EX-99.1
2
ex99-1.txt
EXHIBIT 99.1



                                                                    Exhibit 99.1


                  AMERICAN BUSINESS FINANCIAL SERVICES, INC. REPORTS
                       FISCAL YEAR 2004 FINANCIAL RESULTS
                       Record Quarterly Loan Originations

Philadelphia, PA, October 13, 2004 - American Business Financial Services, Inc.
(ABFS) (NASDAQ: ABFI), today announced its financial results for the fourth
quarter and fiscal year ended June 30, 2004. The Company reported a net loss
attributable to common stock of $30.9 million, or $8.81 per fully diluted share,
on revenues of $22.7 million for the quarter. For the comparable period in 2003,
revenues were $20.6 million and the net loss was $34.1 million or $10.62 per
fully diluted share.

For the fiscal year ended June 30, 2004, ABFS reported a net loss attributable
to common stock of $115.1 million, or $34.07 per fully diluted share, on
revenues of $97.1 million. For the previous year, revenues were $241.4 million
and the net loss was $29.9 million or $9.32 per fully diluted share.

Albert W. Mandia, Executive Vice President and Chief Financial Officer of
American Business Financial Services, stated, "Last year was extremely
challenging for us, but during the year, ABFS saw major progress toward the
execution of our adjusted business model and the expansion of our loan
origination infrastructure. The Company originated $514.1 million during the
fourth quarter, compared to $489.2 million in the fourth quarter of 2003.
Through September 30, 2004, we have added 204 loan origination personnel and the
benefit of this has been reflected in an all-time quarterly record of $629.7
million of loans during the first fiscal quarter of 2005, compared to $124.1
million for the same quarter of fiscal year 2004. Our loan origination growth is
being fueled by the expansion of our nationwide broker network, which accounted
for 38% of our originations during fiscal 2004. We expect our broker network to
be the driving element of our future growth, and will account for the majority
of our loan originations."

Mandia continued, "From a financial perspective, although the Company continued
to experience losses during the fourth quarter, as we expected, we believe we
are proceeding on track to once again become a profitable enterprise. Factors
impacting the Company during fiscal 2004 included a high level of loan
prepayment activity and an inability to generate new loan originations for a
six-month period early in the year. However, we have made numerous strides to
counteract these issues, and exiting fiscal 2004 we believe that the transition
to our adjusted business model, which is focused on increasing loan originations
and whole loan sales, will generate improved financial performance during fiscal
2005."

Loan prepayment activity during the year resulted in ABFS recording pre-tax non
cash adjustments on securitization assets totaling $63.8 million, of which $46.4
million was charged to the income statement and $17.4 million was charged to
other comprehensive income, a component of stockholders' equity. The write-downs
of the securitization assets continue to reflect higher than anticipated
prepayments. However, over recent months, prepayment activity has slowed and the
Company believes this trend will continue as interest rates continue to rise.
During fiscal 2003, the Company recorded total pre-tax valuation adjustments of






$63.3 million, of which $45.2 million was charged to the income statement.
During the year ended June 30, 2004, ABFS also completed the sale of $808.4
million of mortgage loans with servicing released to various buyers,
representing some of the most highly regarded firms in the industry. In
addition, since June 30, 2004, ABFS has completed the sale of an additional
$586.5 million of mortgage loans with servicing released.

Depending on the Company's ability to securitize in the future, it anticipates
incurring losses at least through its first quarter of fiscal 2005, ended
September 30, 2004. ABFS also anticipates that losses incurred in fiscal 2005
will be markedly less than those incurred in fiscal 2004, assuming that the loan
production increases experienced in the fourth quarter of fiscal 2004 and first
quarter of fiscal 2005 continue.

Over the past several weeks, ABFS has worked to secure funding to support its
adjusted business model, working with new and existing lenders. For example, the
Company was successful in receiving a commitment for a 1 year, $100 million
warehouse credit facility with a major warehouse lender which is expected to
close in October, subject to completion and execution of definitive agreements
(see Form 8-K filed with the SEC on October 1, 2004 for additional information
regarding this commitment letter). ABFS continues to negotiate with other
warehouse lenders to secure additional credit facilities for the purpose of
funding loan originations, and will report on progress shortly. The Company has
also actively worked to enhance balance sheet liquidity completing asset sales
where appropriate to improve the Company's cash position (see Form 8-K filed
with the SEC on October 1, 2004 for additional information regarding this asset
sale).

