<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the quarterly period ended September 30, 1996 or
Transition report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the transition period from _________ to _________
Commission File Number: 0-16918
AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 47-0713310
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1004 Farnam Street, Omaha, Nebraska 68102
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(Address of principal executive offices) (Zip Code)
(402) 444-1630
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
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AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP AND SUBSIDIARY
FORM 10-Q
September 30, 1996
TABLE OF CONTENTS
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PAGE
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995............ 1
Consolidated Statements of Operations
For the quarters ended September 30, 1996 and
September 30, 1995 and for the nine months ended
September 30, 1996 and September 30, 1995........... 2
Consolidated Statement of Partners' Capital
For the nine months ended September 30, 1996........ 3
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1996 and
September 30, 1995.................................. 4
Notes to Consolidated Financial Statements.......... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................... 14
Item 6. Exhibits and Reports on Form 8-K.................... 14
SIGNATURES................................................... 16
</TABLE>
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
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CONSOLIDATED BALANCE SHEETS
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September 30, 1996 December 31, 1995
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Assets
<S> <C> <C>
Cash and amounts due from depository institutions $ 25,684,686 $ 27,115,665
Federal funds sold 16,000,000 24,700,000
Securities purchased under agreements to resell 5,300,000 20,500,000
Investments held to maturity 39,999,382 39,995,619
Mortgage-backed securities, net
Held to maturity 628,050,390 763,770,159
Available-for-sale 45,704,498 52,031,990
Loans receivable, net 1,408,005,605 1,431,180,207
Loans held for sale 745,150 403,000
Accrued interest receivable 13,094,293 13,500,436
Premises and equipment, net 9,127,847 9,535,178
Federal Home Loan Bank stock, at cost 21,486,800 21,508,600
Real estate held for sale, net 1,328,256 2,385,712
Real estate owned, net 3,208,934 2,542,684
Other assets 9,855,449 7,784,114
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Total Assets $2,227,591,290 $2,416,953,364
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Liabilities and Partners' Capital
Customer deposits $1,806,967,378 $1,704,466,523
Securities sold under agreements to repurchase 59,135,000 206,856,000
Other borrowings 159,601,127 310,087,421
Distributions payable 2,436,725 2,436,725
Other liabilities and accrued expenses 28,765,362 21,433,023
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Total Liabilities 2,056,905,592 2,245,279,692
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Redeemable Preferred Stock; Series A, no par value;
200,000 shares issued; $20 million liquidation value 17,168,699 15,541,988
Partners' Capital:
General Partner 4,214,042 4,883,801
Beneficial Unit Certificate (BUC) Holders
6,010,589 BUCs authorized, issued and outstanding 149,302,957 151,247,883
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Total Partners' Capital 153,516,999 156,131,684
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Total Liabilities and Partners' Capital $2,227,591,290 $2,416,953,364
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</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF OPERATIONS
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For the For the For the Nine For the Nine
Quarter Ended Quarter Ended Months Ended Months Ended
Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1996 Sept. 30, 1995
<S> <C> <C> <C> <C>
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Interest income
Interest and fees on loans $26,570,230 $27,483,043 $ 80,320,398 $ 77,897,183
Interest on mortgage-backed securities 12,108,038 14,019,563 38,625,103 39,913,056
Interest and dividends on investment 1,110,851 1,172,123 3,481,289 3,401,482
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Total interest income 39,789,119 42,674,729 122,426,790 121,211,721
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Interest expense
Interest on deposits 20,834,901 19,664,815 60,893,909 55,811,432
Interest on borrowings 3,488,146 8,060,250 14,815,364 22,821,627
Preferred Stock accretion 560,326 482,940 1,626,711 1,448,821
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Total interest expense 24,883,373 28,208,005 77,335,984 80,081,880
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Net interest income before provision for loan losses 14,905,746 14,466,724 45,090,806 41,129,841
Provision for loan losses 71,284 234,595 851,497 586,806
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Net interest income after provision for loan losses 14,834,462 14,232,129 44,239,309 40,543,035
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Non-interest income
Deposit related fees 471,038 502,711 1,392,777 1,559,505
Loan related fees 326,131 484,419 1,038,575 1,254,714
Gain on disposition of loans 56,024 16,057 209,592 60,211
Other income 855,178 1,303,356 2,372,318 4,337,081
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Total non-interest income 1,708,371 2,306,543 5,013,262 7,211,511
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Non-interest expense
Compensation and benefits 5,350,069 5,133,529 16,016,596 15,097,445
Occupancy and equipment 2,017,845 2,234,668 6,331,589 6,700,271
FDIC premiums and special assessments 12,123,441 1,049,294 14,303,387 3,170,367
Professional services 304,693 200,366 842,847 730,613
Advertising and promotion 234,827 172,820 760,784 800,840
Provision for loss (recovery) on interest
rate exchange agreements 147,000 68,000 (422,000) 1,097,000
Other expense 1,943,814 2,568,829 6,157,889 8,068,809
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Total non-interest expense 22,121,689 11,427,506 43,991,092 35,665,345
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Income (loss) before income taxes (5,578,856) 5,111,166 5,261,479 12,089,201
Provision for income taxes - - - -
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Net income (loss) $(5,578,856) $ 5,111,166 $ 5,261,479 $ 12,089,201
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Net income (loss) allocated to:
General Partner $(1,619,568) $ 518,436 $ (459,094) $ 906,450
BUC Holders (3,959,288) 4,592,730 5,720,573 11,182,751
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$(5,578,856) $5,111,166 $5,261,479 $12,089,201
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Net income (loss) per BUC $(.6587) $.7641 $.9517 $1.8605
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</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
For the Nine Months Ended September 30, 1996
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General
Partner BUC Holders Total
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<S> <C> <C> <C>
Balance at December 31, 1995 $4,883,801 $151,247,883 $156,131,684
Net income (loss) (459,094) 5,720,573 5,261,479
Cash distributions paid or accrued (97,467) (7,212,708) (7,310,175)
Net unrealized losses on available-for-sale
mortgage-backed securities (113,198) (452,791) (565,989)
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Balance at September 30, 1996 $4,214,042 $149,302,957 $153,516,999
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</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the Nine For the Nine
Months Ended Months Ended
Sept. 30, 1996 Sept. 30, 1995
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<S> <C> <C>
Cash flows from operating activities
Net income $ 5,261,479 $ 12,089,201
Adjustments to reconcile net income to net cash
provided by operating activities
Amortization of:
Investments and mortgage-backed securities net premium 2,002,121 366,460
Loan (discount) premium 617,480 (1,504,251)
Intangibles 923,279 1,004,976
Proceeds from sale of loans 13,710,323 4,652,511
Originations of loans held for sale (13,996,431) (5,140,200)
Gain on sale of real estate owned (22,062) (599,625)
Gain on sale of loans (209,592) (60,211)
Provision for loan losses 851,497 586,806
Provision for loss (recovery) on interest rate exchange agreements (422,000) 1,097,000
Decrease (increase) in accrued interest receivable 406,143 (2,265,085)
Decrease in accrued interest payable (2,580,632) (1,062,064)
Depreciation and amortization of premises and equipment 1,279,578 1,533,695
Increase in other assets (2,994,614) (1,173,122)
Increase (decrease) in other liabilities 10,334,971 (4,414,427)
Other, net 1,799,182 673,412
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Total adjustments 11,699,243 (6,304,125)
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Net cash provided by operating activities 16,960,722 5,785,076
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Cash flows from investing activities
Originations of loans held for investment (169,027,293) (112,825,203)
Purchases of mortgage-backed securities held for investment (14,547,696) (70,531,607)
Purchases of real estate loans (23,259,816) (92,221,198)
Purchases of premises and equipment (903,028) (633,242)
Principal payments on mortgage-backed securities 154,023,081 91,029,503
Principal payments on loans 210,068,426 176,875,681
Proceeds from maturities of securities
purchased under agreements to resell - 3,000,000
Proceeds from sale of consumer loans - 12,959,309
Proceeds from sale of Federal Home Loan Bank Stock 911,200 -
Proceeds from sales of real estate owned 3,134,088 6,544,902
Proceeds from sales of real estate held for sale - 1,684,273
Other, net 326,052 1,485,416
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Net cash provided by investing activities 160,725,014 17,367,834
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Cash flows from financing activities
Net increase (decrease) in checking, money market accounts
and passbook savings 75,842,584 (738,273)
Proceeds from issuance of certificates of deposits 192,835,775 187,973,809
Payments for maturing or early withdrawal
of certificates of deposits (166,177,605) (188,836,563)
Net decrease in short-term repurchase agreements (147,721,000) (37,899,000)
Net increase (decrease) in Federal Home Loan Bank advances (150,486,294) 19,900,000
Capital distributions (7,310,175) (7,310,174)
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Net cash used by financing activities (203,016,715) (26,910,201)
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Net decrease in cash and cash equivalents (25,330,979) (3,757,291)
Cash and cash equivalents at beginning of period 72,315,665 64,561,654
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Cash and cash equivalents at end of period $ 46,984,686 $ 60,804,363
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Supplemental disclosure of cash flow information:
Non cash investing and financing activities:
Additions to real estate acquired through foreclosure $ 4,242,428 $ 3,567,755
Additions to consumer loan acquired in
settlement of loans $ 56,972 $ 188,205
Cash paid for interest (including interest credited) $ 80,135,136 $ 80,022,684
Cash paid for alternative income and minimum
franchise taxes $ 545,000 $ 400,000
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</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. ORGANIZATION
America First Financial Fund 1987-A Limited Partnership (the "Partnership")
was formed on April 14, 1987 under the Delaware Revised Uniform Limited
Partnership Act for the purpose of acquiring one or more federally insured
financial institutions through supervisory assisted acquisitions. The
Partnership formed a subsidiary corporation, America First Eureka Holdings,
Inc. ("AFEH") for the purpose of owning and managing one or more acquired
financial institutions. The Partnership will terminate on December 31, 2036,
unless terminated earlier under the provisions of the Partnership Agreement.
The general partner of the Partnership is America First Capital Associates
Limited Partnership Five ("AFCA-5") whose managing general partner is AFCA-5
Management Corporation.
2. BASIS OF PRESENTATION
The consolidated financial statements of the Partnership include the
accounts of the Partnership, AFEH (its wholly-owned subsidiary) and AFEH's
wholly-owned subsidiary, EurekaBank ("Eureka") and its subsidiaries. All
significant intercompany transactions have been eliminated.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (primarily consisting of normal
recurring accruals) necessary for a fair presentation of the Partnership's
financial condition as of September 30, 1996, and the results of its
operations and its cash flows for the three and nine month periods ended
September 30, 1996 and 1995.
3. ALLOWANCE FOR LOAN LOSSES
The Partnership recorded loan loss provisions of approximately $71,000 and
$851,000 for the quarter and nine months ended September 30, 1996,
respectively, compared to $235,000 and $587,000 for the same periods in
1995. At September 30, 1996 and December 31, 1995, the Partnership
maintained loan loss reserves of approximately $7.1 million and $6.9
million, respectively. Management believes that reserves are adequate given
the composition, credit characteristics and loss experience of the loan
portfolio.
4. INTEREST RATE EXCHANGE AGREEMENTS
The Partnership entered into interest rate exchange agreements arranged
predominately in 1988, 1990 and 1991, to reduce the impact of future
fluctuations in interest rates on fixed rate mortgages funded by variable
rate liabilities. The floating rates to be received by the Partnership under
the terms of these agreements are reset monthly, quarterly or semi-annually
and are generally indexed to the FHLB Eleventh District Cost of Funds index
or the one or three month London Interbank Offered Rate ("LIBOR").
In 1993, the sustained decline in interest rates in the general economy and
the resulting prepayment of mortgage loans associated with the interest rate
exchange agreements caused Eureka to establish a liability based on the
estimated fair value of interest rate exchange agreements that were no
longer deemed effective as hedges. During the quarter and nine months ended
September 30, 1996, Eureka recorded to non-interest expense a provision
(recovery) of approximately $147,000 and ($422,000), respectively, to
reflect the effect of interest rate changes on the market value of Eureka's
related obligations. During the quarter and nine months ended September 30,
1995, Eureka recorded to non-interest expense a provision for losses on
interest rate exchange agreements of approximately $68,000 and $1.1 million,
respectively, to reflect the effect of interest rate decreases on the market
value of Eureka's related obligations deemed ineffective as hedges. The
recorded liability for the interest rate exchange agreements totaled
approximately $1.5 million and $3.4 million at September 30, 1996 and
December 31, 1995, respectively. Net interest payable on interest rate
exchange agreements was approximately $400,000 and $700,000 at September 30,
1996 and December 31, 1995, respectively, and was included in other
liabilities and accrued expenses.
5
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
Net interest expense on interest rate exchange agreements is included as an
adjustment to interest income on loans. For the quarter and nine months
ended September 30, 1996, net interest expense on interest rate exchange
agreements totaled approximately $238,000 and $623,000, respectively, as
compared to $213,000 and $2.2 million for the same periods in 1995. The
increase in net interest expense on interest rate exchange agreements for
the quarter ended September 30, 1996 as compared to the same period in 1995,
is due to lower accretion of the recorded liability for interest rate
exchange agreements in the third quarter of 1996 as compared to the same
period in 1995, offset by the expiration of some of these agreements. The
decrease in net interest expense on interest rate exchange agreements for
the nine months ended September 30, 1996 as compared to the same period in
1995, is primarily due to the expiration of some of these agreements. The
notional amount of interest rate exchange agreements outstanding was $100
million and $145 million at September 30, 1996 and December 31, 1995,
respectively.
5. SAVINGS ASSOCIATION INSURANCE FUND ASSESSMENT
On September 30, 1996, the President signed an appropriations bill which
includes provisions to recapitalize the Savings Association Insurance Fund
("SAIF"). The SAIF recapitalization provisions impose a one-time special
assessment of 65.7 basis points on deposits held by SAIF-insured
institutions as of March 31, 1995, payable not later than 60 days after the
enactment of the legislation. Eureka's portion of this one-time special
assessment is approximately $11 million and is included in FDIC premiums and
special assessments for the quarter and nine months ended September 30,
1996.
6
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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FINANCIAL CONDITION
At September 30, 1996, Partnership assets were approximately $2.2 billion, which
was approximately $189 million less than Partnership assets at December 31,
1995, and consisted primarily of the assets of Eureka. Significant changes in
the composition of the balance sheet included the following:
. Net loans receivable, loans held for sale and net mortgage-backed securities
("MBS") decreased approximately $165 million during the nine months ended
September 30, 1996. The net decreases in the loan and MBS portfolio were
primarily due to prepayments. During the nine months ended September 30,
1996, Eureka originated (net of sales) $53 million and $115 million in retail
and wholesale loans, respectively. Management believes that wholesale loan
originations will continue to be a significant percentage of total loan
originations through 1996. Wholesale loan originations enable Eureka to add
assets which meet its credit quality guidelines within its market area.
Purchases of loans and MBS for the nine months ended September 30, 1996
totaled $23 million and $14 million, respectively. Repayments of $207 million
and $154 million were recorded in the mortgage loan and MBS portfolios,
respectively, during the nine months ended September 30, 1996.
. Retail deposits increased approximately $103 million since December 31, 1995
and totaled $1.8 billion at September 30, 1996. This increase is primarily
due to deposit promotions in 1996.
. Securities sold under agreements to repurchase and other borrowings decreased
approximately $298.2 million during the first nine months of 1996 from $516.9
million at December 31, 1995 to $218.7 million at September 30, 1996. This
decrease was primarily due to asset shrinkage in net loans receivable, loans
held for sale and MBS, and the growth in retail customer deposits during the
nine months ended September 30, 1996. As of September 30, 1996, other
liabilities increased by $7.3 million from December 31, 1995, primarily due
to the one-time assessment of $11 million to recapitalize the SAIF (see
"Deposit Insurance and Other Matters" for further discussion of the SAIF
assessment), offset by decreases of approximately $1.9 million in the
interest rate exchange agreements liability and $2.2 million for accrued
interest on borrowings and deposits.
At September 30, 1996 and December 31, 1995, the loan-to-deposit ratios were 78%
and 84%, respectively. Loans, MBS, federal funds sold, securities purchased
under agreements to resell and investments comprised approximately 96% and 97%
of Partnership assets at September 30, 1996 and December 31, 1995, respectively.
Cash distributions paid or accrued during the quarter ended September 30, 1996
totaled $.40 per BUC. Future distributions are expected to be made principally
from dividends paid to the Partnership by AFEH. AFEH funds these dividends by
receipt of dividends from Eureka, the payment of which is subject to regulatory
limitation. Accordingly, it is not possible to estimate the level of cash
distributions to BUC Holders in the future.
ASSET QUALITY
The allowance for loan losses was $7.1 million and $6.9 million, or .50% and
.48% of gross loans outstanding at September 30, 1996 and December 31, 1995,
respectively. Non-performing assets (loans which were 90 or more days
delinquent and real estate acquired through foreclosure) were approximately $9.0
million and $8.9 million, or .41% and .37% of total assets at September 30, 1996
and December 31, 1995, respectively. This compares favorably to 1.63% for non-
performing assets as of June 30, 1996, for thrifts located in California as
reported by the Office of Thrift Supervision ("OTS"). The ratio of loan loss
reserves to non-performing loans was 121.71% at September 30, 1996 compared to
107.66% at December 31, 1995. Management believes that reserves are adequate
given the composition, credit characteristics and loss experience of the loan
portfolio.
7
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
The level of loans 30 days or more delinquent was approximately $8.5 million or
.60% of loans at September 30, 1996, compared to approximately $12.1 million or
.84% of loans at December 31, 1995. This compares favorably to 2.85% for loans
30 days or more delinquent as of June 30, 1996, for thrifts located in
California as reported by the OTS.
RESULTS OF OPERATIONS
Net income (loss) for the quarter and nine months ended September 30, 1996 was
approximately ($5.6) million and $5.3 million, respectively, as compared to $5.1
million and $12.1 million for the same periods in 1995. Net income (loss) per
BUC for the quarter and nine months ended September 30, 1996 was ($.66) and
$.95, respectively, as compared to $.76 and $1.86 for the same periods in 1995.
The decrease in net income and net income per BUC for the quarter and nine
months ended September 30, 1996 as compared to the same periods in 1995 is due
to the SAIF assessment of $11 million in the third quarter of 1996. Net
earnings for the quarter and nine months ended September 30, 1996, before the
charge of $11 million for the SAIF assessment were approximately $5.4 million,
or $.81 per unit, and $16.3 million or $2.42 per unit, respectively. See
"Deposit Insurance and Other Matters" for further discussion of the SAIF
assessment.
NET INTEREST INCOME
Net interest income before the provision for loan losses for the quarter and
nine months ended September 30, 1996 was approximately $14.9 million and $45.1
million, respectively, as compared to $14.5 million and $41.1 million for the
same periods in 1995. Net interest income is the Partnership's principal income
component and is determined by the relative levels of, and interest rates paid
on, interest earning assets and interest bearing liabilities. Average interest
earning assets were approximately $2.2 billion and $2.3 billion for the quarter
and nine months ended September 30, 1996, respectively, compared to
approximately $2.3 billion for the quarter and nine months ended September 30,
1995.
The net interest margin, the net yield on average assets, for the quarter and
nine months ended September 30, 1996 was 2.65% and 2.58%, respectively, as
compared to 2.47% and 2.33% for the same periods in 1995. The net interest
margin improved in the quarter and nine months ended September 30, 1996 as
compared to the same periods in 1995, as earnings on adjustable rate mortgage
loans remained stable and the cost of funds was lower. The notional amount of
interest rate exchange agreements decreased from $145 million at December 31,
1995 to $100 million at September 30, 1996. Lower accretion of the recorded
liability for interest rate exchange agreements, offset by the expiration of
some of these agreements, slightly increased the net interest expense on
interest rate exchange agreements to $238,000 for the quarter ended September
30, 1996, as compared to $213,000 for the same period in 1995. The decrease in
the notional amount of interest rate exchange agreements, offset by the
expiration of some of these agreements, along with relatively stable interest
rates, decreased the net interest expense on interest rate exchange agreements
to $623,000 for the nine months ended September 30, 1996, as compared to $2.2
million for the same period in 1995. The reduction in net interest expense on
interest rate exchange agreements contributed to a higher net interest margin
for the nine months ended September 30, 1996 as compared to the same period in
1995. The net interest expense on these contracts is reflected as an adjustment
to interest income on loans receivable (see Note 4 of Notes to Consolidated
Financial Statements).
PROVISION FOR LOAN LOSSES
The Partnership recorded loan loss provisions of approximately $71,000 and
$851,000 for the quarter and nine months ended September 30, 1996, respectively,
as compared to $235,000 and $587,000 for the same periods in 1995. Net loan
charge-offs were $95,000 and $459,000 for the quarter and nine months ended
September 30, 1996, respectively, as compared to $432,000 and $1.2 million for
the same periods in 1995. Of the total net charge-offs recorded during the
quarter and nine months ended September 30, 1996, $5,000 and $11,000,
respectively, were for Eureka's consumer loan portfolio, as compared to charge-
offs of $373,000 and $856,000 for the same periods in 1995. Provisions and
charge-offs for the consumer loan portfolio were lower primarily because of the
sale of the credit card portfolio, which occurred during the third quarter of
1995. Mortgage loan charge-offs totaled $90,000 and $448,000, respectively, for
the quarter and nine months ended September 30, 1996, as compared to $59,000 and
$312,000 for the same periods in 1995.
8
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AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
Eureka's determination of the allowance for loan losses and the resulting
provision for loan losses are based upon judgments and assumptions regarding
various factors including general economic conditions, internal asset review
findings, composition of the loan portfolio, historical loss experience and
estimates of potential future losses. Management believes that it has recorded
adequate provisions to the allowance for loan losses to cover potential losses,
particularly considering the low level of delinquencies and charge-offs
experienced by Eureka over the past five years and continued adherence to strict
credit quality control guidelines. The decrease in the provision for the third
quarter of 1996 as compared to previous quarters in 1996 and 1995 is primarily
due to the reduction in outstanding loan balances and strong asset quality. In
addition, consumer charge-offs have significantly declined in 1996 compared to
1995, reflecting the sale of the credit card portfolio in the third quarter of
1995. Management expects the provision for loan losses in the fourth quarter of
1996 to be comparable to the third quarter's provision unless loan balances
significantly increase, net charge-offs increase, or if negative trends are
detected in asset quality. However, future loss experience related to changes
in the economy and interest rate environment cannot be predicted.
NON-INTEREST INCOME
The principal components of non-interest income are deposit and loan related fee
income, gains on the disposition of loans and other income. Non-interest income
totaled approximately $1.7 million and $5.0 million for the quarter and nine
months ended September 30, 1996, respectively, compared to $2.3 million and $7.2
million for the same periods in 1995.
Deposit and loan related fees for the quarter and nine months ended September
30, 1996 were approximately $797,000 and $2.4 million, respectively, compared to
$987,000 and $2.8 million for the same periods in 1995. These declines are
primarily due to reduced loan origination activity and a competitive deposit
environment in 1996.
