<PAGE>
Filed Pursuant to Rule 424(b)(3)
File No. 333-87333
--------------------------------------------------------------------------------
American Business Financial Services, Inc.
Rate Supplement
Investment Notes
Prospectus Supplement Dated October 23, 2000
American Business Financial Services, Inc.
---------------------------------------------------
TERM RATE YIELD*
---------------------------------------------------
3-5 mos. 8.00% 8.32%
6-11 mos. 9.00% 9.41%
12-17 mos. 10.70% 11.29%
15 mos. 11.00% 11.62%
18-23 mos. 10.35% 10.93%
24-29 mos. 10.45% 11.01%
30-35 mos. 11.50% 12.18%
36-47 mos. 10.85% 11.45%
48-59 mos. 11.15% 11.79%
60-119 mos. 11.75% 12.46%
120 mos. 12.00% 12.74%
---------------------------------------------------
Minimum for Investment Notes $100,000.
American Business Financial Services, Inc. is a NASDAQ listed Company (ABFI).
*The Effective Annual Yield assumes all interest remains invested for 365 days.
American Business Financial Services, Inc. is a publicly traded Company (NASDAQ,
ABFI). An offer can only be made by the Prospectus dated October 15, 1999
delivered in conjunction with this Rate Supplement dated October 23, 2000. See
"Risk Factors" in the Prospectus for a discussion of certain factors which
should be considered in connection with an Investment in the Notes. Interest is
compounded daily based on a 365-day year.
THE INVESTMENT NOTES AND MONEY MARKET NOTES REPRESENT OBLIGATIONS OF AMERICAN
BUSINESS FINANCIAL SERVICES, INC. AND ARE NOT CERTIFICATES OF DEPOSIT OR INSURED
OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. This announcement is
neither an offer to sell nor a solicitation of an offer to buy Subordinated
Investment Notes. This offer is made by prospectus only. The rates are available
through October 31, 2000. These rates are available to residents of the
following states: AK, AL, AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN,
KS, KY, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NH, NM, NV, NY, OH, OK, OR, RI,
SC, TN, TX, UT, VA, VT, WA, WI, WV, WY.
Updated Risks Related to the Offering of Debt Securities.
Since we have historically experienced negative cash flows from our operations
and expect to do so in the foreseeable future, our ability to repay the
investment notes could be impaired.
We have historically experienced negative cash flow from operations since
1996 primarily because our strategy of selling loans through securitization
requires us to build an inventory of loans over time. During the period we are
building this inventory of loans, we incur costs and expenses. We do not
recognize a gain on the sale of loans until we complete a securitization, which
may not occur until a subsequent period. In addition, our gain on a
securitization results from our retained interests in the securitized loans,
consisting primarily of interest-only strips, which do not generate cash flow
immediately. We expect this negative cash flow from operations to continue in
the foreseeable future. Should we continue to experience negative cash flows
from operations, it could impair our ability to make principal and interest
payments due under the terms of the investor notes. At June 30, 2000, there was
$177.7 million of investment notes which will mature through June 30, 2001.
We obtain the funds to repay the investment notes at their maturities by
securitizing our loans, selling whole loans and selling additional investment
notes. We may in the future generate cash flows by securitizing or selling
interest-only strips and selling servicing rights generated in past
securitizations. If we are unable in the future to securitize our loans, to sell
whole loans, or to realize cash flows from interest-only strips and servicing
rights generated in past securitizations, our ability to repay the investment
notes could be impaired.
<PAGE>
Our estimates of the value of interest-only strips and servicing rights we
retain when we securitize loans could be inaccurate and could result in reduced
profits and impair our ability to repay the notes.
We generally retain interest-only strips and servicing rights in the
securitization transactions we complete. We estimate the fair value of the
interest-only strips and servicing rights based upon discount rates established
by management of our company and prepayment and default assumptions. Together,
these two assets represent 59.5% of our total assets at June 30, 2000. The value
of our interest-only strips totaled $277.9 million and the value of our
servicing rights totaled $74.9 million at June 30, 2000. Although we believe
that these amounts represent the fair value of these assets at June 30, 2000,
the amounts were estimated based on discounting the expected cash flows to be
received in connection with our securitizations using discount rates established
by us, prepayment rates and default rate assumptions. Changes in market interest
rates may impact our discount rate assumptions and our actual prepayment and
default experience may vary materially from these estimates. Even a small
unfavorable change in these assumptions utilized could have a significant
adverse impact on the value of these assets. In the event of an unfavorable
change in these assumptions, the fair value of these assets would be overstated,
requiring an adjustment which would adversely affect our income in the period of
adjustment and impair our ability to repay the notes.
