American Business Financial Services Reports Fiscal First Quarter 2002 Earnings; Company Focuses on Achieving Positive Cash Flow; Cash Dividend of $0.08 Declared.Business Editors BALA CYNWYD Cynwyd is a small village in Denbighshire, Wales, about two miles south-west of the town of Corwen. It is home to a large factory, run by Ifor Williams Trailers. See also
American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of 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:ABFI), a diversified financial The diversified financial services segment includes a range of consumer and commercially-oriented companies offering a wide variety of products and services, including various lending products (such as home equity loans and credit cards), insurance, and securities and investment services company operating nationwide, today announced results for the Company's fiscal first quarter, ended September September: see month. 30, 2001. At the same time, ABFI's Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a quarterly cash dividend of $0.08 per share on the Company's common stock, payable on November November: see month. 30, 2001, to all shareholders of record as of November 15, 2001. Net income for fiscal first quarter was $1.36 million, compared to $1.35 million for the same period last year. Net income per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share was $0.44, 22.2% higher than the $0.36 per diluted share in the prior year period, which was attributed to a reduction in outstanding shares. ABFI achieved total revenues of $50.7 million in fiscal first quarter of 2002, a 32% increase over the $38.4 million in revenues for the same period last year. Loan originations 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. rose to $319.0 million during the fiscal first quarter, versus $310.9 million in the same period last year.
First Quarter Year Ended
(in millions, except EPS) FY02 FY01 FY01 FY00
---------------------------------------------------------------------
Total Revenues $50.7 $38.4 $183.3 $130.6
Originations $319.0 $310.9 $1,217 $1,117
Net Income $1.36 $1.35 $8.1 $6.4
EPS (diluted) $0.44 $0.36 $2.29 $1.66
9/30/01 6/30/01 3/31/01 9/30/00
------- ------- ------- -------
Managed Portfolio
(in billions) $2.7 $2.6 $2.4 $2.1
Delinquencies
(excludes REO) 5.42% 4.13% 3.53% 2.88%
REO 1.11% 1.10% 1.07% 0.69%
According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. ABFI Chairman and Chief Executive Officer Anthony J. Santilli, "Our first fiscal quarter results were good, considering the changing economy. The tragedy of September 11th has affected all our lives. But now more than ever, our industry and our Company stand ready to serve the small businesses and consumers across America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. who need our products, especially in light of the country's new economic realities." Santilli continued, "We believe that ABFI's commitment to asset quality through careful management of our portfolio, our credit screening procedures and the technologies we have brought to the loan origination process is central to our success." As a result of ABFI's performance, and subsequent to the end of the fiscal first quarter, the Company announced a 10% stock dividend payable on November 5, 2001 to shareholders of record on October October: see month. 22, 2001. All per share results have been restated to reflect this stock dividend. Commenting on this action Santilli said, "The Board and management of ABFI want to reward our investors for staying the course, and for their continued confidence in the Company. And, since cash dividends will be paid on these new shares, this effectively increases the cash dividend received by shareholders in the future." At September 30, 2001, the managed portfolio, which includes loans that the Company services for others, was $2.7 billion, compared to $2.1 billion at September 30, 2000. "The importance of the managed portfolio growth is evident in our revenue results for the quarter," Santilli noted. "Remember that every loan we originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. and securitize Securitize The practice of a company selling accounts receivables or other debts owed to it. The third party that buys the debt assumes ownership of it and the responsibility for collecting the debts, and keeps the repayments when made. helps us increase the size of the managed portfolio. This can generate significant revenue and cash streams, through servicing fee income and interest accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the on our interest-only strips Interest-only strip (IO) A security based solely on the interest payments from a pool of mortgages, Treasury bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest payments stop, and the value of the IO falls to zero. , assuming the managed portfolio performs consistently with our assumptions. This, in concert with expense management, is critical in helping us achieve our goal of attaining positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses ." Delinquencies (including loans delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. 31 days or more, and excluding REO reo Noun NZ a language [Maori] ) were 5.42% at September 30, 2001, compared to 2.88% at September 30, 2000. "We have long said that we expected delinquencies to rise as our managed portfolio both grew and matured," Santilli said. "Current economic conditions have certainly contributed to this increase as well. However, our delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. rate continues to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the nonprime industry, which according to the most recent available statistics is 15.5% at December December: see month. 31, 2000." Total Company expenses increased by $12.2 million for the first quarter of fiscal 2002, compared to the same period last year. Interest rate expense primarily related to subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". increased $4.2 million, primarily due to an increase in the amount of subordinated debt outstanding. General and administrative expenses rose by $6.2 million, mainly due to the servicing and collection of the Company's larger managed portfolio. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. as a percentage of revenues were flat for the first quarter of fiscal 2002, compared to the same period last year. In September, ABFI completed a $300 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. through its three subsidiaries, American Business Credit, Inc., Upland Upland, city (1990 pop. 63,374), San Bernardino co., S Calif., in a citrus-fruit region at the foot of the San Gabriel Mts.; inc. 1906. Citrus fruits and grapes are packed and processed in the city. Paint, orchard heaters, auto parts, and feed products are also made. Mortgage, and American Business Mortgage Services, Inc. The Company has been securtizing mortgage loans since 1995. "Overcollateralization Overcollateralization The posting of more collateral than is needed to obtain financing. Notes: This is often done in order to get a better debt rating from a credit rating agency. See also: Collateral, Overcapitalization rates on our securitizations continue to decline, which we believe reflects investor confidence in the underlying pool of loans, and provides us greater flexibility in structuring our transactions," said Santilli. The target overcollateralization for this securitization was 4.0%, the lowest in the Company's history. In July July: see month. , the Company completed a 20% share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program and the Board authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an additional stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program for up to 10% of the outstanding shares during fiscal 2002. According to Santilli, "The Board of Directors continues to believe that the purchase of shares in the Company represents an excellent investment, as the market price of our stock continues to trade below book value. Our results for the first quarter of fiscal 2002 reflect the value we believe this Company has built over our more than 13 years in business. Even though our operations have continued to expand, negative cash flow from operations has declined, and we have $105 million of cash on our balance sheet." "Overall, we are very satisfied with our results for the fiscal first quarter," Santilli concluded. "I am pleased that we were able to reward our investors with both a stock dividend and a cash dividend. Further, we believe that we are focused on reaching our goal of achieving positive cash flow from operations, which will enhance shareholder value even more." About American Business Financial Services, Inc. American Business Financial Services, Inc. is a diversified financial services operating throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The Company originates business purpose loans and first and second mortgage loans through a combination of channels, including a national processing center located at its centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. operating office in Bala Cynwyd, Pennsylvania Bala Cynwyd is a village in Lower Merion Township which is located in the Main Line in southeastern Pennsylvania, bordering the western edge of Philadelphia. It was originally two separate towns, Bala and Cynwyd, but is commonly treated as a single community. , and a retail branch network of offices. Certain statements contained in this press release, which are not historical fact, may be deemed to be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes (legislative or otherwise) affecting the real estate market and mortgage lending activities, competition, demand for American Business Financial Services, Inc. and its subsidiaries' services, availability of funding, loan payment rates, delinquency and default rates, changes in factors influencing the loan securitization market and other risks identified in American Business Financial Services, Inc.'s Securities and Exchange Commission filings.
American Business Financial Services, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands)
Sept. 30, June 30,
2001 2001
------------- -------------
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 105,594 $ 91,092
Loan and lease receivables,
net
Available for sale 76,268 83,241
Interest, fees and other 15,085 16,549
Interest-only strips
(includes the fair value of
over-collateralization
related cash flows of
$195,686 at September 30,
2001 and $183,087 at
June 30, 2001) 430,188 398,519
Servicing rights 105,312 102,437
Receivable for sold loans
and leases 21,518 14,157
Prepaid expenses 2,791 3,457
Property and equipment, net 20,354 20,750
Other assets 41,420 36,285
------------- -------------
Total assets $ 818,530 $ 766,487
============= =============
Liabilities and
Stockholders' Equity
Liabilities
Subordinated debt $ 582,211 $ 537,950
Warehouse lines and other
notes payable 51,181 51,064
Accounts payable and accrued
expenses 47,972 41,023
Deferred income taxes 32,786 30,954
Other liabilities 38,997 38,634
------------- -------------
Total liabilities 753,147 699,625
------------- -------------
Stockholders' Equity
Preferred stock, par value
$.001, Authorized, 1,000,000
Shares; issued and
outstanding, none - -
Common stock, par value
$.001, Authorized, 9,000,000
shares Issued: 3,645,192
shares at September 30, 2001
and 3,645,092 shares at
June 30, 2001 (including
treasury shares of 915,716
at September 30, 2001 and
676,507 at June 30, 2001) 4 4
Additional paid-in capital 23,985 23,984
Accumulated other
comprehensive income 11,049 10,337
Retained earnings 45,074 43,922
Treasury stock, at cost (14,129) (10,785)
------------- -------------
65,983 67,462
Note receivable (600) (600)
------------- -------------
Total stockholders'
equity 65,383 66,862
------------- -------------
Total liabilities and
stockholders' equity $ 818,530 $ 766,487
============= =============
Note: The balance sheet at June 30, 2001 has been derived from the
audited financial statements at that date. See accompanying notes to
consolidated financial statements.
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands, except per share data)
Three Months Ended
Sept. 30,
---------------------
2001 2000
------- -------
(Unaudited)
REVENUES
Gain on sale of loans and
leases $35,356 $26,090
Interest and fees 5,941 5,238
Interest accretion on
interest-only strips 7,736 5,598
Servicing income 1,636 1,495
Other income 3 2
------- -------
Total Revenues 50,672 38,423
------- -------
EXPENSES
Interest 16,983 12,807
Provision for credit losses 1,436 868
Employee related costs 7,824 6,907
Sales and marketing 6,064 5,718
General and administrative 16,017 9,867
------- -------
Total Expenses 48,324 36,167
------- -------
INCOME BEFORE PROVISION
FOR INCOME TAXES 2,348 2,256
PROVISION FOR INCOME TAXES 986 902
------- -------
NET INCOME $ 1,362 $ 1,354
======= =======
EARNINGS PER COMMON SHARE
Basic $ 0.47 $ 0.37
======= =======
Diluted $ 0.44 $ 0.36
======= =======
Average Common Shares
(in thousands):
Basic 2,907 3,656
Diluted 3,093 3,717
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
Managed Portfolio Quality
The following table provides data concerning delinquency
experience, real estate owned and loss experience for the loan and
lease portfolio serviced for the last three fiscal quarters (dollars
in thousands):
Sept. 30, 2001 June 30, 2001
------------------- -------------------
Delinquency by Type Amount % Amount %
----------- ------ ----------- ------
Business Purpose Loans
Total managed portfolio $ 314,076 $ 300,192
=========== ===========
Period of delinquency:
31-60 days $ 2,626 0.84% $ 3,460 1.15%
61-90 days 3,100 0.99 1,837 .61
Over 90 days 26,958 8.58 22,687 7.56
----------- ------ ----------- ------
Total delinquencies $ 32,684 10.41% $ 27,984 9.32%
=========== ====== =========== ======
REO $ 5,408 $ 4,530
=========== ===========
Home Equity Loans
Total managed portfolio $ 2,336,007 $ 2,223,429
=========== ===========
Period of delinquency:
31-60 days $ 29,477 1.26% $ 16,227 .73%
61-90 days 23,519 1.01 14,329 .64
Over 90 days 58,681 2.51 47,325 2.13
----------- ------ ----------- ------
Total delinquencies $ 111,677 4.78% $ 77,881 3.50%
=========== ====== =========== ======
REO $ 24,662 $ 23,902
=========== ===========
Equipment Leases
Total managed portfolio $ 55,299 $ 65,774
=========== ===========
Period of delinquency:
31-60 days $ 1,179 2.13% $ 595 .90%
61-90 days 530 0.96 206 .31
Over 90 days 700 1.27 347 .53
----------- ------ ----------- ------
Total delinquencies $ 2,409 4.36% $ 1,148 1.74%
=========== ====== =========== ======
Combined
Total managed portfolio $ 2,705,382 $ 2,589,395
=========== ===========
Period of delinquency:
31-60 days $ 33,282 1.23% $ 20,282 .78%
61-90 days 27,149 1.00 16,372 .63
Over 90 days 86,339 3.19 70,359 2.72
----------- ------ ----------- ------
Total delinquencies $ 146,770 5.42% $ 107,013 4.13%
=========== ====== =========== ======
REO $ 30,070 1.11% $ 28,432 1.10%
=========== ====== =========== ======
Losses experienced during the
three month period(a)(b) :
Loans $ 2,644 0.41% $ 4,168 .68%
====== ======
Leases 118 0.83% 61 .37%
----------- ====== ----------- ======
Total managed
portfolio $ 2,762 0.42% $ 4,229 .68%
=========== ====== =========== ======
March 31, 2001
------------------------
Delinquency by Type Amount %
----------- ------
Business Purpose Loans
Total managed portfolio $ 281,824
===========
Period of delinquency:
31-60 days $ 2,057 .73%
61-90 days 2,502 .89
Over 90 days 16,131 5.72
----------- ------
Total delinquencies $ 20,690 7.34%
=========== ======
REO $ 4,353
===========
Home Equity Loans
Total managed portfolio $ 2,075,899
===========
Period of delinquency:
31-60 days $ 10,881 .52%
61-90 days 12,185 .59
Over 90 days 40,997 1.98
----------- ------
Total delinquencies $ 64,063 3.09%
=========== ======
REO $ 21,760
===========
Equipment Leases
Total managed portfolio $ 77,792
===========
Period of delinquency:
31-60 days $ 554 .71%
61-90 days 215 .28
Over 90 days 553 .71
----------- ------
Total delinquencies $ 1,322 1.70%
=========== ======
Combined
Total managed portfolio $ 2,435,515
===========
Period of delinquency:
31-60 days $ 13,492 .55%
61-90 days 14,902 .61
Over 90 days 57,681 2.37
----------- ------
Total delinquencies $ 86,075 3.53%
=========== ======
REO $ 26,113 1.07%
=========== ======
Losses experienced during the
three month period(a)(b) :
Loans $ 2,448 .43%
======
Leases 445 2.30%
----------- ======
Total managed
portfolio $ 2,893 .49%
=========== ======
(a) Percentage based on annualized losses and average managed
portfolio.
(b) Losses recorded on our books were $0.9 million ($0.6 million from
charge-offs through the provision for loan losses and $0.3 million
for write downs of real estate owned) and losses absorbed by loan
securitization trusts were $1.9 million for the three months ended
September 30, 2001. Losses recorded on our books were $2.7 million
($1.8 million from charge-offs through the provision for loan
losses and $0.9 million for write downs of real estate owned) and
losses absorbed by loan securitization trusts were $1.5 million
for the three months ended June 30, 2001. Losses recorded on our
books were $2.3 million ($1.4 million from charge-offs through the
provision for loan losses and $0.9 million for write downs of real
estate owned) and losses absorbed by loan securitization trusts
were $0.6 million for the three months ended March 31, 2001.
Losses recorded on our books include losses for loans we hold as
available for sale or real estate owned and loans repurchased from
securitization trusts.
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES
LOAN AND LEASE ORIGINATIONS
(in thousands)
Three Months Ended
September 30,
----------------------
2001 2000
-------- --------
American Business Credit $ 29,624 $ 29,854
Upland Mortgage / ABMS 289,425 281,060
-------- --------
Total Company $319,049 $310,914
======== ========
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