Eureka originates "conforming loans" (fixed rate loans which meet the FHLMC
lending requirements) for sale in the secondary mortgage market. The net gain
from Eureka's loan sale activities was approximately $56,000 and $210,000 for
the quarter and nine months ended September 30, 1996, respectively, on loan
sales of approximately $3.4 million and $13.5 million, respectively. During the
comparable periods a year earlier, Eureka sold conforming loans with principal
balances which totaled $1.2 million and $4.6 million, respectively, at a net
gain of approximately $16,000 and $60,000, respectively. The net gain from loan
sale activities of $210,000 for the nine months ended September 30, 1996
includes $121,000 of capitalized originated mortgage servicing rights retained
by Eureka. The increase in loan sale transactions and related income was due, in
part, to attractive interest rate pricing on the sale of conforming loans.
Other non-interest income for the quarter and nine months ended September 30,
1996 was approximately $855,000, and $2.4 million, respectively, compared to
$1.3 million and $4.3 million for same periods in 1995. This variance is
primarily due to $1.1 million included in the nine months ended September 30,
1995, as a one-time credit to income, for the reduction of previously
established reserves no longer deemed necessary. The amount of net gains on the
sale of REO for the quarter and nine months ended September 30, 1996, was
approximately $54,000 and $22,000, respectively, compared to $362,000 and
$600,000 for the same periods in 1995. The decrease is primarily due to reduced
sales activity in 1996. Other non-interest income included rental income, fee
income from Eureka Financial Services Inc. (a Eureka subsidiary licensed to sell
mutual funds and insurance annuities), income from real estate held for sale,
gain on sale of real estate owned, and other non-operating income items.
NON-INTEREST EXPENSE
The principal components of non-interest expense are compensation and benefits
expense, occupancy and equipment expense, FDIC insurance premiums, professional
and advertising expense, provision for loss (recovery) on interest rate exchange
agreements and other administrative expenses. Non-interest expense for the
quarter and nine months ended September 30, 1996 was approximately $22.1 million
and $44.0 million, respectively, compared to $11.4 million and $35.7 million for
the same periods in 1995. The increase in non-interest expense for the quarter
and nine months ended September 30, 1996 as compared to the same periods in 1995
is due to the SAIF assessment of $11 million in the third quarter of 1996.
Non-interest expense for the quarter and nine months ended September 30, 1996,
before the charge of $11 million for the SAIF
9
<PAGE>
AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
assessment, was approximately $11.1 million and $33.0 million, respectively. See
"Deposit Insurance and Other Matters" for further discussion of the SAIF
assessment.
Compensation and benefits expenses were approximately $5.4 million and $16.0
million for the quarter and nine months ended September 30, 1996, respectively,
compared to approximately $5.1 million and $15.1 million for the same periods in
1995. The increase in 1996 expenses is primarily due to increases in base
compensation and adjustments to accruals for bonuses and incentive awards.
Non-interest expense for the quarter and nine months ended September 30, 1996
included adjustments to the interest rate exchange agreements liability
established in 1993. During the quarter and nine months ended September 30,
1996, provisions (recoveries) of approximately $147,000 and ($422,000),
respectively, were recorded to increase (decrease) the interest rate exchange
agreements liability to reflect the effect of interest rate changes on the
market value of Eureka's obligations under the interest rate exchange
agreements. During the quarter and nine months ended September 30, 1995,
provisions of approximately $68,000 and $1.1 million, respectively, were
recorded to increase the interest rate exchange agreements liability to reflect
the effect of interest rate decreases on the market value of Eureka's
obligations under the interest rate exchange agreements deemed ineffective as
hedges.
Occupancy and equipment expenses totaled $2.0 million and $6.3 million for the
quarter and nine months ended September 30, 1996, respectively, as compared to
$2.2 million and $6.7 million for the same periods in 1995. FDIC insurance
premiums (before the $11 million SAIF assessment), professional and advertising
expenses, and other expenses were approximately $3.6 million and $11.1 million
for the quarter and nine months ended September 30, 1996, compared to $4.0
million and $12.8 million for the same periods in 1995. See "Deposit Insurance
and Other Matters" for further discussion of the SAIF assessment.
Other non-interest expense for the quarter and nine months ended September 30,
1996 totaled $1.9 million and $6.2 million, respectively, compared to $2.6
million and $8.1 million for the same periods in 1995. Other non-interest
expense for the quarter and nine months ended September 30, 1995 included
valuation allowances of $400,000 and $700,000, respectively, on real estate held
for sale which was sold in September 1995. Other non-interest expense for the
nine months ended September 30, 1995 included an adjustment for nonrecurring
expenses of $400,000, expenses of approximately $300,000 related to the credit
card portfolio which was sold in the third quarter of 1995 and operating
expenses of approximately $150,000 related to the real estate investment sold in
the third quarter of 1995. Comparable adjustments were not necessary for the
quarter or nine months ended September 30, 1996.
PROVISION FOR INCOME TAXES AND DEFERRED TAX ASSETS
Due to the net operating loss carryforwards available to AFEH arising from the
acquisition of Eureka, AFEH does not expect to pay any regular income taxes in
1996. AFEH's alternative minimum taxes totaled $165,000 and $545,000 for the
quarter and nine months ended September 30, 1996, respectively, as compared to
$215,000 and $400,000 for the same periods in 1995. Alternative minimum taxes
paid by AFEH are recorded as a component of the deferred tax asset which is
included in other assets as they result in tax credits with an indefinite life
that will be used to offset future tax liabilities.