A write down in the value of our interest-only strips during fiscal 2000 due to
a change in the discount rate resulted in a loss for the fourth quarter and
reduced profits for fiscal 2000.
During the year ended June 30, 2000, a write down of $12.6 million was
recorded on our interest-only strips. The write down included a charge of $11.2
million related to an increase from 11% to 13% in the discount rate used to
value our interest-only strips. This change in the discount rate was considered
an other than temporary fair value adjustment and was recorded as an expense in
fiscal 2000. The write down also included a charge of $1.9 million for the
impact of changes in one-month LIBOR deemed to be other than temporary. As a
result of these changes, we had a loss of $5.0 million for the fourth quarter of
fiscal 2000 and reported net income of $6.4 million for the year ended June 30,
2000 as compared to net income of $14.1 million for the year ended June 30,
1999. In addition, we changed the prepayment assumptions used to value our
interest-only strips and servicing rights to reflect actual experience. The
effect of these changes was a $0.5 million increase in our interest-only strips
which is netted in the $12.6 million write down above, and a $0.7 million write
down of the value of our servicing rights.
You may obtain an additional copy of the prospectus, dated October 15,
1999, free of charge from American Business Financial Services, Inc. by calling
(800) 776-4001.
[ABFS LOGO]
BalaPointe Office Centre, 111 Presidential Boulevard, Bala Cynwyd, PA 19004
2255 Glades Road, Suite 311E, Boca Raton, FL 33431
2425 East Camelback Road, Suite 1065, Phoenix, AZ 85016
www.abfsonline.com
<PAGE>
Filed Pursuant to Rule 424(b)(3)
File No. 333-87333
--------------------------------------------------------------------------------
American Business Financial Services, Inc.
Rate Supplement
Investment Notes
Prospectus Supplement Dated October 23, 2000
American Business Financial Services, Inc.
---------------------------------------------------
TERM RATE YIELD*
---------------------------------------------------
3-5 mos. 7.75% 8.05%
6-11 mos. 8.75% 9.14%
12-17 mos. 10.45% 11.01%
15 mos. 11.00% 11.62%
18-23 mos. 10.10% 10.62%
24-29 mos. 10.20% 10.73%
30-35 mos. 11.50% 12.18%
36-47 mos. 10.60% 11.18%
48-59 mos. 10.90% 11.51%
60-119 mos. 11.50% 12.18%
120 mos. 11.75% 12.46%
---------------------------------------------------
Minimum for Investment Notes $1,000.
Ask about our rates for larger investments. Please call (800) 776-4001 for more
information.
American Business Financial Services, Inc. is a NASDAQ listed Company (ABFI).
*The Effective Annual Yield assumes all interest remains invested for 365 days.
American Business Financial Services, Inc. is a publicly traded Company (NASDAQ,
ABFI). An offer can only be made by the Prospectus dated October 15, 1999
delivered in conjunction with this Rate Supplement dated October 23, 2000. See
"Risk Factors" in the Prospectus for a discussion of certain factors which
should be considered in connection with an Investment in the Notes. Interest is
compounded daily based on a 365-day year.
THE INVESTMENT NOTES AND MONEY MARKET NOTES REPRESENT OBLIGATIONS OF AMERICAN
BUSINESS FINANCIAL SERVICES, INC. AND ARE NOT CERTIFICATES OF DEPOSIT OR INSURED
OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. This announcement is
neither an offer to sell nor a solicitation of an offer to buy Subordinated
Investment Notes. This offer is made by prospectus only. The rates are available
through October 31, 2000. These rates are available to residents of the
following states: AK, AL, AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN,
KS, KY, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NH, NM, NV, NY, OH, OK, OR, RI,
SC, TN, TX, UT, VA, VT, WA, WI, WV, WY.
Updated Risks Related to the Offering of Debt Securities.
