<PAGE>
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____
Commission File Number: 0-22474
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AMERICAN BUSINESS FINANCIAL SERVICES, INC.
------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 87-0418807
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 Presidential Boulevard, Bala Cynwyd, PA 19004
- - ------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(610) 668-2440
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As of May 1, 1998, there were 3,523,406 shares of the registrants Common Stock
issued and outstanding.
Transitional Small Business Disclosure Format Yes No X
--- ---
<PAGE>
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES
FORM 10-QSB - March 31, 1998
INDEX
Page
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets........................................2
Consolidated Statements of Operations..............................3
Consolidated Statement of Stockholders' Equity.....................4
Consolidated Statements of Cash Flows..............................5
Notes to Consolidated Financial Statements.........................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................9
Part II Other Information.................................................17
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1- FINANCIAL STATEMENTS
- - ----------------------------
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
----- ----
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 4,474,423 $ 5,013,936
Loans and lease receivables - net
Available for sale 93,786,406 35,711,821
Other 4,054,079 1,143,566
Other receivables 79,997,521 39,644,161
Prepaid expenses 5,346,234 1,181,654
Property and equipment - net 6,290,498 2,863,345
Other assets 35,268,037 18,430,049
------------ ------------
Total assets $229,217,198 $103,988,532
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Debt $162,226,525 $ 56,486,229
Accounts payable and accrued expenses 13,586,113 6,081,630
Deferred income taxes 7,780,330 4,630,981
Other liabilities 6,266,674 5,877,664
------------ ------------
Total liabilities 189,859,642 73,076,504
------------ ------------
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 and outstanding 3,523,406 at March 31, 1998 and
3,503,166 at June 30, 1997 3,523 3,503
Additional paid-in capital 23,255,957 22,669,477
Retained earnings 16,698,108 8,839,080
------------ ------------
39,957,588 31,512,060
Less note receivable 600,032 600,032
------------ ------------
Total stockholders' equity 39,357,556 30,912,028
------------ ------------
Total liabilities and stockholders' equity $229,217,198 $103,988,532
============ ============
</TABLE>
See notes to consolidated financial statement.
2
<PAGE>
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------ ------------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Gain on sale of loans $10,427,033 $ 7,107,645 $25,532,711 $14,963,089
Interest and fees 4,224,584 1,528,358 11,603,658 3,891,642
Servicing income 581,007 196,160 1,416,131 491,942
Other income 36,906 4,382 154,775 18,513
----------- ----------- ----------- -----------
Total Revenue 15,269,530 8,836,545 38,707,275 19,365,186
----------- ----------- ----------- -----------
EXPENSES
Interest 3,035,427 1,451,126 7,971,728 3,601,969
Provision for credit losses 296,614 18,335 460,487 41,185
Payroll and related costs 1,795,656 556,796 3,662,856 1,077,845
Sales and marketing 2,811,446 2,402,856 8,185,052 5,249,393
General and administrative 2,126,662 1,099,801 6,093,380 2,547,753
----------- ----------- ----------- -----------
Total Expenses 10,065,805 5,528,914 26,373,503 12,518,145
----------- ----------- ----------- -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 5,203,725 3,307,631 12,333,772 6,847,041
PROVISION FOR INCOME TAXES 1,892,604 1,157,382 4,316,820 2,396,464
----------- ----------- ----------- -----------
NET INCOME $ 3,311,121 $ 2,150,249 $ 8,016,952 $ 4,450,577
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE
Basic $ 0.94 $ 0.73 $ 2.28 $ 1.75
=========== =========== =========== ===========
Diluted $ 0.90 $ 0.69 $ 2.19 $ 1.66
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED MARCH 31, 1998
--------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
-------------------------
Additional Total
Number of Paid-In Retained Notes Stockholders'
Shares Amount Capital Earnings Receivable Equity
------ ------ ------- -------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE 3,503,166 $3,503 $22,669,477 $ 8,839,080 $ (600,032) $30,912,028
July 1, 1997
Cash dividends
($.045 per (157,924) (157,924)
share)
Shares issued for
Acquisition 20,240 20 499,980 500,000
Non-employee
Options 86,500 86,500
Net income 8,016,952 8,016,952
--------- ------ ----------- ----------- ---------- -----------
BALANCE
March 31, 1998 3,523,406 $3,523 $23,255,957 $16,698,108 $ (600,032) $39,357,556
========= ====== =========== =========== ========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
AMERICAN BUSINESS FINANCIAL SERVICES, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------------------------
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities
Net Income $ 8,016.952 $ 4,450,577
Adjustments to reconcile net income to net
cash used in operating activities
Gain on sales of loans/leases (29,976,347) (15,666,664)
Amortization of origination fees and costs 61,661 267,576
Amortization of deferred servicing rights 1,000,440 295,101
Amortization of goodwill 522,762 --
Amortization of deferred expenses 54,409 --
Amortization of financing and organization costs 529,291 441,329
Depreciation and amortization of
property and equipment 1,015,439 356,647
Provision for credit losses 2,193,762 723,000
Accounts written off (351,755) (50,064)
Loans originated for sale (233,617,709) (89,228,069)
Proceeds of loans and leases sold 204,996,008 87,167,675
Increase in accrued interest and fees on
loan and lease receivables (1,479,893) (932,781)
Decrease in other receivables 3,717,280 316,211
Increase in prepaid expenses (3,453,057) (1,768,660)