Net operating loss carryforwards and investment tax credits generated by Eureka
and its subsidiaries through the date Eureka was acquired by AFEH are available
to offset future taxable income or income taxes of Eureka and its subsidiaries,
but may not be used to offset future taxable income or income taxes of any other
new member of the consolidated group. At December 31, 1995, pre-acquisition net
operating loss carryforwards for federal income tax purposes amounted to $113
million and will expire in various years through 2002. At December 31, 1995,
post-acquisition net operating loss carryforwards for federal income and state
franchise tax purposes amounted to approximately $107 million and approximately
$40 million, respectively, and will expire in various years through 2007 and
1997, respectively. At December 31, 1995, total gross deferred tax assets
relating primarily to the net operating loss carryforwards totaled $86 million.
Because the Partnership did not believe it was more likely than not that all of
the deferred tax assets would be
10
<PAGE>
AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
realized as of December 31, 1995, the Partnership maintained a valuation
allowance in the amount of $75 million. Net income of Eureka and its
subsidiaries was approximately $208,000, $15 million and $17 million for the
fiscal years ended December 31, 1993, 1994 and 1995, respectively.
Eureka's results of operations subsequent to 1993 have continued to improve
(exclusive of the SAIF assessment recorded at September 30, 1996). In the
fourth quarter, Eureka will evaluate the recoverability of its deferred tax
assets, which are substantially reserved for as of September 30, 1996, based on
the anticipated operating results for the remainder of 1996 and future periods.
Management expects the valuation allowance for the deferred tax assets to be
decreased before December 31, 1996 to the extent that the evaluation indicates
that utilization of the net operating loss carryforwards is more likely than
not, as defined in SFAS No. 109, "Accounting for Income Taxes." The impact of
recent federal legislation that repeals the thrift bad debt reserve method and
provides for the recapture of statutory "excess reserves" will be included in
management's evaluation of the recoverability of deferred tax assets. See
"Deposit Insurance and Other Matters" for further discussion of this
legislation. The adjustment to the existing valuation allowance of $75 million
may be significant to the financial statements of the Partnership.
ASSET/LIABILITY MANAGEMENT
Eureka's Asset and Liability Committee ("ALCO") has responsibility for managing
Eureka's assets and liabilities in a manner which balances profitability and
risk (including interest rate risk). ALCO operates within policies and risk
limits prescribed by the Board of Directors. ALCO's principal activities
include:
. Measuring and monitoring the expected impact of changes in market interest
rates on Eureka's net income.
. Establishing target pricing, volume, and business mix of loans and deposits.
. Emphasizing adjustable rate mortgages ("ARMs") and retail deposits as opposed
to fixed rate mortgages and other borrowings.
. Utilizing financial models to project, measure and evaluate
profitability/risk decisions.
INTEREST RATE RISK
Financial institutions (such as Eureka) are subject to interest rate risk when
interest-bearing liabilities "reprice" or mature at different times or with
different indices than do interest-earning assets. Eureka's objective and
strategy in this regard is to balance the effective maturities (or repricing
bases) of assets and liabilities such that Eureka's capital base is protected in
the event of significant changes in interest rates and/or market conditions.
Eureka utilizes a comprehensive simulation of projected interest income and
expense under alternative market scenarios to assess its interest rate risk
exposure. In each such scenario, the analysis incorporates expectations about
how borrowers and depositors will increase or pay down their balances as a
result of simulated rate changes, and reflects the impact of those rate changes
on the market value of both assets and liabilities.
Another (though much less effective) measure of Eureka's interest rate risk
exposure is the interest rate gap (the difference between the amount of assets
and liabilities which are expected to reprice or mature within a specified time
period, e.g., one year). At September 30, 1995, Eureka's cumulative one-year
and three-year interest rate gaps were a positive 3% of total assets and
negative 1% of total assets, respectively. In the case of the cumulative one-
year interest rate gap, the amount of asset repricing exceeded the amount of
liability repricing during this period. This gap suggests the margin would be
reduced if overall interest rates were to move downwards. At September 30,
1996, Eureka's cumulative one-year and three-year interest rate gaps were also a
positive 3% of total assets and negative 1% of total assets, respectively. At
September 30, 1996, Eureka had a higher concentration of retail deposits as
compared to securities sold under agreements to repurchase and other borrowings;
however, the notional amount of interest rate exchange agreements (paying fixed
rates, receiving adjustable rates) was lower.
11
<PAGE>
AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
LIQUIDITY
Eureka derives its primary liquidity from loan repayments, customer deposits,
FHLB advances and securities sold under agreements to repurchase. Eureka
manages liquidity by coordinating the relative maturities of assets and
liabilities. A much larger source of liquidity is the base of readily
marketable assets, as well as ready access to secured borrowings. The sources
of liquidity are influenced by various uncertainties, primarily market interest
rates. Eureka continually evaluates its sources of funds, and a decline in any
one source of funds generally can be offset by an alternate source, although
potentially at a different cost. At September 30, 1996, Eureka had outstanding
loan funding commitments of approximately $36 million. Management believes that
existing liquidity and other capital resources are adequate to fund existing and
anticipated commitments at September 30, 1996.
Regulations require a savings institution to maintain a liquidity ratio of at
least five percent of cash and specified securities to net withdrawable accounts
and borrowings due in one year. For the month of September 1996, Eureka's
liquidity ratio was 5.37% compared to 5.38% for the month of December 1995.
