,730 |   |   | 17,737 |   |
| Deferred                  income tax assets:                 |   |                      |   |   |   |   |   |
| Allowances                  and reserves                     |   |                      | (1,489 | ) |   | (1,433 | ) |
| State                  income taxes                          |   |                      | (430   | ) |   | (635 | ) |
| Stock-based                  compensation                    |   |                      | (72    | ) |   | - |   |
| Under                  estimated tax payments                |   |                      | -      |   |   | 36 |   |
| Total                  assets                                |   |                      | (1,991 | ) |   | (2,032 | ) |
| Net                  deferred income tax liabilities         |   | $                         | 9,739  |   | $ | 15,705 |   |

----

**California                  First National Bancorp and                  Subsidiaries**

|                                               |   | Years                  ended June 30, |   |
|----------------------------------------------------|--------|---------------------------------------|--------|
|                                               |   | 2006                                  |   | 2005 |   | 2004 |   |
| Federal                  statutory rate            |   |                                  | 35.00  | % |   | 35.0 | % |   | 35.0 | % |
| State                  tax, net of federal benefit |   |                                  | 4.70   |   |   | 4.7 |   |   | 4.7 |   |
| Other                                              |   |                                  | (0.95  | ) |   | (2.2 | ) |   | (1.2 | ) |
| Effective                  rate                    |   |                                  | 38.75  | % |   | 37.5 | % |   | 38.5 | % |

**Note        9 - Capital Structure and Stock-based Compensation**
**:**

----

**California                  First National Bancorp and                  Subsidiaries**

|                                                                                                            |   | As                  of June, 30 |                      |
|-----------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------------------------|
|                                                                                                            |   | 2006                            |                      | 2005 |   | 2004 |   |
|                                                                                                            |   |    Shares        |                      | WeightedAverageExercisePrice |   |  Shares |   | WeightedAverageExercisePrice |   |  Shares |   | WeightedAverageExercisePrice |   |
| Options                  outstanding at the                  beginning of the year     |   |                            | 1,017,518                 |   | $ | 9.02 |   |   | 944,758 |   | $ | 10.34 |   |   | 1,021,074 |   | $ | 10.25 |   |
| Granted                  (1)                                                                                    |   |                            | -                         |   |   | - |   |   | 136,618 |   |   | 9.01 |   |   | 65,000 |   |   | 10.93 |   |
| Exercised                                                                                                       |   |                            | (                  62,825 | ) |   | 8.86 |   |   | (                  59,858 | ) |   | 8.92 |   |   | (                  105,316 | ) |   | 9.80 |   |
| Canceled/expired                                                                                                |   |                            | (                  8,926  | ) |   | 9.33 |   |   | (                  4,000 | ) |   | 11.13 |   |   | (                  36,000 | ) |   | 10.62 |   |
| Options                  outstanding at  the                  end of the year                         |   |                            | 945,767                   |   | $ | 9.02 |   |   | 1,017,518 |   | $ | 9.02 |   |   | 944,758 |   | $ | 10.34 |   |
|                                                                                                            |   |                            |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  available for issuance                                                                  |   |                            | 634,003                   |   |   |   |   |   | 523,016 |   |   |   |   |   | 549,246 |   |   |   |   |
|                                                                                                            |   |                            |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                  exercisable                                                                            |   |                            | 875,811                   |   |   |   |   |   | 824,284 |   |   |   |   |   | 645,158 |   |   |   |   |
| Weighted                  average fairvalue                  of options granted (1)                             |   |                            | N/A                       |   |   |   |   |   | N/A |   |   |   |   | $ | 4.38 |   |   |   |   |