Decrease (increase) in other assets (439,115) 256,072
Increase in accounts payable and accrued expenses 7,221,715 3,206,214
Increase in deferred income taxes 2,250,143 2,396,020
Increase in other liabilities 246,262 2,246,961
------------ ------------
Net cash used in operating activities (37,491,752) (5,522,855)
------------ ------------
Cash flows from investing activities
Leases originated for portfolio (47,436,330) (6,154,282)
Loan and lease payments received 8,768,823 3,297,512
Purchase of property and equipment (3,045,353) (1,017,551)
Decrease in securitization gain receivable 2,336,268 --
Principal receipts on investments 313,731 56,868
Initial overcollateralization of loans (3,575,000) (3,450,000)
Purchase of subsidiary (11,000,000) --
Cash acquired upon purchase of subsidiary 1,414,905 --
Sale of investments 5,000,000 --
------------ ------------
Net cash used in investing activities (47,222,956) (7,267,453)
------------ ------------
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
--------------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from financing activities
Financing costs incurred (1,186,052) (761,249)
Net proceeds of (principal payments on)
revolving lines of credit 47,733,006 (2,348,465)
Record fair value options granted 86,500 --
Dividends paid (157,924) (105,892)
Principal payments on capital lease obligation (73,061) --
Principal payments on note payable, other -- (18,459)
Proceeds from issuance of subordinated debentures 57,151,885 22,731,381
Principal payments on subordinated debentures (7,012,877)
(19,379,159)
Proceeds of public offering-net of related costs -- 20,738,928
------------ ------------
Net cash provided by financing activities 84,175,195 33,223,367
------------ ------------
Net increase (decrease) in cash and cash equivalents (539,513) 20,433,059
Cash and cash equivalents, beginning of period 5,013,936 5,345,269
------------ ------------
Cash and cash equivalents, end of period $ 4,474,423 $ 25,778,328
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 7,287,823 $ 2,193,098
------------ ------------
Income taxes $ 50,000 $ --
------------ ------------
Noncash transaction recorded in connection with the sale of
loans receivable
Increase in other receivables, securitization gains $ 38,912,802 $ 15,877,367
Increase in other assets
Foreclosed real estate held for sale -- 134,280
Other holdings held for sale -- 131,617
Transfer from loans and leases, other -- 479,019
Mortgage servicing rights 7,264,453 4,814,850
------------ ------------
$ 46,177,255 $ 21,437,133
------------ ------------
Noncash transactions recorded in connection with
reclassification of loan and lease receivable
Increase in loans receivable-other $ 18,500 $ --
------------ ------------
Increase in other assets $ (1,012,433) $ --
------------ ------------
Decrease in debt $ (593,074) $ --
------------ ------------
Decrease in other receivables $ (206,300) $ --
------------ ------------
Noncash transactions recorded in connection with the purchase
of wholly-owned subsidiary
Stock issued 500,000 --
Goodwill 5,597,766 --
------------ ------------
$ 6,097,766 $ --
------------ ------------
</TABLE>
6
<PAGE>
AMERICAN BUSINESS FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements are unaudited and
include the accounts of American Business Financial Services, Inc.
(ABFS) and its direct and indirect wholly-owned subsidiaries,
collectively the "Company". The results of operations of New Jersey
Mortgage and Investment Corp. and Subsidiaries are included effective
October 1, 1997, the date of acquisition. All significant inter-company
transactions and balances have been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly,
they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the interim
periods are not necessarily indicative of financial results for the
full year. These unaudited consolidated financial statements should be
read in conjunction with the audited consolidated financial statements
and notes thereto included in the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1997. The year-end balance
sheet data was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting
principles.
2. ACQUISITION
Effective October 1, 1997, the Company acquired all of the issued and
outstanding stock of New Jersey Mortgage and Investment Corp.
("NJMIC"), a mortgage and leasing company based in Roseland, New
Jersey. The purchase price for the stock consisted of an initial
payment of $11.0 million and issuance of 20,240 shares of ABFS common
stock, and includes contingent payments of up to $9.0 million in the
future if NJMIC achieves certain performance targets. On October 1,
1997, NJMIC had total assets of $18.5 million, liabilities of $18.7
million, including subordinated debt of $9.9 million, and stockholders'
deficit of $200,000. The acquisition of NJMIC was accounted for using
the purchase method of accounting and accordingly, the purchase price
was allocated to assets acquired and liabilities assumed based on the
fair values at the date of acquisition. The fair value of NJMIC's
assets approximated the liabilities assumed and accordingly, the
majority of the purchase price was recorded as goodwill. Any contingent
payments will result in an increase in the amount of recorded goodwill.
7
<PAGE>
3. DEBT
Debt is summarized as follows:
Warehouse lines of credit $ 54,714,917
Subordinated debentures (a) 94,035,332
Subordinated debentures (b) 491,722
Subordinated debentures (c) 6,586,800
Senior subordinated note (d) 3,000,000
Notes payable - acquisition 3,025,594
Capitalized lease obligations 372,160
-------------
$ 162,226,525
=============
(a) Represents aggregate net sales made pursuant to public
offerings of debentures. These debentures mature during the
period of April 1998 through March 2008 and are subordinate to
all of the Company's senior indebtedness.
(b) Represents aggregate net sales made pursuant to a prior public
offering of debentures by a subsidiary. These debentures
mature during the period April 1998 through October 1998 and
are subordinate to all of the Company's senior indebtedness.