Since we have historically experienced negative cash flows from our operations
and expect to do so in the foreseeable future, our ability to repay the
investment notes could be impaired.
We have historically experienced negative cash flow from operations since
1996 primarily because our strategy of selling loans through securitization
requires us to build an inventory of loans over time. During the period we are
building this inventory of loans, we incur costs and expenses. We do not
recognize a gain on the sale of loans until we complete a securitization, which
may not occur until a subsequent period. In addition, our gain on a
securitization results from our retained interests in the securitized loans,
consisting primarily of interest-only strips, which do not generate cash flow
immediately. We expect this negative cash flow from operations to continue in
the foreseeable future. Should we continue to experience negative cash flows
from operations, it could impair our ability to make principal and interest
payments due under the terms of the investor notes. At June 30, 2000, there was
$177.7 million of investment notes which will mature through June 30, 2001.
We obtain the funds to repay the investment notes at their maturities by
securitizing our loans, selling whole loans and selling additional investment
notes. We may in the future generate cash flows by securitizing or selling
interest-only strips and selling servicing rights generated in past
securitizations. If we are unable in the future to securitize our loans, to sell
whole loans, or to realize cash flows from interest-only strips and servicing
rights generated in past securitizations, our ability to repay the investment
notes could be impaired.
<PAGE>
Our estimates of the value of interest-only strips and servicing rights we
retain when we securitize loans could be inaccurate and could result in reduced
profits and impair our ability to repay the notes.
We generally retain interest-only strips and servicing rights in the
securitization transactions we complete. We estimate the fair value of the
interest-only strips and servicing rights based upon discount rates established
by management of our company and prepayment and default assumptions. Together,
these two assets represent 59.5% of our total assets at June 30, 2000. The value
of our interest-only strips totaled $277.9 million and the value of our
servicing rights totaled $74.9 million at June 30, 2000. Although we believe
that these amounts represent the fair value of these assets at June 30, 2000,
the amounts were estimated based on discounting the expected cash flows to be
received in connection with our securitizations using discount rates established
by us, prepayment rates and default rate assumptions. Changes in market interest
rates may impact our discount rate assumptions and our actual prepayment and
default experience may vary materially from these estimates. Even a small
unfavorable change in these assumptions utilized could have a significant
adverse impact on the value of these assets. In the event of an unfavorable
change in these assumptions, the fair value of these assets would be overstated,
requiring an adjustment which would adversely affect our income in the period of
adjustment and impair our ability to repay the notes.
A write down in the value of our interest-only strips during fiscal 2000 due to
a change in the discount rate resulted in a loss for the fourth quarter and
reduced profits for fiscal 2000.
During the year ended June 30, 2000, a write down of $12.6 million was
recorded on our interest-only strips. The write down included a charge of $11.2
million related to an increase from 11% to 13% in the discount rate used to
value our interest-only strips. This change in the discount rate was considered
an other than temporary fair value adjustment and was recorded as an expense in
fiscal 2000. The write down also included a charge of $1.9 million for the
impact of changes in one-month LIBOR deemed to be other than temporary. As a
result of these changes, we had a loss of $5.0 million for the fourth quarter of
fiscal 2000 and reported net income of $6.4 million for the year ended June 30,
2000 as compared to net income of $14.1 million for the year ended June 30,
1999. In addition, we changed the prepayment assumptions used to value our
interest-only strips and servicing rights to reflect actual experience. The
effect of these changes was a $0.5 million increase in our interest-only strips
which is netted in the $12.6 million write down above, and a $0.7 million write
down of the value of our servicing rights.
You may obtain an additional copy of the prospectus, dated October 15,
1999, free of charge from American Business Financial Services, Inc. by calling
(800) 776-4001.
[ABFS LOGO]
BalaPointe Office Centre, 111 Presidential Boulevard, Bala Cynwyd, PA 19004
2255 Glades Road, Suite 311E, Boca Raton, FL 33431
2425 East Camelback Road, Suite 1065, Phoenix, AZ 85016
www.abfsonline.com
<PAGE>
Filed Pursuant to Rule 424(b)(3)
File No. 333-87333
--------------------------------------------------------------------------------
American Business Financial Services, Inc.
Rate Supplement
Investment Notes
Prospectus Supplement Dated October 23, 2000
American Business Financial Services, Inc.
