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   California First Leasing Corporation

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                                                                                    July 31, 2024                               Via Edgar

John F. Kernan

Office of Chief Accountant

Division of Investment Management

Securities and Exchange Commission (“SEC”)

100 F Street, NE

 Washington, DC 20549-8626

Re:       California First Leasing Corporation

Dear Mr. Kernan:

This correspondence responds to comments that California First Leasing Corporation (“Company”) received verbally from you on July 2, 2024. To assist your review, the numbered comments below correspond to the numbered comments conveyed, with the Company’s response to each comment just below.

1.       Provide management’s SAB 99 materiality assessment or related analysis of the impact on previously issued financial statements since CFNB registered under the 40 ACT of its accounting for the leases under Section 842 instead of Section 946-325. In the response add any ASC 250 implications (Accounting Changes and Error Corrections) as a result of your assessment, and plans to provide readers of the financial statements with meaningful disclosure of the fair value of leases.

The Company has not conducted a SAB 99 materiality assessments related to its accounting for leases under Section 842 as presented in its registration statement on Form N-2, dated, and assumed to be effective as of July 20, 2022 (“N-2”), and subsequent financial statement filings for fiscal years ended June 30, 2022 and 2023 and interim periods ended December 31, 2022 and 2023. Staff Accounting Bulletin No. 99 (“SAB 99”) addresses the handling of material errors identified in previously-issued financial statements. The premise of the SEC inquiry seems to be that there is an error in the Company’s financial statements. We and our accountants do not believe there was or are any errors. We previously addressed the Company’s assessment of its accounting for leases in correspondence to the SEC in July and August 2022 and that documentation still stands true. We have attached the relevant excerpts as Exhibit A.

At the risk of  being redundant, it is relevant to recall the context of the Company’s registration as an investment company in 2022 and history prior thereto, as it is unique.

a)    From May 2001 through February 2021, the Company operated as a bank holding company. At June 30, 2022, prior to the effective date of the N-2, all leases had been booked in compliance with the only applicable generally accepted accounting principle (“GAAP”) of 2016-02, Leases (Topic 842, “ASC 842”).

o    70% of lease portfolio was booked prior to December 31, 2020 by California First National Bank, when the Company still operated as a bank holding company.

o    Another 25% of this portfolio was booked prior to January 1, 2022, again prior to any investment company considerations and in accordance with GAAP with no misstatements identified.

o    Accordingly, 95% of the lease portfolio at June 30, 2022 had been accounted for under ASC 842 and presented in financial statements filed with bank regulators (Office of the Comptroller of the Currency and Federal Reserve Board) through December 2020, and distributed to shareholders and OTC Market Group (“OTC”) through December 2021.

b)    At the time of its N-2 filing, the Company carefully considered the question of whether a change in accounting principle to be applied to leases was warranted. Among the topics considered were the following, some of which contradict each other:

o    842-30-35-2: After the commencement date, a lessor shall not remeasure the net investment in the lease unless the lease is modified, and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.

o   842-35-25:  A lessor shall review the estimated residual value of leased property at least annually. If the review results in a lower estimated residual, the accounting for the transaction shall be revised and the reduction in value recognized as a loss. An upward adjustment of the estimated residual value shall not be made.

John F. Kernan

Division of Investment Management

July 31, 2024

Page 2

o    946-10-15-7:  An investment company also has the following typical characteristics:  e) It manages substantially all of its investments on a fair value basis.

o    946-10-25-3: An entity that subsequently is an investment company under this Topic as result of the reassessment of status shall account for the effect of the change in status from the date of the change in status (July 2022 forward, in our case).

o    ASC 250-10-20.  Accounting Changes: the implementation of a change in accounting principle should have consistent presentation for all periods presented within the financial statements.  The oldest leases in the portfolio were booked in fiscal 2018.

o    820-10-15-2: The Fair Value Measurement Topic does not apply as follows:

c.     To accounting principles that address fair value measurements for purposes of lease classification or measurement in accordance with Topic 840.

o   Section 2(a)41 of the 1940 Act provides for:

                                 i.       any security to be carried at cost, if it shall determine that such procedure is consistent with the general intent and purposes of this title;

                                ii.       valuation of securities at cost or other basis in cases where it may be more convenient to make its computations on such basis by reason of the necessity or desirability of complying with the provisions of any United States revenue laws or rules and regulations.