Payment of principal and interest is guaranteed by ABC but
such guarantee is subordinate to ABC's senior indebtedness.
(c) Represents aggregate sales made pursuant to a prior private
offering of debentures by NJMIC. These debentures mature
during the period April 1998 through May 2002 and are
subordinate to all of the Company's indebtedness.
(d) Represents a senior subordinated note due July 1, 2002 and is
subordinate to all of NJMIC's senior indebtedness.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
-------------------------
The following information should be read in conjunction with the
Company's Consolidated Financial Statements and the accompanying notes thereto
included in Item 1 of this Quarterly Report, and the financial statements and
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's Annual Report on Form
10-KSB for the year ended June 30, 1997.
FORWARD LOOKING STATEMENTS
- - --------------------------
When used in this Quarterly Report on Form 10-QSB, the words or phrases
"will likely result," "are expected to," "will continue," "is anticipated," "is
planned", "estimate," "projected," or similar expressions are intended to
identify "forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties, including, but not limited to, changes in interest
rates, the Company's dependence on debt financing and securitizations to fund
operations, the Company's ability to implement its growth strategy and
fluctuations in operating results. Such factors, which are discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinion or statements expressed herein with respect to future periods. As a
result, the Company wishes to caution readers not to place undue reliance on any
such forward looking statements, which speak only as of the date made.
GENERAL
- - -------
ABFS is a financial services company operating primarily in the eastern
region of the United States. The Company, through its principal direct and
indirect subsidiaries, originates, sells and services loans to businesses
secured by real estate and other business assets ("Business Purpose Loans"),
non-conforming mortgage loans typically to credit impaired borrowers, secured by
first and second mortgages on single-family residences ("Home Equity Loans") and
conforming and jumbo loans secured by first mortgages on one-to four-unit
residential properties ("First Mortgage Loans"). The Company also originates
small ticket leases and, to a lesser extent, middle market leases for the
acquisition of business equipment ("Equipment Leases").
ACQUISITION
- - -----------
Effective October 1, 1997, the Company acquired all of the issued and
outstanding stock of New Jersey Mortgage and Investment Corp. ("NJMIC"), a
mortgage and leasing company based in Roseland, New Jersey. The purchase price
for the stock consisted of an initial payment of $11.0 million and issuance of
20,240 shares of ABFS common stock, and includes contingent payments of up to
$9.0 million in the future if NJMIC achieves certain performance targets. On
October 1, 1997, NJMIC had total assets of $18.5 million, liabilities of $18.7
million, including subordinated debt of $9.9 million, and stockholders' deficit
of $200,000. The acquisition of NJMIC was accounted for using the purchase
method of accounting and accordingly, the purchase price was allocated to assets
acquired and liabilities assumed based on the fair values at the date of
acquisition. The fair value of NJMIC's assets approximated the liabilities
assumed and accordingly, the majority of the purchase price was recorded as
goodwill. Any contingent payments will result in an increase in the amount of
recorded goodwill.
9
<PAGE>
NJMIC is a diversified residential lender, which directly and through
its subsidiary offers a range of loan and lease products, including Home Equity
Loans, First Mortgage Loans and Equipment Leases. Historically, NJMIC originated
loans for sale to third parties with servicing released. The Company intends
that NJMIC will continue to originate First Mortgage Loans for sale in the
secondary market and that the majority of Home Equity Loans originated by NJMIC
will be securitized and sold pursuant to the Company's current securitization
program. NJMIC originates real estate secured loans in 15 states. Such loans are
originated through NJMIC's eight state network of six branch sales offices and
three satellite offices. Home Equity Loan customers primarily include
credit-impaired borrowers, while borrowers on First Mortgage Loans are generally
borrowers with favorable credit histories.
Through its subsidiary, Federal Leasing Corp. ("FLC"), NJMIC originates
Equipment Leases throughout the United States. Such leases are generally sold
through securitizations with servicing retained. The Company intends to continue
to securitize these leases in the future subject to economic and market
conditions.
BALANCE SHEET INFORMATION
- - -------------------------
Total assets increased $125.2 million, or 120.4%, to $229.2 million at
March 31, 1998 from $104.0 million at June 30, 1997 due primarily to increases
in loans and leases available for sale, other receivables and other assets.
Loans and leases available for sale increased net $58.1 million, or
162.7%, from $35.7 million at June 30, 1997 to $93.8 million at March 31, 1998
representing $304.9 million of loan and lease originations, of which $97.3
million was originated by NJMIC, partially offset by sales and securitizations
of loans and leases of $.
Interest only and residual strips created in connection with the
Company's securitizations, the primary component of other receivables, increased
$39.1 million, or 104.2%, to $76.6 million at March 31, 1998 from $37.5 million
at June 30, 1997 as the Company completed $205.0 million in loan
securitizations. Other assets increased $16.9 million, or 91.8%, to $35.3
million at March 31, 1998 from $18.4 million at June 30, 1997 due primarily to
the recording of $15.7 million of goodwill in connection with the acquisition of
NJMIC and to a net increase in mortgage servicing rights of $6.3 million
obtained in connection with the Company's loan securitizations, offset by a $5.0
million decrease in investments held for sale.
