ABFS Reports Loss in Fiscal Quarter

American Business Financial Services Inc., Philadelphia, lost $26.3 million or $8.91 per share in its first fiscal quarter of 2004.This compares to profits of $1.8 million or $0.61 for the same three months in fiscal year 2003. Its current situation is a continuation of problems that developed in the company's fourth fiscal quarter of 2003. Albert W. Mandia, executive vice president and chief financial officer said, "the quarterly loss was primarily due to liquidity issues which substantially reduced our ability to originate loans and generate revenues, our inability to complete a securitization of loans during the quarter and $10.8 million of pre-tax non-cash charges for valuation adjustments on our securitization assets charged to the income statement." As the company shifts its strategy from doing large publicly underwritten securitizations to whole loan sales and smaller privately placed securitizations, ABFS will take operating losses until the third fiscal quarter of 2004, he continued. A cut in warehouse capacity affected originations, as ABFS did only $124.1 million for the three months ended Sept. 30, 2004, compared with $370.7 million the same prior year period. ABFS only had $147.0 million in warehouse credit to draw upon in the third quarter. It entered into arrangements for $450 million more of credits in October. But to be profitable again, ABFS believes it needs quarterly volume of between $700 million and $800 million. The report was issued after the stock market closed on Nov. 5. On that day, ABFS common closed at $5.08 per share on Nasdaq. As of 11:35 a.m. on Nov. 6, it was down to $4.17 per share.