----

| (1)   | All                2005 option grants were the result of the special dividend in December                2004, which resulted in all unexercised options as of the record                date                being re-priced under FIN 44 to preserve the economic benefit of                the stock                options at such time. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As                  of June 30, 2006                            |
|--------|-----------------------------------------------------------------|
|   | Options                  outstanding                            |   | Options                  exercisable |
|   |  Range                  ofExercise                  Prices |  NumberOutstanding | Weighted                  AverageRemaining                  Contractual Life(in                  years) |  Weighted                  AverageExercise                  Price |   |  NumberExercisable |  Weighted                  AverageExercise                  Price |
|   | $5.20                  - $ 8.81                                 | 612,443 | 4.52 | $                  7.55 |   | 577,812 | $                  7.48 |
|   |  9.85                  - 15.27                             |  333,324 | 3.38 |  11.71 |   | 297,999 |  11.68 |
|   | $5.20                  - $15.27                                 |  945,767 | 4.12 | $                  9.02 |   | 875,811 | $                  8.91 |

----

**California                  First National Bancorp and                  Subsidiaries**

|                                   |   | Years                  ended June 30,                     |                   |
|----------------------------------------|--------|-----------------------------------------------------------|------------------------|
|                                   |   | 2005                                                      |                   | 2004 |   |
|                                   |   | (in                  thousands, except per share amounts) |                   |
| Net                  earnings          |   | $                                                         | 8,427                  |   | $ | 9,360 |   |
| Proforma                  compensation |   |                                                      | (                  522 | ) |   | (                  704 | ) |
| Income                  tax effect     |   |                                                      | 196                    |   |   | 271 |   |
| Proforma                  net earnings |   | $                                                         | 8,101                  |   | $ | 8,927 |   |
|                                   |   |                                                      |                   |   |   |   |   |
| Proforma                  Basic EPS    |   | $                                                         | 0.73                   |   | $ | 0.81 |   |
|                                   |   |                                                      |                   |   |   |   |   |
| Proforma                  Diluted EPS  |   | $                                                         | 0.71                   |   | $ | 0.80 |   |

|                                     |   | Year                  ended June 30, 2004 |              |
|------------------------------------------|--------|------------------------------------------------|-------------------|
| Risk                  free interest rate |   |                                           |   3.81% |  |
| Option                  life (in years)  |   |                                           | 5                 |   |
| Dividend                  yield          |   |                                           |   3.24% |  |
| Volatility                               |   |                                           | 53.85%            |  |

**Note        10 - Regulatory Capital Requirements**
**:**

----

**California                    First National Bancorp and                    Subsidiaries**

|                                                   |   |  June                  30,         |    |
|--------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                   |   | 2006                                    |    | 2005 |   |
|                                                   |   | (dollars                  in thousands) |    |
| **California                  First National Bancorp** |   | Amount                                  |    | Ratio |   | Amount |   | Ratio |   |
| Tier                  1 risk-based capital             |   | $                                       | 193,527 |   |   | 62.1 | % | $ | 186,738 |   |   | 72.3 | % |
| Total                  risk-based capital              |   | $                                       | 196,096 |   |   | 63.2 | % | $ | 190,171 |   |   | 73.6 | % |
| Tier                  1 leverage capital               |   | $                                       | 193,527 |   |   | 64.5 | % | $ | 186,738 |   |   | 68.3 | % |
|                                                   |   |                                    |    |   |   |   |   |   |   |   |   |   |   |
| **California                  First National Bank**    |   |                                    |    |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 risk-based capital             |   | $                                       | 36,333  |   |   | 26.3 | % | $ | 20,091 |   |   | 19.3 | % |
| Total                  risk-based capital              |   | $                                       | 37,354  |   |   | 27.0 | % | $ | 20,930 |   |   | 20.1 | % |
| Tier                  1 leverage capital               |   | $                                       | 36,333  |   |   | 28.3 | % | $ | 20,091 |   |   | 21.1 | % |

**Note        11 - Commitments and Contingencies**
**:**

|                          |   | Future                  minimum |   |
|-------------------------------|--------|---------------------------------|--------|
| Years                  ending |   | lease                  payments |   |
| June                  30,     |   | (in                  thousands) |   |
| 2007                          |   | $                               | 1,029  |   |
| 2008                          |   |                            | 1,112  |   |
| 2009                          |   |                            | 186    |   |
|                          |   | $                               | 2,327  |   |