Total liabilities increased $116.8 million, or 159.8%, to $189.9
million at March 31, 1998 from $73.1 million at June 30, 1997 due primarily to
an increase in outstanding debt and to a lesser extent, increases in accounts
payable and accrued expenses and deferred income taxes. The increase in debt of
$105.7 million was due to net sales of subordinated debt, utilization of the
Company's warehouse lines and other debt incurred in connection with the
acquisition of NJMIC. At March 31, 1998, the Company had $104.1 million of
subordinated debt outstanding, including $9.6 million assumed in connection with
the acquisition of NJMIC. The Company maintains two warehouse facilities for a
total of $160.0 million, of which $54.7 million was drawn upon at March 31,
1998. The Company's ratio of total debt to equity at March 31, 1998 was 4.1:1
compared to 1.8:1 at June 30, 1997. See "Liquidity and Capital Resources."
Accounts payable and accrued expenses increased $7.5 million, or
123.0%, to $13.6 million at March 31, 1998 from $6.1 million at June 30, 1997
due to growth in the Company's lending and leasing activities resulting in
larger accruals for interest expense and other operating expenses. Deferred
income taxes increased $3.2 million, or 70.0%, to $7.8 million at March 31, 1998
from $4.6 million at June 30, 1997 due to tax accruals on the Company's
10
<PAGE>
income for the nine months ended March 31, 1998.
Stockholders' equity increased $8.4 million to $39.4 million at March
31, 1998 from $30.9 million at June 30, 1997 due to net income of $8.0 million
for the nine months ended March 31, 1998 and the issuance of $500,000 of ABFS
common stock in connection with the purchase of NJMIC, partially offset by
dividends paid of $158,000.
Results of Operations
During the nine months ended March 31, 1998, the Company experienced
record levels of total revenues and net income as a result of increases in
originations and the dollar amount of loans securitized.
The Company's securitization strategy requires the Company to build an
inventory of loans over time. As a result, the Company may experience
fluctuations in operating results as a consequence of incurring costs and
expenses in a fiscal period prior to the fiscal period in which the
securitization is consummated. As such, the results of operations for a given
period may not be indicative of results for subsequent comparable periods. In
addition, as a result of the Company's securitization strategy, the Company may
operate on a negative operating cash flow basis, which could negatively impact
the Company's results of operations during such periods.
The Company's growth strategy is dependent upon its ability to increase
its loan volume through geographic expansion and further penetration of its
existing markets. The implementation of this strategy will depend in large part
on a variety of factors outside the control of the Company, including, but not
limited to, the Company's ability to obtain adequate financing on favorable
terms, profitably securitize its loans on a regular basis and continue to expand
in the face of increasing competition. The failure of any of these factors could
impair the Company's ability to successfully implement its growth strategy,
which could adversely affect the Company's results of operations and financial
condition.
Total Revenues. Total revenues increased $19.3 million, or 99.5%, to
$38.7 million for the nine months ended March 31, 1998 from $19.4 million for
the nine months ended March 31, 1997. Total revenues increased $6.5 million, or
73.9%, to $15.3 million for the three months ended March 31, 1998 from $8.8
million for the three months ended March 31, 1997. The increases in total
revenues were the result of gains on sales of loans through securitization as
well as an increase in interest and fees earned due to growing levels of loan
and lease production.
Gain on Sale of Loans. Gain on sale of loans increased $10.5 million,
or 70.0%, to $25.5 million for the nine months ended March 31, 1998 from $15.0
million for the nine months ended March 31, 1997. Gain on sale of loans
increased $3.3 million, or 46.5%, to $10.4 million for the three months ended
March 31, 1998 from $7.1 million for the three months ended March 31, 1997. The
increases were the result of sales of $39.1 million of Business Purpose Loans
and $165.9 million of Home Equity Loans through securitizations in September
1997 and March 1998, as compared to the sale of $29.3 million of Business
Purpose Loans and $57.9 million of Home Equity Loans through securitizations in
September 1996 and March 1997. During the nine months ended March 31, 1998, the
Company recognized a gain of $25.1 million (representing the fair value of the
interest only and residual strips of $30.3 million less $5.2 million of costs
associated with the transaction) on the Company's funding of the $205.0 million
of loans sold pursuant to the securitizations described above.
Interest and Fees. Interest and fee income increased $7.7 million, or
197.4%, to $11.6 million for the nine
11
<PAGE>
months ended March 31, 1998 from $3.9 million for the nine months ended March
31, 1997. Interest and fee income increased $2.7 million, or 18.0%, to $4.2
million for the three months ended March 31, 1998 from $1.5 million for the
three months ended March 31, 1997. The increases in interest and fee income were
the result of an increase in the amount of loans and leases originated and
retained in the Company's portfolio prior to securitization.
Interest income consists primarily of interest income the Company earns
on loans and leases held in its portfolio. Interest income increased $3.8
million, or 115.2%, to $7.1 million for the nine months ended March 31, 1998
from $3.3 million for the nine months ended March 31, 1997. Interest income
increased $1.3 million, or 92.9%, to $2.7 million for the three months ended
March 31, 1998 from $1.4 million for the three months ended March 31, 1997. The
increases were attributable to increased originations of Business Purpose Loans,
Home Equity Loans and Equipment Leases. Of the increases noted, $2.1 million and
$1.0 million were attributable to loans and leases originated by NJMIC during
the nine months and three months ended March 31, 1998, respectively.
During the nine months ended March 31, 1998, the Company originated
approximately $37.8 million of Business Purpose Loans, $224.3 million of Home
Equity Loans, and $44.8 million of Equipment Leases. During the nine months
ended March 31, 1997, the Company originated $27.6 million of Business Purpose
Loans, $57.8 million of Home Equity Loans, and $5.6 million of Equipment Leases.