Mandia commented, "ABFS continues to grow its origination volume to regain
profitability. In fact, during the last 12 months, loan originations have
increased more than eight-fold, from our lowest monthly level of originations."

This growth has been accomplished through a combination of initiatives:

o Geographic expansion beyond our traditional East Coast focus.

o Expansion of product lines into variable-rate loans and purchase money
  mortgages.

o Continued expansion of our broker network.

o Lowered origination costs through technology enhancements.

o Expansion of our retail origination channel through continued use of
  e-commerce and outbound telemarketing.

o Expanded relationships with potential buyers of the Company's loan portfolio.

"The Company continues to develop momentum towards each of these initiatives,"
Mandia concluded. "Additionally, we believe that our products are attracting a
more credit-worthy borrower as evidenced by our higher average FICO score. While




we still face some challenges in seeing our adjusted business strategy translate
into sustained profitability, we are very pleased with the progress to date."

American Business Financial Services, Inc. is a diversified financial services
organization operating mainly in the eastern and central portions of the United
States. Recent expansion has positioned the Company to increase its operations
in the western portion of the United States, especially California. Through its
principal direct and indirect subsidiaries, the Company currently originates,
sells and services home mortgage loans through a combination of channels,
including a national processing center located at its centralized operating
office in Philadelphia, Pennsylvania. The Company also processes and purchases
home mortgage loans from other financial institutions through its Bank Alliance
Services program.

For further information, contact Albert W. Mandia, Executive Vice President and
Chief Financial Officer, 215-940-4504, or Keith Bratz, VP--Corporate
Communications, 215-940-4525.

                                      # # #

Certain statements contained in this press release, which are not historical
fact, may be deemed to be forward-looking statements under federal securities
laws. There are many important factors that could cause American Business
Financial Services, Inc. and its subsidiaries' actual results to differ
materially from those indicated in the forward-looking statements. Such factors
include, but are not limited to, general economic conditions, including interest
rate risk, future residential real estate values, regulatory changes
(legislative or otherwise) affecting the mortgage lending and real estate
industries, regulatory investigations of lending practices, lending to
credit-impaired borrowers, competition, demand for the Company's products,
relationships with brokers, ability to obtain financing, loan prepayment rates,
delinquency and default rates, access to securitization markets, changes in
factors influencing or interruptions in securitization and whole loan sale
markets, ability to successfully implement changes in business strategy, amount
of debt outstanding, restrictive covenants in debt instruments and other risks
identified in American Business Financial Services, Inc.'s Securities and
Exchange Commission filings.



                   AMERICAN BUSINESS FINANCIAL SERVICES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
              (dollar amounts in thousands, except per share data)
THREE MONTHS ENDED TWELVE MONTHS ENDED JUNE 30, JUNE 30, ----------------------------- -------------------------- 2004 2003 2004 2003 ---------- --------- ---------- ---------- (Unaudited) (Unaudited) REVENUES Gain on sale of loans: Securitizations $ - $ 556 $ 15,107 $ 170,950 Whole loan sales 6,394 626 18,725 655 Interest and fees 6,042 6,002 17,732 19,395 Interest accretion on interest-only strips 9,234 12,986 40,176 47,347 Servicing income 1,040 382 4,850 3,049 Other income 2 3 482 10 ---------- --------- ---------- ---------- Total Revenues 22,712 20,555 97,072 241,406 ---------- --------- ---------- ---------- EXPENSES Interest 17,769 17,041 68,138 68,098 Provision for credit losses 1,443 1,861 14,289 6,553 Employee related costs 13,200 11,636 50,026 41,601 Sales and marketing 5,210 7,637 15,734 27,773 (Gains) and losses on derivative financial instruments 2,130 (220) (2,561) 5,037 General and administrative 20,982 26,549 84,718 96,182 Securitization assets valuation adjustments 8,602 11,879 46,450 45,182 ---------- --------- ---------- ---------- Total Expenses 69,336 76,383 276,794 290,426 ---------- --------- ---------- ---------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (BENEFIT) (46,624) (55,828) (179,722) (49,020) PROVISION FOR INCOME TAXES (BENEFIT) (17,717) (21,773) (68,294) (19,118) ---------- --------- ---------- ---------- INCOME (LOSS) BEFORE DIVIDENDS ON PREFERRED STOCK (28,907) (34,055) (111,428) (29,902) DIVIDENDS ON PREFERRED STOCK 1,967 - 3,718 - ---------- --------- ---------- ---------- NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $ (30,874) $ (34,055) $ (115,146) $ (29,902) ========== ========= ========== ========== EARNINGS (LOSS) PER COMMON SHARE Basic $ (8.81) $ (10.62) $ (34.07) $ (9.32) ========== ========= ========== ========== Diluted $ (8.81) $ (10.62) $ (34.07) $ (9.32) ========== ========= ========== ========== Average Common Shares (in thousands): Basic 3,511 3,238 3,380 3,210 Diluted 3,511 3,238 3,380 3,210
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands)
JUNE 30, -------------------------------- 2004 2003 ----------- ------------ ASSETS Cash and cash equivalents $ 910 $ 36,590 Restricted cash 13,307 10,885 Loan and lease receivables: Loans available for sale 304,275 263,419 Non-accrual loans (net of allowance for credit losses of $1,469 at June 30, 2004 and $1,359 at June 30, 2003) 1,993 3,999 Lease receivables (net of allowance for credit losses of $170 at June 30, 2003) - 3,984 Interest and fees receivable 18,089 10,838 Deferment and forbearance advances receivable 6,249 4,341 Loans subject to repurchase rights 38,984 23,761 Interest-only strips (includes the fair value of overcollateralization related cash flows of $216,926 and $279,245 at June 30, 2004 and 2003) 459,086 598,278 Servicing rights 73,738 119,291 Deferred income tax asset 59,133 - Property and equipment, net 26,047 23,302 Prepaid expenses 13,511 3,477 Receivable for sold loans - 26,734 Other assets 27,548 30,452 ----------- ------------ Total assets $ 1,042,870 $ 1,159,351 =========== ============
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (dollar amounts in thousands)
JUNE 30, -------------------------------- 2004 2003 -------------------------------- LIABILITIES Subordinated debentures $ 522,609 $ 719,540 Senior collateralized subordinated notes 83,639 - Warehouse lines and other notes payable 241,200 212,916 Accrued interest payable 37,675 45,448 Accounts payable and accrued expenses 28,096 30,352 Liability for loans subject to repurchase rights 45,864 27,954 Deferred income tax liability - 17,036 Other liabilities 71,872 64,036 --------------------------------- Total liabilities 1,030,955 1,117,282 --------------------------------- STOCKHOLDERS' EQUITY Preferred stock, par value $.001, liquidation preference of $1.00 per share plus accrued and unpaid dividends to the date of liquidation, authorized, 203,000,000 shares at June 30, 2004 and 3,000,000 shares at June 30, 2003; Issued: 93,787,111 shares of Series A at June 30, 2004 94 - Common stock, par value $.001, authorized shares 209,000,000 at June 30, 2004 and 9,000,000 at June 30, 2003; Issued: 3,653,165 shares in 2004 and 3,653,165 shares in 2003 (including Treasury shares of 54,823 in 2004 and 411,584 in 2003) 4 4 Additional paid-in capital 107,241 23,985 Accumulated other comprehensive income 4,596 14,540 Unearned compensation (495) - Stock awards outstanding 95 - Retained earnings (deficit) (98,324) 13,104 Treasury stock, at cost (696) (8,964) --------------------------------- 12,515 42,669 Note receivable (600) (600) --------------------------------- Total stockholders' equity 11,915 42,069 --------------------------------- Total liabilities and stockholders' equity $ 1,042,870 $ 1,159,351 =================================
See accompanying notes to financial statements AMERICAN BUSINESS FINANCIAL SERVICES, INC. Total Portfolio Quality (FOR THE LAST THREE FISCAL QUARTERS) The following table provides data concerning delinquency experience, real estate owned and loss experience for the total loan and lease portfolio in which we have interests, either because the loans and leases are on our balance sheet or sold into securitizations in which we have retained interests. The total portfolio is divided into the portion of the portfolio managed by us and the portion of the portfolio serviced by others. See Attachment A for a reconciliation of total portfolio and REO measures to our balance sheet. Previously delinquent loans managed by us subject to deferment and forbearance arrangements are not included in this table if borrowers are current on principal and interest payments as required under the terms of the original note (exclusive of delinquent payments advanced or fees paid by us on the borrower's behalf as part of the deferment or forbearance arrangement) (dollars in thousands):
JUNE 30, MARCH 31, DECEMBER 31, 2004 2004 2003 ---------------------- ------------------ -------------------- DELINQUENCY BY TYPE: AMOUNT % AMOUNT % AMOUNT % -------------------- ------------- ----- ----------- ----- ------------ ----- MANAGED BY ABFS: BUSINESS PURPOSE LOANS Total portfolio......... $ 255,200 $ 278,608 $ 307,807 ============= =========== ============ Period of delinquency: 31-60 days............. $ 4,847 1.90% $ 4,864 1.75% $ 6,640 2.16% 61-90 days............. 4,241 1.66 5,798 2.08 7,109 2.31 Over 90 days........... 51,625 20.23 52,434 18.82 47,449 15.42 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 60,713 23.79% $ 63,096 22.65% $ 61,198 19.88% ============= ===== =========== ===== ============ ===== REO...................... $ 3,725 $ 4,411 $ 1,879 ============= =========== ============ HOME EQUITY LOANS Total portfolio.......... $ 1,836,678 $ 1,914,165 $ 2,179,052 ============= =========== ============ Period of delinquency: 31-60 days............. $ 35,301 1.92% $ 36,885 1.93% $ 53,522 2.46% 61-90 days............. 18,961 1.03 21,964 1.15 31,668 1.45 Over 90 days........... 104,441 5.69 121,999 6.37 125,212 5.75 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 158,703 8.64% $ 180,848 9.45% $ 210,402 9.66% ============= ===== =========== ===== ============ ===== REO...................... $ 30,675 $ 21,778 $ 22,359 ============= =========== ============ EQUIPMENT LEASES (a) Total portfolio.......... $ - $ - $ 3,669 ============= =========== ============ Period of delinquency: 31-60 days............. $ - % $ - -% $ 419 10.23% 61-90 days............. - - - 93 2.27 Over 90 days........... - - - 127 3.10 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ - % $ - -% $ 639 15.60% ============= ===== =========== ===== ============ ===== TOTAL MANAGED BY ABFS Total loans and leases... $ 2,091,878 $ 2,192,773 $ 2,490,528 ============= =========== ============ Period of delinquency: 31-60 days............. $ 40,148 1.92% $ 41,749 1.90% $ 60,581 2.43% 61-90 days............. 23,202 1.11 27,762 1.27 38,870 1.56 Over 90 days........... 156,066 7.46 174,433 7.95 172,788 6.94 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 219,416 10.49% $ 243,944 11.12% $ 272,239 10.93% ============= ===== =========== ===== ============ ===== REO...................... $ 34,400 1.64% $ 26,189 1.19% $ 24,238 0.97% ============= ===== =========== ===== ============ ===== SERVICED BY OTHERS (b): Total portfolio serviced by others.............. $ 139,811 $ 156,644 $ 167,582 ============= =========== ============ Period of delinquency: 31-60 days............. $ 6,976 4.99% $ 8,649 5.52% $ 10,112 6.03% 61-90 days............. 3,636 2.60 3,529 2.25 3,198 1.91 Over 90 days........... 8,105 5.80 5,804 3.71 1,984 1.18 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 18,717 13.39% $ 17,982 11.48% $ 15,294 9.13% ============= ===== =========== ===== ============ =====
TOTAL PORTFOLIO QUALITY (CONTINUED) (FOR THE LAST THREE FISCAL QUARTERS)