**Note        12 - Segment Reporting**
**:**

----

**California                    First National Bancorp and                    Subsidiaries**

|                                                     |   |                            |    |                           |   | Bancorp                  and |   |         |    |
|----------------------------------------------------------|--------|---------------------------------|---------|--------------------------------|--------|------------------------------|--------|--------------|---------|
|                                                     |   | Leasing                         |    |                           |   | Eliminating                  |   |         |    |
|                                                     |   | Companies                       |    | CalFirst                  Bank |   | Entries                      |   | Consolidated |    |
|                                                     |   | (in                  thousands) |    |
| Year                  end June 30, 2006                  |   |                            |    |                           |   |                         |   |         |    |
| Net                  direct finance and interest income  |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| after                  provision for lease losses        |   | $                               | 13,315  |                           | $      | 3,743                        |   | $            | 57      |   | $ | 17,115 |   |
| Other                  income                            |   |                            | 14,935  |                           |   | 733                          |   |         | -       |   |   | 15,668 |   |
| Gross                  profit                            |   | $                               | 28,250  |                           | $      | 4,476                        |   | $            | 57      |   | $ | 32,783 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Net                  earnings                            |   | $                               | 8,248   |                           | $      | 1,278                        |   | $            | 1,196   |   | $ | 10,722 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Total                  assets                            |   | $                               | 225,155 |                           | $      | 133,793                      |   | $            | (44,593 | ) | $ | 314,355 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Year                  end June 30, 2005 (Restated)  |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Net                  direct finance and interest income  |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| after                  provision for lease losses        |   | $                               | 12,098  |                           | $      | 2,959                        |   | $            | 35      |   | $ | 15,092 |   |
| Other                  income                            |   |                            | 13,844  |                           |   | 593                          |   |         | (6      | ) |   | 14,431 |   |
| Gross                  profit                            |   | $                               | 25,942  |                           | $      | 3,552                        |   | $            | 29      |   | $ | 29,523 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Net                  earnings                            |   | $                               | 7,123   |                           | $      | 1,242                        |   | $            | 62      |   | $ | 8,427 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Total                  assets                            |   | $                               | 243,644 |                           | $      | 94,073                       |   | $            | (59,225 | ) | $ | 278,492 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Year                  end June 30, 2004 (Restated)       |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Net                  direct finance and interest income  |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| after                  provision for lease losses        |   | $                               | 12,478  |                           | $      | 2,245                        |   | $            | 74      |   | $ | 14,797 |   |
| Other                  income                            |   |                            | 15,772  |                           |   | 38                           |   |         | -       |   |   | 15,810 |   |
| Gross                  profit                            |   | $                               | 28,250  |                           | $      | 2,283                        |   | $            | 74      |   | $ | 30,607 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Net                  earnings (loss)                     |   | $                               | 9,074   |                           | $      | 397                          |   | $            | (111    | ) | $ | 9,360 |   |
|                                                     |   |                            |    |                           |   |                         |   |         |    |   |   |   |   |
| Total                  assets                            |   | $                               | 259,291 |                           | $      | 60,039                       |   | $            | (45,516 | ) | $ | 273,814 |   |