c)     The Company registered as an investment company under the 40 Act in 2022 solely because it met the definition based on investment securities representing over 40% of total assets. In other aspects, its activities, operations and source of income were quite distinct from fundamental investment characteristics defined under ASC 946:

o    It has not obtained funds from investors as an investment company.

o    It does not have any asset-based fees and it does not transact with shareholders on the basis of net asset value per share.

o    While the company manages its securities on a fair value basis, that is not the case with the lease portfolio where fair value is the not the primary measurement attribute used to evaluate returns.

o    The Company continues to be a C-corporation that accrues and pay taxes at the corporate level, which is unique and not generally assumed under ASC 946.

d)    The Company’s decision to not change its method of accounting for leases but still be compliant within the confines of ASC 946 is supported by 1) the non-substantive nature of the Company’s lease activities and portfolio, and 2) the economic benefit to shareholders of not undergoing a restatement of prior period financials for minimal benefit.

o   The Company has had minimal lease activity since its 40 Act registration, and the net investment in leases has become even more non-substantive, declining from 10% of total assets at June 2022 to less than 4% of total assets at June 30, 2024. Under $10 million of new leases have been added to the portfolio over the last two years.

   (dollars in thousands)

   6/30/22

   12/31/22 *

   6/30/23 *

   12/31/23

   6/30/24

   Net investment in leases *

   $21,630

   $14,697

   $14,173

   $11,216

   $9,269

   Average lease yield for period

   7.67%

   7.67%

   7.63%

   7.27%

   7.79%

     Average life of leases (months)

   12.8

   14.3

   14.5

   13.8

   12.9

   Total assets

   $216,516

   $212,516

   $227,438

   $233,284

   $261,027

   Leases as percent of assets

   10.0%

   6.9%

   6.2%

   4.8%

   3.6%

   New Leases Retained

   $6,834

   $3,155

   $3,904

   $1,584

   $1,252

   Cumulative New Leases Added

   $3,155

   $7,059

   $8,643

   $9,896

      (subsequent to June 30, 2022)

   Yield on New Leases Retained

   6.60%

   8.96%

   9.38%

   Risk Adjusted Discount Rate

   3.91%

   6.09%

   6.56%

     Interest Spread

   2.69%

   2.87%

   2.82%

    * Adjusted to exclude leases sold shortly after period close and reflect only leases retained.

      Does not include operating leases.

John F. Kernan

Division of Investment Management

July 31, 2024

Page 3

As to the question of providing readers of the financial statements with “meaningful disclosure of the fair value of leases”, we believe our existing disclosure provides the relevant information required to evaluate the book value of the lease portfolio, including a) tables of the average yield earned in each fiscal period; b) a maturity schedule showing the expected timing for receipt of lease payments; and c) credit quality metrics detailing risk ratings and payment status of the leases.  Any alternative estimate of the fair value of leases would be compromised by the lack of a ready market for lease receivables and exclusion of  residual investments and operating lease assets from the process. Moreover, the above table shows the average life of the leases across all periods to be 13-14 months -- the impact of even a 300-basis point increase in interest rates over the last two years is significantly limited by the short-term and amortizing nature of the receivables. As such, we believe the reported values for the leases have been determined in good faith to approximate the fair value of such assets in accordance with applicable accounting principles.

To augment disclosure, the footnote on leases in the 2024 annual report has been expanded to explicitly provide the average yield and maturity of the lease receivables at period end.

   The minimum lease payments receivable and estimated residual value are discounted using the internal rate of return method related to each specific lease. At June 30, 2024, a summary of the installments of minimum lease payments receivable due, and the expected maturity of the Company's estimated residual value are as follows. The weighted average maturity of the payments is 26 months and the weighted average yield is 8.9%.

       Lease

   Estimated

   Years ending June 30,

        Receivable

   Residual Value

   Total

   (in thousands)

   2025

   $

   5,222

   $

   22

   $

   5,244

   2026

   3,476

   23

   3,499

   2027

   1,164

   11

   1,175

   2028

   323

   38

   361

   2029

   60

   -

   60

   10,245

   94

   10,339

   Less unearned income

   (957)

   (13)

   (970)

   Less allowances

   (101)

   -

   (101)

   $

   9,187

   $

   81

   $

   9,268

2.     Pursuant to Reg S-X 6-07, gains and losses on securities in the income statement need to be separated between realized and unrealized gains

·         Beginning with the Statement of Operations for the year ended June 30, 2024, the Company will separately show realized and unrealized gains on securities.