During the three months ended March 31, 1998, the Company originated
approximately $14.6 million of Business Purpose Loans, $102.5 million of Home
Equity Loans, and $22.0 million of Equipment Leases. During the three months
ended March 31, 1997, the Company originated $9.8 million of Business Purpose
Loans, $27.6 million of Home Equity Loans, and $1.8 million of Equipment Leases.
Fee income, includes primarily premium and points earned when loans are
closed, funded and immediately sold to unrelated third party purchasers and
ancillary fees collected on loan originations. Fee income increased $3.9
million, or 650.0%, to $4.5 million for the nine months ended March 31, 1998
from $600,000 for the nine months ended March 31, 1997. Fee income increased
$1.2 million, or 400.0%, to $1.5 million for the three months ended March 31,
1998 from $300,000 for the three months ended March 31, 1997. The increases in
fee income, of which $2.1 million is attributable to NJMIC, were due to an
increase in ancillary fees collected in connection with increased loan
originations.
Servicing Income. Servicing income increased $900,000 or 180.0%, to
$1.4 million for the nine months ended March 31, 1998 from $500,000 for the nine
months ended March 31, 1997. Servicing income increased $400,000 or 200.0% to
$600,000 for the three months ended March 31, 1998 from $200,000 for the three
months ended March 31, 1997. The increase was the result of the increase in the
Company's loan and lease portfolio serviced from $138.0 million at March 31,
1997 to $441.7 million at March 31, 1998.
Total Expenses. Total expenses increased $13.9 million, or 111.2%, to
$26.4 million for the nine months ended March 31, 1998 from $12.5 million for
the nine months ended March 31, 1997. Total expenses increased $4.6 million, or
83.6%, to $10.1 million for the three months ended March 31, 1998 from $5.5
million for the three months ended March 31, 1997. As described in more detail
below, these increases were a result of increased interest attributable to the
Company's continued sale of subordinated debt and increases in payroll, sales
and marketing and general and administrative expenses related to increased loan
and lease originations. Of the
12
<PAGE>
increases noted, $4.5 million and $3.2 million were attributable to expenses of
NJMIC for the nine months and three months ended March 31, 1998, respectively.
Interest Expense. Interest expense increased $4.4 million, or 122.2%,
to $8.0 million for the nine months ended March 31, 1998 from $3.6 million for
the nine months ended March 31, 1997. Interest expense increased $1.5 million,
or 100.0%, to $3.0 million for the three months ended March 31, 1998 from $1.5
million for the three months ended March 31, 1997. The increases were primarily
attributable to an increase in the amount of the Company's subordinated debt
outstanding during the periods, the proceeds of which were used to fund the
Company's increased loan and lease originations and the purchase of NJMIC, and
to increased utilization of warehouse facilities. Average subordinated debt
outstanding was $92.1 million during the nine months ended March 31, 1998
compared to $41.5 million during the nine months ended March 31, 1997. Average
interest rates paid on the subordinated debt increased to 9.42% from 9.04% for
the comparable nine month periods as a result of the higher rates offered during
the first three quarters of fiscal 1998 in order to attract additional funds and
higher rate subordinated debt acquired through the purchase of NJMIC. Interest
expense on lines of credit utilized by the Company for the nine months ended
March 31, 1998 was $2.4 million, compared to $504,000 for the nine months ended
March 31, 1997. The increase was due to the higher utilization of warehouse
lines of credit to fund loan and lease originations.
Provision for Credit Losses. The Company maintains an allowance for
credit losses based upon management's estimate of the expected collectibility of
loans and leases outstanding based upon a variety of factors, including, but not
limited to, economic conditions and credit and collateral considerations.
Although the Company maintains its allowance for credit losses at the level it
considers adequate to provide for potential losses, there can be no assurances
that actual losses will not exceed the estimated amounts or that additional
provisions will not be required. The allowance is increased through the
provision for credit losses. The Company had an allowance for credit losses of
$4.5 million at March 31, 1998 as compared to $1.8 million at June 30, 1997. The
provision for credit losses was $2.2 million (including a $460,000 provision
related to the Company loan and lease portfolio and a $1.8 million provision
related to the Company's securitizations) for the nine months ended March 31,
1998 as compared to $723,000 (including a $41,000 provision related to the
Company's loan and lease portfolio and a $682,000 provision related to the
Company's securitizations) for the nine months ended March 31, 1997. The ratio
of the allowance for credit losses to net loan and lease receivables serviced
was 1.00% at March 31, 1998 and at June 30, 1997. Total delinquencies were $13.5
million at March 31, 1998 as compared to $3.8 million at June 30, 1997. The
Company's loans and leases delinquent more than 30 days as a percentage of the
total portfolio serviced (the "delinquency rate") was 3.06% at March 31, 1998 as
compared to 2.15% at June 30, 1997. The increase in the delinquency rate was
attributable to the maturation of the Company's total managed portfolio which
was $441.7 million at March 31, 1998 and $176.7 million at June 30, 1997.
Payroll and Related Costs. Payroll and related costs increased $2.6
million, or 236.4%, to $3.7 million for the nine months ended March 31, 1998
from $1.1 million for the nine months ended March 31, 1997. Payroll and related
costs increased $1.2 million, or 215.4%, to $1.8 million for the three months
ended March 31, 1998 from $557,000 for the three months ended March 31, 1997.
The increases were due to an increase in the number of non-loan originating
employees as a result of the Company's growth in loan and lease originations,
including production by NJMIC, as well as an increase in loans and leases
serviced. Management anticipates that these expenses will continue to increase
in the future as the Company's expansion continues.
Sales and Marketing Expenses. Sales and marketing expenses increased
$3.0 million, or 57.7%, to $8.2
13
<PAGE>
million for the nine months ended March 31, 1998 from $5.2 million for the nine
months ended March 31, 1997. Sales and marketing expenses increased $400,000, or
16.7%, to $2.8 million for the three months ended March 31, 1998 from $2.4
million for the three months ended March 31, 1997. The increases were
attributable to greater usage of newspaper, direct mail and television
advertising related to the Company's originations of Home Equity Loans, Business
Purpose Loans and Equipment Leases. Subject to market conditions, the Company
plans to continue to expand its service area throughout the eastern United
States. As a result, it is anticipated that sales and marketing expenses will
continue to increase in the future.
General and Administrative Expenses. General and administrative
expenses increased $3.6 million, or 144.0%, to $6.1 million for the nine months
ended March 31, 1998 from $2.5 million for the nine months ended March 31, 1997.
General and administrative expenses increased $1.0 million, or 90.9%, to $2.1
million for the three months ended March 31, 1998 from $1.1 million for the
three months ended March 31, 1997. The increases were primarily attributable to
increases in rent, telephone, office expense, professional fees and other
expenses incurred as a result of previously discussed increases in loan and
lease originations and servicing experienced during fiscal 1998.
Income Taxes. Income taxes increased $1.9 million, or 79.2%, to $4.3
million for the nine months ended March 31, 1998 from $2.4 million for the nine
months ended March 31, 1997. Income taxes increased $700,000, or 58.3%, to $1.9
million for the three months ended March 31, 1998 from $1.2 million for the
three months ended March 31, 1997. The increases were due to increases in income
before taxes.
Net Income. Net income increased $5.5 million, or 80.9%, to $12.3
million for the nine months ended March 31, 1998 from $6.8 million for the nine
months ended March 31, 1997. Basic earnings per common share increased to $2.28
on weighted average common shares outstanding of 3,514,690 for the nine months
ended March 31, 1998 compared to $1.75 per share on weighted average common
shares outstanding of 2,550,429 for the nine months ended March 31, 1997. Fully
diluted earnings per common share increased to $2.19 on weighted average common
shares outstanding of 3,667,646 for the nine months ended March 31, 1998
compared to $1.66 per share on weighted average common shares outstanding of
2,676,513 for the nine months ended March 31, 1997.
Net income increased $1.1 million, or 50.0%, to $3.3 million for the
three months ended March 31, 1998 from $2.2 million for the three months ended
March 31, 1997. Basic earnings per common share increased to $.94 on weighted
average common shares outstanding of 3,523,406 for the three months ended March
31, 1998 compared to $.73 per share on weighted average common shares
outstanding of 2,953,722 for the three months ended March 31, 1997. Fully
diluted earnings per common share increased to $.90 on weighted average common
shares outstanding of 3,688,516 for the three months ended March 31, 1998
compared to $.69 per share on weighted average common shares outstanding of
3,095,815 for the three months ended March 31, 1997.
The increase in weighted average shares outstanding is primarily
attributable to an underwritten public offering of 1,150,000 shares of the
Company's common stock during the third quarter of fiscal 1997.
LIQUIDITY AND CASH RESOURCES
- - ----------------------------
The Company continues to fund its loans principally through (i) the
securitization and sales of loans which it originates, (ii) the sale of the
Company's registered subordinated debentures, (iii) institutional debt
financing, and (iv) retained earnings. In addition the Company has utilized the
capital market to sell additional common
14
<PAGE>
stock. The Company's cash requirements include the funding of loan originations,
payment of interest expense, funding of over-collaterization requirements in
connection with its securitizations, operating expenses and capital
expenditures.
To a limited extent, the Company presently intends to continue to
augment the interest and fee income it earns on its loan and lease portfolios,
from time to time, by selling loans either at the time of origination or from
its portfolio to unrelated third parties. These transactions also create
additional liquid funds available for lending activities.
The Company continues to rely significantly on securitizations to
generate cash proceeds for the repayment of debt and to fund its ongoing
operations. As a result of the terms of the securitizations, the Company will
receive less cash flow from the portfolios of loans securitized than it would
otherwise receive absent securitizations. Additionally, pursuant to the terms of
the securitizations, the Company will act as the servicer of the loans and in
that capacity will be obligated to advance funds in certain circumstances which
may create greater demands on the Company's cash flow than either selling loans
or maintaining a portfolio of loans.
Subject to economic, market and interest rate conditions, the Company
intends to continue to implement additional securitizations of its loan
portfolios and may in the future securitize its lease portfolio. Any delay or
impairment in the Company's ability to securitize its loans, as a result of
market conditions or otherwise, could adversely affect the Company's results of
operations.
The Company also relies on borrowings such as its subordinated debt and
warehouse credit facilities or lines of credit to fund its operations. At March
31, 1998, the Company had a total of $104.1 million of subordinated debt
outstanding, including $9.6 million and $492,000 issued by NJMIC and American
Business Finance Corporation ("ABFC"), respectively, and available credit
facilities and lines of credit totaling $160.0 million, of which $54.7 million
was drawn upon at such date.
Effective October 1, 1997, ABFS assumed $9.9 million of subordinated
debt previously issued by NJMIC. Of this amount $9.6 million was outstanding at
March 31, 1998 and included maturity dates ranging from April 1998 to July 2002.
In addition, during the nine months ended March 31, 1998, ABFS sold $38.5
million in principal amount of subordinated debt (including redemptions and
repurchases by investors), pursuant to a registered public offering with
maturities ranging between one day and ten years. As of March 31, 1998 ABFS had
approximately $93.7 million of subordinated debt outstanding. The proceeds of
such sales of debt have been used to fund general operating and lending
activities. The Company intends to meet its obligation to repay such debt as it
matures with income generated through its lending activities and funds generated
from repayment of outstanding loans and through continued debt financing. The
repayment of such obligations should not adversely affect the Company's
operations.
The Company's subsidiaries have an aggregate $50.0 million Interim
Warehouse and Security Agreement with Prudential Securities Realty Funding
Corporation. In July 1997, the Company and certain of its subsidiaries obtained
a $110.0 million warehouse credit facility from a syndicate of banks led by
Chase Bank of Texas N. A. ("CBT"). The facility has a term of two years. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources" in the Company's Form 10-KSB for the
year ended June 30, 1997 (File No. 000-22474) for additional information on this
credit facility. At March 31, 1998, a total of $54.7 million of these credit
facilities was utilized.
15
<PAGE>
The Company is currently discussing the possibility of obtaining
additional lines of credit with other lenders and providers of credit.
As of March 31, 1998, the Company had $108.9 million of debt scheduled
to mature during the twelve months ending March 31, 1999 which was comprised of
maturing subordinated debt, warehouse facilities and other debt incurred in
connection with the acquisition of NJMIC. The Company currently expects to
refinance the maturing debt through extensions of maturing debt or new debt
financing and, if necessary, may retire the debt through cash flow from
operations and loan sales or securitizations. The Company intends to continue to
utilize debt financing to fund its operations in the future.
From time to time, the Company considers potential acquisitions of
related businesses or assets, which could have a material impact upon the
Company's results of operations and liquidity position.
The Company leases its corporate headquarters facilities under a
five-year operating lease expiring in January 2003 at a minimum annual rental of
approximately $700,000. The lease contains a renewal option for an additional
period at increased annual rental. The Company also leases a facility in
Roseland, New Jersey which functions as the loan production headquarters for
NJMIC and its subsidiaries at an annual rental cost of approximately $250,000.
The current lease term expires on July 31, 1998 and contains two renewal options
for additional terms of five years each at increased annual rental. In addition,
the Company leases branch offices on a short-term basis in various cities
throughout the United States. The leases for the branch offices are not material
to the Company's operations.
16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
(a) Exhibits
27.1 Financial Data Schedule
27.2 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.3 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.4 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.5 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.6 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.7 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.8 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
17
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
DATE: May 13, 1998 BY: /s/ David M. Levin
------------ -------------------------------------------------
David M. Levin
Senior Vice President and Chief Financial Officer
18
<PAGE>
Exhibit Index
Exhibit No. Description of Exhibit
----------- ----------------------
27.1 Financial Data Schedule
27.2 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.3 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.4 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.5 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.6 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.7 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
27.8 Financial Data Schedule restating EPS in light of the
implementation of FASB 128
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of American Business Financial Services, Inc.
and Subsidiaries as of March 31, 1998 and the nine months then ended and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,474,423
<SECURITIES> 0
<RECEIVABLES> 99,135,659
<ALLOWANCES> 1,295,174
<INVENTORY> 0
<CURRENT-ASSETS> 124,165,574
<PP&E> 10,110,385
<DEPRECIATION> 3,819,887
<TOTAL-ASSETS> 229,217,198
<CURRENT-LIABILITIES> 128,752,787
<BONDS> 0
0
0
<COMMON> 3,523
<OTHER-SE> 39,354,033
<TOTAL-LIABILITY-AND-EQUITY> 229,217,198
<SALES> 0
<TOTAL-REVENUES> 38,707,275
<CGS> 0
<TOTAL-COSTS> 26,373,503
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,193,762
<INTEREST-EXPENSE> 7,971,728
<INCOME-PRETAX> 12,333,772
<INCOME-TAX> 4,316,820
<INCOME-CONTINUING> 8,016,952
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,016,952
<EPS-PRIMARY> 2.28
<EPS-DILUTED> 2.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> $ 798,799
<SECURITIES> 0
<RECEIVABLES> 24,365,312
<ALLOWANCES> 421,829
<INVENTORY> 0
<CURRENT-ASSETS> 25,851,290
<PP&E> 2,048,641
<DEPRECIATION> 945,980
<TOTAL-ASSETS> 40,225,594
<CURRENT-LIABILITIES> 23,144,057
<BONDS> 0
<COMMON> 2,353
0
0
<OTHER-SE> 2,806,418
<TOTAL-LIABILITY-AND-EQUITY> 40,225,594
<SALES> 0
<TOTAL-REVENUES> 6,429,532
<CGS> 0
<TOTAL-COSTS> 5,100,272
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 305,634
<INTEREST-EXPENSE> 1,748,526
<INCOME-PRETAX> 1,023,626
<INCOME-TAX> 358,269
<INCOME-CONTINUING> 665,357
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 665,357
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRATION'S AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONSOLIDATED STATEMENTS AND THE NOTES THERETO.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 5,345,269
<SECURITIES> 0
<RECEIVABLES> 18,866,927
<ALLOWANCES> 707,424
<INVENTORY> 0
<CURRENT-ASSETS> 25,053,896
<PP&E> 2,271,756
<DEPRECIATION> 818,861
<TOTAL-ASSETS> 46,894,163
<CURRENT-LIABILITIES> 24,338,954
<BONDS> 0
0
0
<COMMON> 2,353
<OTHER-SE> 4,389,162
<TOTAL-LIABILITY-AND-EQUITY> 46,894,163
<SALES> 0
<TOTAL-REVENUES> 12,378,733
<CGS> 0
<TOTAL-COSTS> 8,576,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 681,228
<INTEREST-EXPENSE> 2,667,858
<INCOME-PRETAX> 3,120,663
<INCOME-TAX> 801,967
<INCOME-CONTINUING> 2,318,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,318,696
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of American Business Financial Services, Inc.
