California First National Bancorp (the Company) is a bank
holding company headquartered in Orange County, California with
a bank subsidiary, California First National Bank (CalFirst
Bank or the Bank) that is regulated by the Office of the
Comptroller of the Currency, U.S. Department of the Treasury
(OCC). As previously disclosed in a Report on Form 8-K filed
February 15, 2017, following the completion of an interim
examination, the OCC advised the Bank to cease originating new
leveraged or non-leveraged syndicated commercial loans until
the OCC validated that an acceptable risk management framework
is in place. In a letter dated March 21, 2017 reporting results
of the interim examination, the OCC further advised the Bank to
take action to substantially reduce its concentration of
leveraged loans.

As a result of the OCCs directive in February 2017, the Bank
stopped participating in new syndicated loans, and through loan
payoffs and sales it is estimated that the Banks syndicated
loan portfoliodeclined by 10% between January 1 and March 31,
2017, with another 6% pending the close of a sale or payoff.

The Company and the Bank are undertaking a strategic review of
their options in light of the latest OCC letter. While plans
for complying with a reduced concentration limit in leveraged
loans in an orderly way are not finalized, it is expected that
such a plan may ultimately result in more than a 50% reduction
in the Banks leverage loan portfolio over the next twelve
months. While the Bank has the latitude to coordinate any
reduction in the loan portfolio with reductions in deposits and
other funding liabilities, consistent with a prudent asset and
liability management strategy, this process could have a
material adverse effect on net interest income.

The Company expects to report results for the third quarter
ended March 31, 2017 around April 28, 2017 and be in a position
to provide an update on its strategic plan at such time.

Cautionary Statement Regarding Forward-Looking
Statements

This communication contains forward-looking statements, which
involve management assumptions, risks and uncertainties. The
statements in this document that are not strictly historical in
nature constitute forward-looking statements. Such statements
include expectations regarding the level of lease and loan
commitments and growth in interest income and lease and loan
performance. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that could cause
actual results to be different from the results expressed or
implied by such forward-looking statements. Although we believe
that the expectations reflected in these forward-looking
statements are reasonable as of the date on which the
statements are made, these statements are not guarantees of
future performance and involve risks and uncertainties that are
subject to change based on various important factors and
assumptions, some of which are beyond our control.
Consequently, if such management assumptions prove to be
incorrect or such risks or uncertainties materialize, the
Companys actual results could differ materially from the
results forecast in the forward-looking statements. All
forward-looking statements are qualified in their entirety by
this cautionary statement, and the Company undertakes no
obligation to revise or update this communication to reflect
events or circumstances arising after the date hereof. For
further discussion regarding management assumptions, risks and
uncertainties, readers should refer to the Companys 2016 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission.