American Business Financial Services, Inc. Closes $173.5 Million Private Placement Securitization.Business Editors PHILADELPHIA--(BUSINESS WIRE)--Nov. 10, 2003 American Business Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ABFI), announced that it has closed a $173.5 million mortgage loan securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. , with servicing released, through its three lending subsidiaries, American Business Credit, Inc., Home American Credit d/b/a Upland Mortgage, and American Business Mortgage Services, Inc. The securitization, which was structured as a privately placed transaction, was closed under the Company's adjusted business model of emphasizing whole loan sales, supplemented by smaller privately placed securitizations. ABFS ABFS American Business Financial Services, Inc. ABFS ABF Freight Systems, Inc. ABFS Alpaca Breeders Fiber School ABFS Atchafalaya Basin Floodway System (Louisiana) ABFS Advance Benefit Funding Sources Mortgage Loan Trust 2003-2, structured as a Real Estate Mortgage Investment Conduit Real Estate Mortgage Investment Conduit (REMIC) A pass-through tax entity that can hold mortgages secured by any type of real property and can issue multiple classes of ownership interests to investors in the form of pass-through certificates, bonds, or other legal forms. (REMIC), consists of fixed rate mortgage loans. JP Morgan Securities, Inc. was the transaction's sole placement agent, and EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. Mortgage Corporation, a division of Bear Stearns The Bear Stearns Companies, Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., one of the largest global investment banks and securities trading and brokerage firms in the world. and Co., Inc. was selected to act as the servicer. The Class A certificates, representing 85.2% of the securities issued by the Trust, are wrapped by a credit insurance policy issued by Ambac. As a result, these certificates received a AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. rating from Standard & Poor's, Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. and Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. . The Class M certificates, representing 10.5% of the securities issued by the Trust, are wrapped by a credit insurance policy insured by Radian Asset Assurance Inc. As a result, these certificates received a AA rating from Standard & Poor's and Fitch Ratings. The securitization's Class B certificates, representing 4.3% of the securities issued by the Trust, were rated BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. by Standard & Poor's and Moody's Investors Service. In addition, the securitization includes an interest-only (I.O.) class representing 1.5% of the securities issued by the Trust, and priced to yield 3.5%. In effect, this class pulls forward excess cash flow that would have come to the Company during a later period of time, thus improving the Company's cash flow position. The I.O. class certificates were rated AAA by Standard & Poor's and Moody's Investors Service. "We are grateful to JP Morgan Securities, Ambac and Radian for their interest in our Company and their efforts in executing this securitization," said ABFI Chairman and Chief Executive Officer Anthony J. Santilli. "Their support was instrumental in our return to the asset-backed securities market under favorable market conditions, and we are pleased with the terms of this securitization." Last month, as another part of its adjusted business strategy, ABFI announced the closing of two new mortgage loan warehouse facilities totaling $450 million, and the refinancing of a mortgage warehouse conduit. American Business Financial Services, Inc. is a diversified financial services company operating predominantly in the eastern and central portions of the United States. The Company primarily originates, sells and services home equity and, subject to market conditions in the secondary loan market, business purpose loans through a combination of channels, including a national processing center located at its centralized operating office in Philadelphia, Pennsylvania, and a small processing center in Roseland, New Jersey. The Company also processes and purchases home equity 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 Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. in debt instruments and other risks identified in American Business Financial Services, Inc.'s Securities and Exchange Commission filings. |
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