and Subsidiaries as of September 30, 1996 and the three months then ended and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,812,590
<SECURITIES> 0
<RECEIVABLES> 12,430,418
<ALLOWANCES> 956,982
<INVENTORY> 0
<CURRENT-ASSETS> 23,233,217
<PP&E> 2,503,539
<DEPRECIATION> 925,840
<TOTAL-ASSETS> 51,975,176
<CURRENT-LIABILITIES> 26,135,227
<BONDS> 0
0
0
<COMMON> 2,353
<OTHER-SE> 6,109,538
<TOTAL-LIABILITY-AND-EQUITY> 51,975,176
<SALES> 0
<TOTAL-REVENUES> 5,584,110
<CGS> 0
<TOTAL-COSTS> 3,806,201
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 300,000
<INTEREST-EXPENSE> 1,041,659
<INCOME-PRETAX> 1,777,709
<INCOME-TAX> 622,268
<INCOME-CONTINUING> 1,155,641
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,155,641
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of American Business Financial Services, Inc.
and Subsidiaries as of December 31, 1996 and the six months then ended and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 3,034,952
<SECURITIES> 0
<RECEIVABLES> 28,328,277
<ALLOWANCES> 1,049,089
<INVENTORY> 0
<CURRENT-ASSETS> 33,529,321
<PP&E> 2,802,110
<DEPRECIATION> 1,042,680
<TOTAL-ASSETS> 67,463,468
<CURRENT-LIABILITIES> 35,088,326
<BONDS> 0
0
0
<COMMON> 2,353
<OTHER-SE> 6,618,895
<TOTAL-LIABILITY-AND-EQUITY> 67,463,468
<SALES> 0
<TOTAL-REVENUES> 10,905,791
<CGS> 0
<TOTAL-COSTS> 7,366,381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 400,000
<INTEREST-EXPENSE> 2,150,843
<INCOME-PRETAX> 3,539,410
<INCOME-TAX> 1,239,082
<INCOME-CONTINUING> 2,300,328
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,300,328
<EPS-PRIMARY> .98
<EPS-DILUTED> .93
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN BUSINESS
FINANCIAL SERVICES, INC. AND SUBSIDIARIES AS OF MARCH 31, 1997 AND THE
NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 25,778,328
<SECURITIES> 0
<RECEIVABLES> 18,434,520
<ALLOWANCES> 1,380,360
<INVENTORY> 0
<CURRENT-ASSETS> 45,214,195
<PP&E> 3,289,304
<DEPRECIATION> 1,175,505
<TOTAL-ASSETS> 93,178,550
<CURRENT-LIABILITIES> 37,273,238
<BONDS> 0
0
0
<COMMON> 3,503
<OTHER-SE> 29,471,625
<TOTAL-LIABILITY-AND-EQUITY> 93,178,550
<SALES> 0
<TOTAL-REVENUES> 20,047,001
<CGS> 0
<TOTAL-COSTS> 13,199,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 723,000
<INTEREST-EXPENSE> 3,601,969
<INCOME-PRETAX> 6,847,041
<INCOME-TAX> 2,396,464
<INCOME-CONTINUING> 4,450,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,450,577
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.66
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN BUSINESS
FINANCIAL SERVICES, INC. AND SUBSIDIARIES AS OF JUNE 30, 1997 AND THE
YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,013,936
<SECURITIES> 0
<RECEIVABLES> 36,050,130
<ALLOWANCES> 338,309
<INVENTORY> 0
<CURRENT-ASSETS> 41,907,411
<PP&E> 4,215,201
<DEPRECIATION> 1,351,856
<TOTAL-ASSETS> 103,988,532
<CURRENT-LIABILITIES> 41,541,003
<BONDS> 0
0
0
<COMMON> 3,503
<OTHER-SE> 30,908,525
<TOTAL-LIABILITY-AND-EQUITY> 103,988,532
<SALES> 0
<TOTAL-REVENUES> 26,481,753
<CGS> 0
<TOTAL-COSTS> 17,480,066
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,154,666
<INTEREST-EXPENSE> 5,174,925
<INCOME-PRETAX> 9,001,687
<INCOME-TAX> 3,061,854
<INCOME-CONTINUING> 5,939,833
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,939,833
<EPS-PRIMARY> 2.13
<EPS-DILUTED> 2.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN BUSINESS FINANCIAL
SERVICES, INC. AND SUBSIDIARIES AS OF SEPTEMBER 30, 1997 AND THE THREE
MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
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