CAPITAL REQUIREMENTS
Federal regulations also require that savings institutions meet three separate
capital tests: a tangible capital standard, a core capital standard and a
risk-based capital standard. At September 30, 1996, Eureka maintained
regulatory capital as follows:
<TABLE>
<CAPTION>
(000's)
-------------------------------------------------------------------
Tangible Core Risk-Based
Capital Capital Capital
--------------------- --------------------- ---------------------
% of
% % Risk-Based
Amount of Assets Amount of Assets Amount Assets
--------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
GAAP capital $146,864 $146,864 $146,864
Non-allowable assets:
Intangible assets and mortgage
servicing rights (3,511) (3,511) (3,511)
Non-includable Subsidiaries (2,551) (2,551) (2,551)
Net unrealized loss on securities
available for sale 455 455 455
Allowance for loan losses - - 4,573
-------- ---- -------- ---- -------- -----
Computed regulatory capital 141,257 6.38% 141,257 6.38% 145,830 15.00%
Minimum capital requirement 33,198 1.50% 66,395 3.00% 77,783 8.00%
-------- ---- -------- ---- -------- -----
Excess regulatory capital $108,059 4.88% $ 74,862 3.38% $ 68,047 7.00%
======== ==== ======== ==== ======== ====
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
During 1995, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 123 ("SFAS No. 123"), Accounting for
Stock-Based Compensation. This Statement establishes a new fair value based
accounting method for stock-based compensation plans and encourages (but does
not require) employers to adopt the new accounting method in place of the
provisions of Accounting Principles Board Opinion No. 25 ("APB 25"), Accounting
for Stock Issued to Employees. In accordance with SFAS No. 123, the Partnership
has decided to continue to apply the accounting provisions of APB 25 in
determining net income; however, it will apply the disclosure requirements of
SFAS No. 123 in the 1996 Annual Report. Management does not expect the
application of the disclosure requirements of SFAS No. 123 to be material to the
Partnership's financial statements.
12
<PAGE>
AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
In June 1996, the FASB issued Statement of Financial Accounting Standards No.
125 ("SFAS No. 125"), Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities. This statement establishes standards under
which, after a transfer of financial assets, an entity recognizes the financial
and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. SFAS No. 125 shall be effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996, and shall be applied prospectively.
Management does not expect the adoption of SFAS No. 125 to be material to the
Partnership's financial statements.
DEPOSIT INSURANCE AND OTHER MATTERS
Eureka's deposits are insured by the Federal Deposit Insurance Corporation
("FDIC") up to the maximum amount provided by law through the SAIF. For the
quarter and nine months ended September 30, 1996, Eureka paid deposit insurance
premiums to the SAIF, in addition to the $11 million one-time assessment, of
$1.0 million and $2.9 million, respectively, based on an annual assessment rate
of .23% of covered deposits.
On September 30, 1996, the President signed an appropriations bill which
includes provisions to recapitalize the SAIF. Under the provisions of the bill,
the SAIF will be recapitalized through a combined approach of imposing a one-
time special assessment on SAIF-insured institutions, and an incremental pro-
rata charge on SAIF-insured institutions and commercial banks insured under the
BIF, to be used to pay the interest on Financing Corporation ("FICO") bonds
issued as part of the 1989 savings association rescue package adopted under
FIRREA. The SAIF recapitalization provisions impose a one-time special
assessment of 65.7 basis points (approximately $11 million for Eureka) on
deposits held by SAIF-insured institutions as of March 31, 1995, payable not
later than 60 days after the enactment of the legislation, and reduce the annual
assessment rate for SAIF-insured institutions from 23 basis points to 6.4 basis
points (a reduction of approximately $3 million annually based upon Eureka's
insured deposits at September 30, 1996) beginning in 1997. Although deposit
premiums for thrifts will continue to be higher than the banking industry's
through the year 2000, the premium reduction significantly reduces the inequity
of Eureka paying a deposit premium significantly higher than that of a similarly
sized commercial bank. Thereafter, beginning January 1, 2000, SAIF-insured and
BIF-insured deposits alike will be assessed on a pro-rata basis (expected to be
at a rate of approximately 2.4 basis points) to repay the FICO bonds until the
year 2017, and thereafter phased out, with the phase-out being completed in
2019.
The BIF/SAIF recapitalization legislation also provides for a merger of the BIF
and SAIF on January 1, 1999, if no SAIF-insured institutions exist on that date.
This provision therefore will not become effective unless Congress enacts
additional legislation abolishing the savings association charter effective
prior to January 1, 1999. In this regard, Congress is expected to consider
additional reform measures involving the merger of the BIF and SAIF, and
abolition of the thrift charter, beginning in early 1997.
Other provisions of the 1996 legislation: (i) authorize the bank regulatory
agencies to take action to prevent depository institutions form taking advantage
of the BIF/SAIF premium disparity by "deposit-shifting" from the SAIF to the
BIF; (ii) strengthen existing prohibitions on the FDIC's increasing the risk-
based premiums for deposit insurance which would result in the statutory
Designated Reserve Ratio for the two federal deposit insurance funds (calculated
as a percentage of insured deposits for each fund) exceeding 1.25%; (iii)
authorize the FDIC to refund assessments paid in excess of amounts due; and (iv)
prohibit the FDIC, prior to January 1, 1999, from setting SAIF premiums at
levels less than BIF premiums.
In September 1996, legislation was signed by the President which includes
provisions that repeal the thrift bad debt reserve method of calculation under
the Internal Revenue Code, effective for tax years beginning after December 31,
1995. Most large savings associations (including Eureka) will be required to
change to the specific charge-off method of accounting for bad debts and will be
required to recapture statutory "excess reserves" as provided in the
legislation. In the case of an institution that meets certain residential
lending requirements of the legislation, recapture of statutory "excess
reserves" can be deferred for up to two years. Eureka's management expects to
meet the residential lending requirements of the legislation and defer the
recapture of the statutory "excess reserves" for up to two years. Management
expects that enactment of such provisions will not have a significant
13
<PAGE>
AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
impact on Eureka due to the amount of net operating loss carryforwards which are
available. The provisions that repeal the thrift bad debt reserve method and the
recapture of statutory "excess reserves" will be included in management's
evaluation of the recoverability of deferred tax assets. See "Provision for
Income Taxes and Deferred Tax Assets" for further discussion.
GENERAL INFORMATION
The results of operations in the interim statements are not necessarily
indicative of the results that may be expected for the full year. In addition,
this Form 10-Q includes forward-looking statements, as defined by applicable
law, that involve inherent risks and uncertainties. The Partnership cautions
readers that a number of important factors could cause the actual results of
operations and other information to differ materially from those results of
operations and other information discussed in the forward-looking statements.