---------------------------------------------------
TERM RATE YIELD*
---------------------------------------------------
3-5 mos. 8.00% 8.32%
6-11 mos. 9.00% 9.41%
12-17 mos. 10.70% 11.29%
18-23 mos. 10.35% 10.93%
24-29 mos. 10.45% 11.01%
30-35 mos. 11.50% 12.18%
36-47 mos. 10.85% 11.45%
48-59 mos. 11.15% 11.79%
60-119 mos. 11.75% 12.46%
120 mos. 12.00% 12.74%
---------------------------------------------------
Minimum for Investment Notes $100,000.
American Business Financial Services, Inc. is a NASDAQ listed Company (ABFI).
*The Effective Annual Yield assumes all interest remains invested for 365 days.
American Business Financial Services, Inc. is a publicly traded Company (NASDAQ,
ABFI). An offer can only be made by the Prospectus dated October 15, 1999
delivered in conjunction with this Rate Supplement dated October 23, 2000. See
"Risk Factors" in the Prospectus for a discussion of certain factors which
should be considered in connection with an Investment in the Notes. Interest is
compounded daily based on a 365-day year.
THE INVESTMENT NOTES AND MONEY MARKET NOTES REPRESENT OBLIGATIONS OF AMERICAN
BUSINESS FINANCIAL SERVICES, INC. AND ARE NOT CERTIFICATES OF DEPOSIT OR INSURED
OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. This announcement is
neither an offer to sell nor a solicitation of an offer to buy Subordinated
Investment Notes. This offer is made by prospectus only. The rates are available
through October 31, 2000. These rates are available to residents of the
following states: NJ, PA.
Updated Risks Related to the Offering of Debt Securities.
Since we have historically experienced negative cash flows from our operations
and expect to do so in the foreseeable future, our ability to repay the
investment notes could be impaired.
We have historically experienced negative cash flow from operations since
1996 primarily because our strategy of selling loans through securitization
requires us to build an inventory of loans over time. During the period we are
building this inventory of loans, we incur costs and expenses. We do not
recognize a gain on the sale of loans until we complete a securitization, which
may not occur until a subsequent period. In addition, our gain on a
securitization results from our retained interests in the securitized loans,
consisting primarily of interest-only strips, which do not generate cash flow
immediately. We expect this negative cash flow from operations to continue in
the foreseeable future. Should we continue to experience negative cash flows
from operations, it could impair our ability to make principal and interest
payments due under the terms of the investor notes. At June 30, 2000, there was
$177.7 million of investment notes which will mature through June 30, 2001.
We obtain the funds to repay the investment notes at their maturities by
securitizing our loans, selling whole loans and selling additional investment
notes. We may in the future generate cash flows by securitizing or selling
interest-only strips and selling servicing rights generated in past
securitizations. If we are unable in the future to securitize our loans, to sell
whole loans, or to realize cash flows from interest-only strips and servicing
rights generated in past securitizations, our ability to repay the investment
notes could be impaired.
<PAGE>
Our estimates of the value of interest-only strips and servicing rights we
retain when we securitize loans could be inaccurate and could result in reduced
profits and impair our ability to repay the notes.
We generally retain interest-only strips and servicing rights in the
securitization transactions we complete. We estimate the fair value of the
interest-only strips and servicing rights based upon discount rates established
by management of our company and prepayment and default assumptions. Together,
these two assets represent 59.5% of our total assets at June 30, 2000. The value
of our interest-only strips totaled $277.9 million and the value of our
servicing rights totaled $74.9 million at June 30, 2000. Although we believe
that these amounts represent the fair value of these assets at June 30, 2000,
the amounts were estimated based on discounting the expected cash flows to be
received in connection with our securitizations using discount rates established
by us, prepayment rates and default rate assumptions. Changes in market interest
rates may impact our discount rate assumptions and our actual prepayment and
default experience may vary materially from these estimates. Even a small
unfavorable change in these assumptions utilized could have a significant
adverse impact on the value of these assets. In the event of an unfavorable
change in these assumptions, the fair value of these assets would be overstated,
requiring an adjustment which would adversely affect our income in the period of
adjustment and impair our ability to repay the notes.
A write down in the value of our interest-only strips during fiscal 2000 due to
a change in the discount rate resulted in a loss for the fourth quarter and
reduced profits for fiscal 2000.
During the year ended June 30, 2000, a write down of $12.6 million was
recorded on our interest-only strips. The write down included a charge of $11.2
million related to an increase from 11% to 13% in the discount rate used to
value our interest-only strips. This change in the discount rate was considered
an other than temporary fair value adjustment and was recorded as an expense in
fiscal 2000. The write down also included a charge of $1.9 million for the
impact of changes in one-month LIBOR deemed to be other than temporary. As a
result of these changes, we had a loss of $5.0 million for the fourth quarter of
fiscal 2000 and reported net income of $6.4 million for the year ended June 30,
2000 as compared to net income of $14.1 million for the year ended June 30,
1999. In addition, we changed the prepayment assumptions used to value our
interest-only strips and servicing rights to reflect actual experience. The
effect of these changes was a $0.5 million increase in our interest-only strips
which is netted in the $12.6 million write down above, and a $0.7 million write
down of the value of our servicing rights.
You may obtain an additional copy of the prospectus, dated October 15,
1999, free of charge from American Business Financial Services, Inc. by calling
(800) 776-4001.
[ABFS LOGO]
BalaPointe Office Centre, 111 Presidential Boulevard, Bala Cynwyd, PA 19004
2255 Glades Road, Suite 311E, Boca Raton, FL 33431
2425 East Camelback Road, Suite 1065, Phoenix, AZ 85016
www.abfsonline.com
<PAGE>
Filed Pursuant to Rule 424(b)(3)
File No. 333-87333
--------------------------------------------------------------------------------
American Business Financial Services, Inc.
Rate Supplement
Investment Notes
Prospectus Supplement Dated October 23, 2000
American Business Financial Services, Inc.
---------------------------------------------------
TERM RATE YIELD*
---------------------------------------------------
3-5 mos. 7.75% 8.05%
6-11 mos. 8.75% 9.14%
12-17 mos. 10.45% 11.01%
18-23 mos. 10.10% 10.62%
24-29 mos. 10.20% 10.73%
30-35 mos. 11.50% 12.18%
36-47 mos. 10.60% 11.18%
48-59 mos. 10.90% 11.51%
60-119 mos. 11.50% 12.18%
120 mos. 11.75% 12.46%
---------------------------------------------------
Minimum for Investment Notes $1,000.
Ask about our rates for larger investments. Please call (800) 776-4001 for more
information.
American Business Financial Services, Inc. is a NASDAQ listed Company (ABFI).
*The Effective Annual Yield assumes all interest remains invested for 365 days.
American Business Financial Services, Inc. is a publicly traded Company (NASDAQ,
ABFI). An offer can only be made by the Prospectus dated October 15, 1999
delivered in conjunction with this Rate Supplement dated October 23, 2000. See
"Risk Factors" in the Prospectus for a discussion of certain factors which
should be considered in connection with an Investment in the Notes. Interest is
compounded daily based on a 365-day year.
THE INVESTMENT NOTES AND MONEY MARKET NOTES REPRESENT OBLIGATIONS OF AMERICAN
BUSINESS FINANCIAL SERVICES, INC. AND ARE NOT CERTIFICATES OF DEPOSIT OR INSURED
OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. This announcement is
neither an offer to sell nor a solicitation of an offer to buy Subordinated
Investment Notes. This offer is made by prospectus only. The rates are available
through October 31, 2000. These rates are available to residents of the
following states: NJ, PA.
Updated Risks Related to the Offering of Debt Securities.
Since we have historically experienced negative cash flows from our operations
and expect to do so in the foreseeable future, our ability to repay the
investment notes could be impaired.
We have historically experienced negative cash flow from operations since
1996 primarily because our strategy of selling loans through securitization
requires us to build an inventory of loans over time. During the period we are
building this inventory of loans, we incur costs and expenses. We do not
recognize a gain on the sale of loans until we complete a securitization, which
may not occur until a subsequent period. In addition, our gain on a
securitization results from our retained interests in the securitized loans,
consisting primarily of interest-only strips, which do not generate cash flow
immediately. We expect this negative cash flow from operations to continue in
the foreseeable future. Should we continue to experience negative cash flows
from operations, it could impair our ability to make principal and interest
payments due under the terms of the investor notes. At June 30, 2000, there was
$177.7 million of investment notes which will mature through June 30, 2001.