JUNE 30, MARCH 31, DECEMBER 31, 2004 2004 2003 ---------------------- ------------------ -------------------- AMOUNT % AMOUNT % AMOUNT % ------------- ----- ----------- ----- ------------ ----- TOTAL PORTFOLIO.......... $ 2,231,689 $ 2,349,417 $ 2,658,110 ============= =========== ============ Period of delinquency: 31-60 days........... $ 47,124 2.11% $ 50,398 2.15% $ 70,693 2.66% 61-90 days........... 26,838 1.20 31,291 1.33 42,068 1.58 Over 90 days......... 164,171 7.36 180,237 7.67 174,772 6.57 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.. $ 238,133 10.67% $ 261,926 11.15% $ 287,533 10.82% ============= ===== =========== ===== ============ ===== REO...................... $ 34,400 1.54% $ 26,189 1.11% $ 24,238 0.91% ============= ===== =========== ===== ============ ===== NET LOSSES EXPERIENCED DURING THE PERIOD (c): On Loans: Absorbed by securitization trusts.............. $ 1,691 0.29% $ 1,646 0.26% $ 3,383 0.48% Non-accrual loans...... 6,217 1.08 5,784 0.91 6,144 0.88 Loans available for sale............... - - - - - - On Leases.............. - - - - (41) (3.49) On REO: Absorbed by securitization trusts.............. 216 0.04 1,617 0.25 1,261 0.18 REO on balance sheet... 1,051 0.18 1,876 0.29 1,587 0.23 ------------- ----- ----------- ----- ------------ ----- Total net losses......... $ 9,175 1.60% $ 10,923 1.71% $ 12,334 1.76% ============= ===== =========== ===== ============ =====
--------------- (a) We sold our interests in the leasing portfolio on January 22, 2004. (b) We do not service the mortgage loans in the 2003-2 securitization trust, our most recent securitization, which closed in October 2003. (c) Percentage based on annualized losses and average total portfolio. AMERICAN BUSINESS FINANCIAL SERVICES, INC. Total Portfolio Quality (FOR THE LAST THREE FISCAL YEARS) The following table provides data concerning delinquency experience, real estate owned and loss experience for the total loan and lease portfolio in which we have interests, either because the loans and leases are on our balance sheet or sold into securitizations in which we have retained interests. The total portfolio is divided into the portion of the portfolio managed by us and the portion of the portfolio serviced by others. See Attachment A for a reconciliation of total portfolio and REO measures to our balance sheet. Previously delinquent loans managed by us subject to deferment and forbearance arrangements are not included in this table if borrowers are current on principal and interest payments as required under the terms of the original note (exclusive of delinquent payments advanced or fees paid by us on the borrower's behalf as part of the deferment or forbearance arrangement) (dollars in thousands):
JUNE 30 --------------------------------------------------------------------- 2004 2003 2002 ---------------------- ------------------ -------------------- DELINQUENCY BY TYPE: AMOUNT % AMOUNT % AMOUNT % -------------------- ------------- ----- ----------- ----- ------------ ----- MANAGED BY ABFS: BUSINESS PURPOSE LOANS Total portfolio......... $ 255,200 $ 393,098 $ 361,638 ============= =========== ============ Period of delinquency: 31-60 days............. $ 4,847 1.90% $ 4,849 1.23% $ 2,449 0.68% 61-90 days............. 4,241 1.66 4,623 1.18 1,648 0.46 Over 90 days........... 51,625 20.23 38,237 9.73 32,987 9.12 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 60,713 23.79% $ 47,709 12.14% $ 37,084 10.25% ============= ===== =========== ===== ============ ===== REO...................... $ 3,725 $ 5,744 $ 6,220 ============= =========== ============ HOME EQUITY LOANS Total portfolio.......... $ 1,836,678 $ 3,249,501 $ 2,675,559 ============= =========== ============ Period of delinquency: 31-60 days............. $ 35,301 1.92% $ 48,427 1.49% $ 37,213 1.39% 61-90 days............. 18,961 1.03 24,124 0.74 22,919 0.86 Over 90 days........... 104,441 5.69 108,272 3.33 73,410 2.74 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 158,703 8.64% $ 180,823 5.56% $ 133,542 4.99% ============= ===== =========== ===== ============ ===== REO...................... $ 30,675 $ 22,256 $ 27,825 ============= =========== ============ EQUIPMENT LEASES (a) Total portfolio.......... $ - $ 8,475 $ 28,992 ============= =========== ============ Period of delinquency: 31-60 days............. $ - % $ 162 1.91% $ 411 1.42% 61-90 days............. - 83 0.98 93 0.32 Over 90 days........... - 154 1.82 423 1.46 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ - % $ 399 4.71% $ 927 3.20% ============= ===== =========== ===== ============ ===== TOTAL MANAGED BY ABFS Total loans and leases... $ 2,091,878 $ 3,651,074 $ 3,066,189 ============= =========== ============ Period of delinquency: 31-60 days............. $ 40,148 1.92% $ 53,438 1.46% $ 40,073 1.31% 61-90 days............. 23,202 1.11 28,830 0.79 24,660 0.80 Over 90 days........... 156,066 7.46 146,663 4.02 106,820 3.48 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 219,416 10.49% $ 228,931 6.27% $ 171,553 5.59% ============= ===== =========== ===== ============ ===== REO...................... $ 34,400 1.64% $ 28,000 0.77% $ 34,045 1.11% ============= ===== =========== ===== ============ ===== SERVICED BY OTHERS (b): Total portfolio serviced by others.............. $ 139,811 $ - $ - ============= =========== ============ Period of delinquency: 31-60 days............. $ 6,976 4.99% $ - -% $ - -% 61-90 days............. 3,636 2.60 - - - - Over 90 days........... 8,105 5.80 - - - - ------------- ----- ----------- ----- ------------ ----- Total delinquencies.... $ 18,717 13.39% $ - -% $ - -% ============= ===== =========== ===== ============ =====
TOTAL PORTFOLIO QUALITY (CONTINUED) (FOR THE LAST THREE FISCAL YEARS)
JUNE 30 --------------------------------------------------------------------- 2004 2003 2002 ---------------------- ------------------ -------------------- DELINQUENCY BY TYPE: AMOUNT % AMOUNT % AMOUNT % -------------------- ------------- ----- ----------- ----- ------------ ----- TOTAL PORTFOLIO.......... $ 2,231,689 $ 3,651,074 $ 3,066,189 Period of delinquency: 31-60 days........... $ 47,124 2.11% $ 53,438 1.46% $ 40,073 1.31% 61-90 days........... 26,838 1.20 28,830 0.79 24,660 0.80 Over 90 days......... 164,171 7.36 146,663 4.02 106,820 3.48 ------------- ----- ----------- ----- ------------ ----- Total delinquencies.. $ 238,133 10.67% $ 228,931 6.27% $ 171,553 5.59% ============= ===== =========== ===== ============ ===== REO.......................... $ 34,400 1.54% $ 28,000 0.77% $ 34,045 1.11% ============= ===== =========== ===== ============ ===== NET LOSSES EXPERIENCED DURING THE PERIOD (c): On Loans: Absorbed by securitization trusts.............. $ 8,782 0.32% $ 4,861 0.15% $ 2,618 0.09% Non-accrual loans...... 19,676 0.71 6,897 0.21 3,816 0.14 Loans available for sale............... - - - - - - On Leases.............. (40) (1.25) 513 2.91 1,416 3.20 On REO: Absorbed by securitization trusts.............. 5,648 0.20 8,358 0.25 5,231 0.19 REO on balance sheet... 6,467 0.23 9,375 0.28 3,812 0.14 ------------- ----- ----------- ----- ------------ ----- Total net losses......... $ 40,533 1.46% $ 30,004 0.90% $ 16,893 0.60% ============= ===== =========== ===== ============ =====
------------ (a) We sold our interests in the leasing portfolio on January 22, 2004. (b) We do not service the mortgage loans in the 2003-2 securitization trust, our most recent securitization, which closed in October 2003. (c) Percentage based on annualized losses and average total portfolio. AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES LOAN ORIGINATIONS (in thousands)
THREE MONTHS ENDED TWELVE MONTHS ENDED JUNE 30, JUNE 30, ------------------------------ ------------------------------- 2004 2003 2004 2003 --------- --------- --------- ----------- Business purpose loans $ 587 $ 29,620 $ 587 $ 122,790 Home equity loans: Direct channel 185,972 160,103 467,406 538,877 Retail branches - 36,703 649 160,272 Broker channel 291,917 201,502 371,777 642,670 Bank Alliance Services program 35,620 61,252 142,261 201,911 --------- --------- --------- ----------- Total home equity loans 513,509 459,560 982,093 1,543,730 --------- --------- --------- ----------- Total Company $ 514,096 $ 489,180 $ 982,680 $ 1,666,520 ========= ========= ========= ===========
Attachment A AMERICAN BUSINESS FINANCIAL SERVICES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES This earnings release contains non-GAAP financial measures. For purposes of the SEC's Regulation G, a non-GAAP financial measure is a numerical measure of a registrant's historical or future financial performance, financial position or cash flow that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in our statement of income, balance sheet or statement of cash flows (or equivalent statement) of the company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to accounting principles generally accepted in the United States of America. Pursuant to the requirements of Regulation G, we have provided in this addendum a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure. We present total portfolio and total real estate owned, referred to as REO, information. The total portfolio measure includes loans and leases recorded on our balance sheet and securitized loans and leases both managed by us and serviced by others. Reconciliation of total portfolio and REO measures follows (Dollars in thousands):