Those factors include fluctuations in interest rates, inflation, government
regulations and economic conditions and competition in the geographic and
business area in which the Partnership conducts its operations. The interim
financial information should be read in conjunction with the Partnership's 1995
Form 10-K.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There are no material pending legal proceedings to which the Partnership or AFEH
is a party or to which any property of the Partnership or AFEH is subject.
Eureka, however, is a party to various lawsuits arising in the normal course of
its business. Management does not believe that any of the legal proceedings to
which Eureka is a party will have a material impact on the financial condition
of the Partnership.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
4(a) Amended and Restated Limited Partnership Agreement dated
September 30, 1987 (incorporated herein by reference to Form 10-K
dated December 31, 1987 filed pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934 by America First Financial
Fund 1987-A Limited Partnership (Commission File No. 0-16918)).
4(b) Form of Certificate of Beneficial Unit Certificate (incorporated
herein by reference to Amendment No. 3 to the Registration
Statement on Form S-1 filed March 31, 1987 with the Securities
and Exchange Commission by America First Financial Fund 1987-A
Limited Partnership (Commission File No. 33-10286)).
10(a). Custody Agreement dated August 3, 1987 (incorporated herein by
reference to Form 10-K dated December 31, 1987 filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 by
America First Financial Fund 1987-A Limited Partnership
(Commission File No. 0-16918)).
10(b). Agreement between America First Capital Associates Limited
Partnership Five and Stephen McLin (incorporated herein by
reference to Amendment No. 3 to the Registration Statement on
Form S-1 filed March 31, 1987 with the Securities and Exchange
Commission by America First Financial Fund 1987-A Limited
Partnership (Commission File No. 33-10286)).
10(c). Assistance Agreement dated May 27, 1988 (incorporated herein by
reference to Form 8 filed September 15, 1988 pursuant to Section
13 or 15(d) of the Securities Exchange Act by America First
Financial Fund 1987-A Limited Partnership (Commission File No. 0-
16918)).
10(d). Assignment Agreement dated May 27, 1988 (incorporated herein by
reference to Form 10-K dated December 31, 1988, filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 by
America First Financial Fund 1987-A Limited Partnership
(Commission File No. 0-16918)).
10(e). Capital Maintenance Agreement dated May 27, 1988 (incorporated
herein by reference to Form 10-K dated December 31, 1988, filed
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 by America First Financial Fund 1987-A Limited Partnership
(Commission File No. 0-16918)).
14
<PAGE>
AMERICA FIRST FINANCIAL FUND 1987 - A LIMITED PARTNERSHIP AND SUBSIDIARY
10(f). Asset Purchase Agreement dated May 27, 1988 (incorporated herein
by reference to Form 10-K dated December 31, 1988, filed pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 by
America First Financial Fund 1987-A Limited Partnership
(Commission File No. 0-16918)).
10(g). Employment Agreement between America First Holdings, Inc. (now
America First Eureka Holdings, Inc.) and Stephen T. McLin dated
January 24, 1989 (incorporated herein by reference to Form 10-K
dated December 31, 1988, filed pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 by America First Financial
Fund 1987-A Limited Partnership (Commission File No. 0-16918)).
10(h). Long-Term Incentive Compensation Plan of EurekaBank (as amended
and restated effective January 1, 1991) (incorporated herein by
reference to Form 10-Q dated August 13, 1991, filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 by
America First Financial Fund 1987-A Limited Partnership
(Commission File No. 0-16918)).
27. Financial Data Schedule.
(b) The Partnership did not file any Current Reports on Form 8-K during the
third quarter of 1996.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICA FIRST FINANCIAL FUND
1987-A LIMITED PARTNERSHIP
By America First Capital
Associates Limited
Partnership Five, General
Partner of the Registrant
By AFCA-5 Management Corporation,
General Partner of America First
Capital Associates Limited Partnership Five
Date: November 1, 1996 By /s/ George H. Krauss
-------------------------------------------
George H. Krauss
Chairman of the Board of Directors
and Secretary (Principal Executive Officer)
Date: November 1, 1996 By /s/ J. Paul Bagley
-------------------------------------------
J. Paul Bagley
Director, President and Treasurer
(Principal Financial Officer)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from FORM 10-Q
and is qualified in its entirety by reference to such FORM 10-Q filing.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 21,982,688
<INT-BEARING-DEPOSITS> 3,701,998
<FED-FUNDS-SOLD> 21,300,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 45,704,498
<INVESTMENTS-CARRYING> 668,049,772
<INVESTMENTS-MARKET> 665,379,846
<LOANS> 1,415,825,471
<ALLOWANCE> 7,074,716
<TOTAL-ASSETS> 2,227,591,290
<DEPOSITS> 1,806,967,378
<SHORT-TERM> 201,036,127
<LIABILITIES-OTHER> 31,202,087
<LONG-TERM> 17,700,000
17,168,699
0
<COMMON> 0
<OTHER-SE> 153,516,999
<TOTAL-LIABILITIES-AND-EQUITY> 2,227,591,290
<INTEREST-LOAN> 80,320,398
<INTEREST-INVEST> 42,106,392
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 122,426,790
<INTEREST-DEPOSIT> 60,893,909
<INTEREST-EXPENSE> 77,335,984
<INTEREST-INCOME-NET> 45,090,806
<LOAN-LOSSES> 851,497
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 43,991,092
<INCOME-PRETAX> 5,261,479
<INCOME-PRE-EXTRAORDINARY> 5,261,479
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,261,479
<EPS-PRIMARY> 0.952
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 5,813,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,777,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,878,072
<CHARGE-OFFS> 532,696
<RECOVERIES> 73,843
<ALLOWANCE-CLOSE> 7,074,716
<ALLOWANCE-DOMESTIC> 7,074,716
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