We obtain the funds to repay the investment notes at their maturities by
securitizing our loans, selling whole loans and selling additional investment
notes. We may in the future generate cash flows by securitizing or selling
interest-only strips and selling servicing rights generated in past
securitizations. If we are unable in the future to securitize our loans, to sell
whole loans, or to realize cash flows from interest-only strips and servicing
rights generated in past securitizations, our ability to repay the investment
notes could be impaired.
<PAGE>
Our estimates of the value of interest-only strips and servicing rights we
retain when we securitize loans could be inaccurate and could result in reduced
profits and impair our ability to repay the notes.
We generally retain interest-only strips and servicing rights in the
securitization transactions we complete. We estimate the fair value of the
interest-only strips and servicing rights based upon discount rates established
by management of our company and prepayment and default assumptions. Together,
these two assets represent 59.5% of our total assets at June 30, 2000. The value
of our interest-only strips totaled $277.9 million and the value of our
servicing rights totaled $74.9 million at June 30, 2000. Although we believe
that these amounts represent the fair value of these assets at June 30, 2000,
the amounts were estimated based on discounting the expected cash flows to be
received in connection with our securitizations using discount rates established
by us, prepayment rates and default rate assumptions. Changes in market interest
rates may impact our discount rate assumptions and our actual prepayment and
default experience may vary materially from these estimates. Even a small
unfavorable change in these assumptions utilized could have a significant
adverse impact on the value of these assets. In the event of an unfavorable
change in these assumptions, the fair value of these assets would be overstated,
requiring an adjustment which would adversely affect our income in the period of
adjustment and impair our ability to repay the notes.
A write down in the value of our interest-only strips during fiscal 2000 due to
a change in the discount rate resulted in a loss for the fourth quarter and
reduced profits for fiscal 2000.
During the year ended June 30, 2000, a write down of $12.6 million was
recorded on our interest-only strips. The write down included a charge of $11.2
million related to an increase from 11% to 13% in the discount rate used to
value our interest-only strips. This change in the discount rate was considered
an other than temporary fair value adjustment and was recorded as an expense in
fiscal 2000. The write down also included a charge of $1.9 million for the
impact of changes in one-month LIBOR deemed to be other than temporary. As a
result of these changes, we had a loss of $5.0 million for the fourth quarter of
fiscal 2000 and reported net income of $6.4 million for the year ended June 30,
2000 as compared to net income of $14.1 million for the year ended June 30,
1999. In addition, we changed the prepayment assumptions used to value our
interest-only strips and servicing rights to reflect actual experience. The
effect of these changes was a $0.5 million increase in our interest-only strips
which is netted in the $12.6 million write down above, and a $0.7 million write
down of the value of our servicing rights.
You may obtain an additional copy of the prospectus, dated October 15,
1999, free of charge from American Business Financial Services, Inc. by calling
(800) 776-4001.
[ABFS LOGO]
BalaPointe Office Centre, 111 Presidential Boulevard, Bala Cynwyd, PA 19004
2255 Glades Road, Suite 311E, Boca Raton, FL 33431
2425 East Camelback Road, Suite 1065, Phoenix, AZ 85016
www.abfsonline.com
<PAGE>
Filed Pursuant to Rule 424(b)(3)
File No. 333-87333
--------------------------------------------------------------------------------
American Business Financial Services, Inc.
Rate Supplement
Investment Notes
Prospectus Supplement Dated October 23, 2000
American Business Financial Services, Inc.
------------------------------------------------------------------------
TERM RATE ANNUAL YIELD* RENEWAL RATE RENEWAL YIELD*
------------------------------------------------------------------------
3-5 mos. 8.00% 8.32% 8.50% 8.87%
6-11 mos. 9.00% 9.41% 10.10% 10.62%
12-17 mos. 10.70% 11.29% 11.15% 11.79%
18-23 mos. 10.35% 10.93% 11.25% 11.90%
24-29 mos. 10.45% 11.01% 11.35% 12.01%
30-35 mos. 11.50% 12.18% 11.50% 12.18%
36-47 mos. 10.85% 11.45% 11.50% 12.18%
48-59 mos. 11.15% 11.79% 11.50% 12.18%
60-119 mos. 11.75% 12.46% 12.00% 12.74%
120 mos. 12.00% 12.74% 12.15% 12.91%
Minimum for Investment Notes $100,000.