We believe this response addresses the two questions posed verbally. We expect to release the 2024 annual report to shareholders around August 5, 2024 and file the N-CSR within 10 days thereafter. Should you have any further questions or comments, please do not hesitate to contact me at (949) 255-0667.

Very truly yours,

/s/ S. Leslie Jewett

S. Leslie Jewett

Chief Financial Officer

   cc:

   Kent Fisher, Eide Bailly LLP

   Patrick E. Paddon, CEO

Enclosure: Exhibit A

EXHIBIT A

RELEVANT EXCERPTS FROM PRIOR CFNB CORRESPONDENCE TO SEC

July 20, 2022 Letter to SEC

24.  Please advise the Staff
why the Fund’s equity securities for which market quotations are  readily available are being valued at
“fair value” rather than market value. Further, explain under what circumstances the Fund
will employ fair value and provide the Staff
with a summary of the fair value procedures approved
by the Fund’s Board of Directors.

The Company
adopted Accounting Standards Update (“ASU”) 2016-01 “Financial Instruments,
Recognition and Measurement of Financial Assets and Financial Liabilities”
(“ASU 2016-01”) as of July 1, 2018, the beginning of its 2019 fiscal year. The
explicit language of ASU 2016-01 provides that equity investments be measured
at “fair value”, and the Company’s disclosure since then hewed to the use of
language in the applicable accounting standard. In the case of readily
marketable equity securities such as the Company holds, fair value is equal to
market value. This is disclosed in the notes to our audited financial
statements that states that “Equity securities and a mutual fund investment
generally are reported at fair value by reference to the market closing or last
trade price”. The title of the relevant column in the chart on page 13 is
revised from “Fair Value” to “Market Value”.

The Company
employs fair value analysis generally in connection with assets without readily
available market prices: 1) booking leases under ASC 840 Leases, including estimating
residual values; 2) to meet disclosure requirements required in connection with
ASC Topic 820 Fair Value Measurements and Disclosures and ASC 825-50
Financial Instruments, currently only related to real estate loans; or 3)
to measure impairment of a collateral-dependent loan. Operationally, the
Company utilizes fair valuation in the negotiation of end of term sales prices
for property on true operating lease that provide for a purchase price based on
the fair market value of the property.

Under ASC 840, at commencement of the lease term finance
leases are recorded at the lower of the fair value of the asset or the present
value of the minimum lease payments (discounted at the interest rate implicit
in the lease). Under the assumption that the implicit rate of the lease is a
negotiated rate between unrelated parties, at commencement a lease as booked
under ASC 840 is recorded at fair value. With an average life of amortizing
leases of approximately 20-24 months, the fair value of leases does not vary
much over the term as a result of changing interest rates,
and book value will approximate fair value unless there is a credit impairment,
for which adjustment is made through a reserve for credit losses.

The
Company’s credit policy, approved by the Board, includes guidelines for
estimating lease property and residual values, where fair value is defined as
the price for which the property could be sold in an arm’s length transaction
between unrelated parties. For loans, the estimated fair value is calculated based on
discounted cash flow analyses, using interest rates currently being offered for
loans with similar terms to borrowers of similar credit quality and are based
on exit values and have been adjusted for credit risk.
The policy also addresses the use of third-party valuations if appropriate or
needed.

30.
Please confirm supplementally that the Company will follow the
accounting and accounting guidance
in FASB ASC 946, Financial
Services - Investment Companies.

The Company hereby confirms that it will follow the Accounting guidance
of ASC 946. A fundamental principle of ASC 946 is that substantially all assets
are managed on a fair value basis. Following the adoption of ASU Update 2016-01
on July 1, 2018, accounting for the Company’s investments conforms to guidance
under ASC 946 for investment companies.  Investments, consisting primarily of
equity securities and cash, at March 31, 2022 represented 87% of the Company’s
total assets and 92% of net assets, and this substantively supports the
position that the Company is following the accounting guidance for ASC 946.

31.
Please explain how the leases will be valued in accordance with
FASB ASC 820, Fair Value Measurement.

As stated in 820-10-15-2 and disclosed in Note 11 to the Company’s 2021
audited financials (page 47 of the N-2A), ASC 820 does not apply to fair value
measurements for the purposes of le