----

**California                    First National Bancorp and                    Subsidiaries**

**Note        13 - California First National Bancorp (Parent Only) Financial        Information**
**:**

| **Condensed                  Balance Sheets**                                   |   | June                  30, |    |
|---------------------------------------------------------------------------------|--------|---------------------------|---------|
| (in                  thousands, except share amounts)                           |   | 2006                      |    | 2005 |   |
| Assets                                                                          |   |                      |    |   |   | (Restated) |   |
| Cash                  and cash equivalents                                      |   | $                         | 5,117   |   | $ | 1,328 |   |
| Intercompany                  receivables                                       |   |                      | 252     |   |   | 290 |   |
| Investments                  in bank subsidiary                                 |   |                      | 36,339  |   |   | 20,062 |   |
| Investments                  in non-bank subsidiaries                           |   |                      | 100,770 |   |   | 124,522 |   |
| Intercompany                  note receivable                                   |   |                      | 51,898  |   |   | 39,633 |   |
| Other                  assets                                                   |   |                      | 712     |   |   | 2,071 |   |
| Premises                  and other fixed assets                                |   |                      | 425     |   |   | 554 |   |
|                                                                            |   | $                         | 195,513 |   | $ | 188,460 |   |
| Liabilities                                                                     |   |                      |    |   |   |   |   |
| Accrued                  liabilities                                            |   | $                         | 1,825   |   | $ | 1,484 |   |
| Payable                  to non-bank subsidiaries                               |   |                      | 161     |   |   | 238 |   |
|                                                                            |   |                      | 1,986   |   |   | 1,722 |   |
| Stockholders’                  Equity                                     |   |                      |    |   |   |   |   |
| Preferred                  stock; 2,500,000 shares authorized, none issued      |   |                      | -       |   |   | - |   |
| Common                  stock, $0.01 par value; 20,000,000 shares authorized;   |   |                      |    |   |   |   |   |
| 11,161,508                  (2006) and 11,098,683 (2005) issued and outstanding |   |                      | 112     |   |   | 111 |   |
| Additional                  paid-in capital                                     |   |                      | 3,907   |   |   | 3,164 |   |
| Retained                  earnings                                              |   |                      | 189,508 |   |   | 183,463 |   |
|                                                                            |   |                      | 193,527 |   |   | 186,738 |   |
|                                                                            |   | $                         | 195,513 |   | $ | 188,460 |   |

| **Condensed                  Statements of Earnings**                                        |   | June                  30, |    |
|----------------------------------------------------------------------------------------------|--------|---------------------------|---------|
| (in                  thousands)                                                              |   | 2006                      |    | 2005 |   |
| Income                                                                                       |   |                      |    | (Restated) |   |
| Dividends                  from non-bank subsidiary                                          |   | $                         | 32,000  |   | $ | 35,000 |   |
| Management                  fee income from bank subsidiary                                  |   |                      | 137     |   |   | 137 |   |
| Management                  fee income from non-bank subsidiaries                            |   |                      | 1,290   |   |   | 1,240 |   |
| Interest                  income from non-bank subsidiaries                                  |   |                      | 3,318   |   |   | 1,790 |   |
| Other                  interest income                                                       |   |                      | 57      |   |   | 35 |   |
|                                                                                         |   |                      | 39,900  |   |   | 38,202 |   |
| Expenses                                                                                     |   |                      |    |   |   |   |   |
| Selling,                  general and administrative                                         |   |                      | 2,559   |   |   | 2,354 |   |
| Interest                  expense                                                            |   |                      | -       |   |   | 6 |   |
|                                                                                         |   |                      | 2,559   |   |   | 2,360 |   |
| Income                  before taxes and equity in over distributed earnings of subsidiaries |   |                      | 34,341  |   |   | 35,842 |   |
| Income                  tax expense                                                          |   |                      | 1,145   |   |   | 781 |   |
|                                                                                         |   |                      | 33,196  |   |   | 35,061 |   |
| Equity                  in over distributed earnings of subsidiaries                         |   |                      | (22,474 | ) |   | (26,634 | ) |
|                                                                                         |   | $                         | 10,722  |   | $ | 8,427 |   |