JUNE 30, 2004: DELINQUENCIES ---------------------------------------------------------------------------------------------- AMOUNT % -------------------- On-balance sheet loan receivables: Loans available for sale...................... $ 300,141 $ 245 Non-accrual loans............................. 3,462 3,354 ----------- ---------- Total on-balance sheet loan receivables... 303,603 3,599 1.19% Securitized loan receivables..................... 1,928,086 234,534 12.16% ----------- ---------- Total Portfolio............................... $ 2,231,689 $ 238,133 10.67% =========== ========== On-balance sheet REO............................. $ 1,920 Securitized REO.................................. 32,480 ----------- Total REO........................................ $ 34,400 =========== MARCH 31, 2004: DELINQUENCIES ---------------------------------------------------------------------------------------------- AMOUNT % -------------------- On-balance sheet loan receivables: Loans available for sale...................... $ 114,855 $ 231 Non-accrual loans............................. 5,706 5,334 ----------- ---------- Total on-balance sheet loan receivables... 120,561 5,565 4.62% Securitized loan receivables..................... 2,228,856 256,361 11.50% ----------- ---------- Total Portfolio............................... $ 2,349,417 $ 261,926 11.15% =========== ========== On-balance sheet REO............................. $ 2,508 Securitized REO.................................. 23,681 ----------- Total REO........................................ $ 26,189 ===========
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (CONTINUED)
JUNE 30, 2004: DELINQUENCIES ---------------------------------------------------------------------------------------------- AMOUNT % -------------------- On-balance sheet loan receivables: Loans available for sale...................... $ 106,109 $ 373 Non-accrual loans............................. 6,895 6,618 Lease receivables............................. 3,669 639 ----------- ---------- Total on-balance sheet loan receivables... 116,673 7,630 6.54% Securitized loan receivables..................... 2,541,437 279,903 11.01% ----------- ---------- Total Portfolio............................... $ 2,658,110 $ 287,533 10.82% =========== ========== On-balance sheet REO............................. $ 3,077 Securitized REO.................................. 21,161 ----------- Total REO........................................ $ 24,238 =========== JUNE 30, 2003: DELINQUENCIES ---------------------------------------------------------------------------------------------- AMOUNT % -------------------- On-balance sheet loan receivables: Loans available for sale...................... $ 257,841 $ 225 Non-accrual loans............................. 5,358 4,936 Lease receivables............................. 4,126 111 ----------- ---------- Total on-balance sheet loan receivables... 267,325 5,272 1.97% Securitized loan and lease receivables........... 3,383,749 223,659 6.61% ----------- ---------- Total Portfolio.................................. $ 3,651,074 $ 228,931 6.27% =========== ========== On-balance sheet REO............................. $ 4,776 Securitized REO.................................. 23,224 ----------- Total REO........................................ $ 28,000 ============ JUNE 30, 2002: DELINQUENCIES ---------------------------------------------------------------------------------------------- AMOUNT % -------------------- On-balance sheet loan receivables: Loans available for sale...................... $ 44,621 $ 216 Non-accrual loans............................. 6,991 6,483 Lease receivables............................. 7,774 259 ----------- ---------- Total on-balance sheet loan receivables... 59,386 6,958 11.72% Securitized loan and lease receivables........... 3,006,803 164,595 5.47% ----------- ---------- Total Portfolio.................................. $ 3,066,189 $ 171,553 5.59% =========== ========== On-balance sheet REO............................. $ 3,784 Securitized REO.................................. 30,261 ----------- Total REO........................................ $ 34,045 ===========

The following information was filed by American Business Financial Services Inc on Thursday, October 14, 2004 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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