----

**California                    First National Bancorp and                    Subsidiaries**

| **Condensed                  Statements of Cash Flows**                   |   | June                  30, |    |
|---------------------------------------------------------------------------|--------|---------------------------|---------|
| (in                  thousands)                                           |   | 2006                      |    | 2005 |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                    |   |                      |    | (Restated) |   |
| Net                  earnings                                             |   | $                         | 10,722  |   | $ | 8,427 |   |
| Adjustments                  to reconcile net earnings to cash flows:     |   |                      |    |   |   |   |   |
| Stock-based                  compensation expense                         |   |                      | 187     |   |   | - |   |
| Provision                  for deferred income taxes                      |   |                      | 1,145   |   |   | 781 |   |
| Equity                  in over distributed earnings of subsidiaries      |   |                      | 22,474  |   |   | 26,634 |   |
| Net                  change in other liabilities                          |   |                      | 341     |   |   | (5 | ) |
| Net                  change in other assets                               |   |                      | 214     |   |   | 1,485 |   |
| Other,                  net                                               |   |                      | 130     |   |   | 56 |   |
| Net                  cash provided by operating activities                |   |                      | 35,213  |   |   | 37,378 |   |
|                                                                      |   |                      |    |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                    |   |                      |    |   |   |   |   |
| Payments                  for investments in and advances to subsidiaries |   |                      | (27,304 | ) |   | (13,701 | ) |
| Net                  cash used for investing activities                   |   |                      | (27,304 | ) |   | (13,701 | ) |
|                                                                      |   |                      |    |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                    |   |                      |    |   |   |   |   |
| Proceeds                  from issuance of common stock                   |   |                      | 557     |   |   | 534 |   |
| Dividends                  paid                                           |   |                      | (4,677  | ) |   | (25,497 | ) |
| Net                  cash used for financing activities                   |   |                      | (4,120  | ) |   | (24,963 | ) |
|                                                                      |   |                      |    |   |   |   |   |
| NET                  CHANGE IN CASH AND CASH EQUIVALENTS                  |   |                      | 3,789   |   |   | (1,286 | ) |
|                                                                      |   |                      |    |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS AT BEGINNING OF PERIOD         |   |                      | 1,328   |   |   | 2,614 |   |
| CASH                  AND CASH EQUIVALENTS AT END OF PERIOD               |   | $                         | 5,117   |   | $ | 1,328 |   |

**Note        14 - Selected Quarterly Financial Data (Unaudited)**
**:**

|                                                    |   | Three                  months ended                      |   |
|---------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                    |   | September                  30,                           |   | December                  31, |   | March                  31, |   | June                  30, |   |
|                                                    |   | (in                  thousands except per share amounts) |   |
| 2006                                                    |   | (Restated)                                               |   | (Restated) |   |   |   |   |   |
| Direct                  finance income                  |   | $                                                        | 4,013  |   | $ | 4,483 |   | $ | 5,101 |   | $ | 5,264 |   |
| Net                  direct finance and interest income |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |
| after                  provision for lease losses       |   |                                                     | 3,460  |   |   | 4,201 |   |   | 4,753 |   |   | 4,701 |   |
| Gross                  profit                           |   |                                                     | 7,798  |   |   | 7,474 |   |   | 8,347 |   |   | 9,164 |   |
| Net                  earnings                           |   | $                                                        | 2,417  |   | $ | 2,275 |   | $ | 2,754 |   | $ | 3,276 |   |
|                                                    |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per common share        |   | $                                                        | 0.22   |   | $ | 0.20 |   | $ | 0.25 |   | $ | 0.29 |   |
| Diluted                  earnings per common share      |   | $                                                        | 0.21   |   | $ | 0.20 |   | $ | 0.25 |   | $ | 0.28 |   |
|                                                    |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                  declared per common share    |   | $                                                        | 0.10   |   | $ | 0.10 |   | $ | 0.11 |   | $ | 0.11 |   |

----

**California                    First National Bancorp and                    Subsidiaries**

|                                                    |   | Three                  months ended                      |   |
|---------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                    |   | September                  30,                           |   | December                  31, |   | March                  31, |   | June                  30, |   |
|                                                    |   | (in                  thousands except per share amounts) |   |
| 2005                                                    |   | (Restated)                                               |   | (Restated) |   | (Restated) |   | (Restated) |   |
| Direct                  finance income                  |   | $                                                        | 3,427  |   | $ | 3,788 |   | $ | 4,045 |   | $ | 4,236 |   |
| Net                  direct finance and interest income |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |
| after                  provision for lease losses       |   |                                                     | 3,535  |   |   | 3,802 |   |   | 3,815 |   |   | 3,940 |   |
| Gross                  profit                           |   |                                                     | 6,836  |   |   | 7,248 |   |   | 7,356 |   |   | 8,083 |   |
| Net                  earnings                           |   | $                                                        | 1,705  |   | $ | 2,088 |   | $ | 1,974 |   | $ | 2,660 |   |
|                                                    |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per common share        |   | $                                                        | 0.15   |   | $ | 0.19 |   | $ | 0.18 |   | $ | 0.24 |   |
| Diluted                  earnings per common share      |   | $                                                        | 0.15   |   | $ | 0.19 |   | $ | 0.17 |   | $ | 0.23 |   |
|                                                    |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                  declared per common share    |   | $                                                        | 0.10   |   | $ | 2.00 |   | $ | 0.10 |   | $ | 0.10 |   |

**ITEM        9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND**
**FINANCIAL DISCLOSURE**

**ITEM        9A. CONTROLS AND PROCEDURES **

The          Company maintains disclosure controls and procedures designed to ensure that          information required to be disclosed in the reports that it 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. 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 and have          concluded that the Company's disclosure controls and procedures are adequate          and          effective for the purposes set forth in the definition in Exchange Act rules.          There were no significant changes made during the most recent fiscal quarter          to          the Company's internal controls or other factors that could significantly          affect          the Company's internal control over financial reporting.

**ITEM 9B. OTHER INFORMATION**

None.

----

**California                    First National Bancorp and                    Subsidiaries**

**PART        III**

**ITEM        10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

**ITEM        11. EXECUTIVE COMPENSATION**

**ITEM        12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND        MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

**ITEM        13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

----

**California                    First National Bancorp and                    Subsidiaries**

**PART        IV**

**ITEM        15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

----

**California                  First National Bancorp and                  Subsidiaries**

**SIGNATURES**

|                                    |   |                                             |   |                                |
|-----------------------------------------|--------|--------------------------------------------------|--------|-------------------------------------|
|                                    |   |                                             |   |                                |
| /s/                Patrick E. Paddon    |   | President,                  Chief Executive      |   | September 15, 2006                  |
| Patrick                  E. Paddon      |   | Officer                  and Director            |   |                                |
|                                    |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
| /s/                  Glen T. Tsuma      |   | Vice                  President, Chief Operating |   | September                  15, 2006 |
| Glen                  T. Tsuma          |   | Officer                  and Director            |   |                                |
|                                    |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
| /s/                  S. Leslie Jewett   |   | Chief                  Financial Officer         |   | September                  15, 2006 |
| S.                  Leslie Jewett       |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
| /s/                  Michael H. Lowry   |   | Director                                         |   | September                  15, 2006 |
| Michael                  H. Lowry       |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
| /s/                Harris Ravine   |   | Director                                         |   | September                  15, 2006 |
| Harris                  Ravine          |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
|                                    |   |                                             |   |                                |
| /s/                  Danilo Cacciamatta |   | Director                                         |   | September                  15, 2006 |
| Danilo                  Cacciamatta     |   |                                             |   |                                |

----

**California              First National Bancorp and              Subsidiaries**

**SCHEDULE        II - VALUATION AND QUALIFYING ACCOUNTS**

|                                        |   |                            |   | Additions                   |   |                         |   |                       |   |
|---------------------------------------------|--------|---------------------------------|--------|-----------------------------|--------|------------------------------|--------|----------------------------|--------|
|                                        |   | Balance                         |   | charged                  to |   |                         |   | Balance                    |   |
|                                        |   | beginning                       |   | costs                  and  |   | Accounts                     |   | at                  end    |   |
|                                        |   | of                  period      |   | expenses                    |   | Written                  off |   | of                  period |   |
|                                        |   | (in                  thousands) |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |
| Year                  ended June 30, 2004:  |   |                            |   |                        |   |                         |   |                       |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |
| Allowance                  for lease losses |   | $                               | 3,494  |                        | $      | 164                          |   | $                          | (945   | ) | $ | 2,713 |   |
| Allowance                  for valuation of |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
| residual                  value             |   | $                               | 797    |                        | $      | -                            |   | $                          | (49    | ) | $ | 748 |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
| Year                  ended June 30, 2005:  |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
| Allowance                  for lease losses |   | $                               | 2,713  |                        | $      | 359                          |   | $                          | (42    | ) | $ | 3,030 |   |
| Allowance                  for valuation of |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
| residual                  value             |   | $                               | 748    |                        | $      | -                            |   | $                          | (283   | ) | $ | 465 |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
| Year                  ended June 30, 2006:  |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
| Allowance                  for lease losses |   | $                               | 3,030  |                        | $      | 482                          |   | $                          | (105   | ) | $ | 3,407 |   |
| Allowance                  for valuation of |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |
| residual                  value             |   | $                               | 465    |                        | $      | -                            |   | $                          | (235   | ) | $ | 230 |   |
|                                        |   |                            |   |                        |   |                         |   |                       |   |   |   |   |   |

----

**California              First National Bancorp and Subsidiaries**

**INDEX        TO EXHIBITS**

| Exhibit                    No. | Description                    of Exhibit                                                                                                                                                                                                                                                                                                                                                | Page                    No. |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 2.1                            | Agreement                    of Merger dated as of May 22, 2001 among Amplicon, Inc., California                    First                    National Bancorp and CFNB Merger Sub (incorporated by reference                    to Exhibit                    2.1 to Registrant's Statement on Form 8-K dated May 25,                    2001)                                           |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 3.1                            | Articles                    of Incorporation of California First National Bancorp (incorporated                    by                    reference to Exhibit 3.1 to Registrant's Statement on Form 8-K                    dated May                    25, 2001)                                                                                                                        |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 3.2                            | Bylaws                    of California First National Bancorp (incorporated by reference                    to Exhibit                    3.2 to Registrant's Statement on Form 8-K dated May 25,                    2001)                                                                                                                                                              |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 10.1                           | 1984                    Stock Option Plan, as amended to date (incorporated by reference                    to                    Exhibit 10.1 to Registrant's Statement on Form S-8 File No.                    33-27283)                                                                                                                                                               |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 10.2                           | 1995                    Equity Participation Plan, as amended to date (incorporated by                    reference                    to Exhibit 10.1 to Registrant's Statement on Form S-8 File No.                    333-15683)                                                                                                                                                      |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 10.3                           | Capital                    Assurances and Liquidity Maintenance Agreement between California                    First                    National Bancorp and California First National Bank, effective                    as of May                    23, 2001 (incorporated by reference to Exhibit 10.1 to Registrant's                    Statement on Form 8-K dated May 25, 2001) |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 10.4                           | Agreement                    by and between California First National Bank and the Office                    of the                    Comptroller of the Currency dated as of May 23, 2001 (incorporated                    by                    reference to Exhibit 10.2 to Registrant's Statement on Form 8-K                    dated May                    25, 2001)             |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 10.5                           | Office                    Lease dated January 30, 2003, between California First National                    Bancorp                    and World Trade Center Building, Inc. (incorporated by reference                    to                    Exhibit 10.8 to the Registrant’s March 31, 2003 Form                    10-Q)                                                    |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 10.6                           | Business                    Loan Agreement dated as of January 20, 2006 between California                    First                    Leasing Corporation and Amplicon, Inc. and Bank of America (incorporated                    by reference to Exhibit 10.6 to the Registrant’s December 31, 2005 Form                    10-Q).                                               |                        |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 31.1                           | Rule                    13a-14(a)/15d-14(a) Certifications of Principal Executive Officer                                                                                                                                                                                                                                                                                                |                             | 57 |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 31.2                           | Rule                  13a-14(a)/15d-14(a) Certifications of Principal Financial                  Officer                                                                                                                                                                                                                                                                                 | 58                          |
|                           |                                                                                                                                                                                                                                                                                                                                                                                     |                        |   |
| 32                             | Section                  1350 Certifications by Principal Executive Officer and Principal                  Financial                  Officer                                                                                                                                                                                                                                            | 59                          |

----