American Business Financial Services, Inc. is a NASDAQ listed Company (ABFI).
*The Effective Annual Yield assumes all interest remains invested for 365 days.
American Business Financial Services, Inc. is a publicly traded Company (NASDAQ,
ABFI). An offer can only be made by the Prospectus dated October 15, 1999
delivered in conjunction with this Rate Supplement dated October 23, 2000. See
"Risk Factors" in the Prospectus for a discussion of certain factors which
should be considered in connection with an Investment in the Notes. Interest is
compounded daily based on a 365-day year.
THE INVESTMENT NOTES AND MONEY MARKET NOTES REPRESENT OBLIGATIONS OF AMERICAN
BUSINESS FINANCIAL SERVICES, INC. AND ARE NOT CERTIFICATES OF DEPOSIT OR INSURED
OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. This announcement is
neither an offer to sell nor a solicitation of an offer to buy Subordinated
Investment Notes. This offer is made by prospectus only. The rates are available
through October 31, 2000. These rates are available only to residents of the
following states whose investment notes automatically renew for the same term as
the original note: AK, AL, AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN,
KS, KY, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NH, NJ, NM, NV, NY, OH, OK, OR,
PA, RI, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY.
Updated Risks Related to the Offering of Debt Securities.
Since we have historically experienced negative cash flows from our operations
and expect to do so in the foreseeable future, our ability to repay the
investment notes could be impaired.
We have historically experienced negative cash flow from operations since
1996 primarily because our strategy of selling loans through securitization
requires us to build an inventory of loans over time. During the period we are
building this inventory of loans, we incur costs and expenses. We do not
recognize a gain on the sale of loans until we complete a securitization, which
may not occur until a subsequent period. In addition, our gain on a
securitization results from our retained interests in the securitized loans,
consisting primarily of interest-only strips, which do not generate cash flow
immediately. We expect this negative cash flow from operations to continue in
the foreseeable future. Should we continue to experience negative cash flows
from operations, it could impair our ability to make principal and interest
payments due under the terms of the investor notes. At June 30, 2000, there was
$177.7 million of investment notes which will mature through June 30, 2001.
We obtain the funds to repay the investment notes at their maturities by
securitizing our loans, selling whole loans and selling additional investment
notes. We may in the future generate cash flows by securitizing or selling
interest-only strips and selling servicing rights generated in past
securitizations. If we are unable in the future to securitize our loans, to sell
whole loans, or to realize cash flows from interest-only strips and servicing
rights generated in past securitizations, our ability to repay the investment
notes could be impaired.
<PAGE>
Our estimates of the value of interest-only strips and servicing rights we
retain when we securitize loans could be inaccurate and could result in reduced
profits and impair our ability to repay the notes.
We generally retain interest-only strips and servicing rights in the
securitization transactions we complete. We estimate the fair value of the
interest-only strips and servicing rights based upon discount rates established
by management of our company and prepayment and default assumptions. Together,
these two assets represent 59.5% of our total assets at June 30, 2000. The value
of our interest-only strips totaled $277.9 million and the value of our
servicing rights totaled $74.9 million at June 30, 2000. Although we believe
that these amounts represent the fair value of these assets, the amounts were
estimated based on discounting the expected cash flows to be received in
connection with our securitizations using discount rates established by us,
prepayment rates and default rate assumptions. Changes in market interest rates
may impact our discount rate assumptions and our actual prepayment and default
experience may vary materially from these estimates. Even a small unfavorable
change in these assumptions utilized could have a significant adverse impact on
the value of these assets. In the event of an unfavorable change in these
assumptions, the fair value of these assets would be overstated, requiring an
adjustment which would adversely affect our income in the period of adjustment
and impair our ability to repay the notes.
A write down in the value of our interest-only strips during fiscal 2000 due to
a change in the discount rate resulted in a loss for the fourth quarter and
reduced profits for fiscal 2000.
During the year ended June 30, 2000, a write down of $12.6 million was
recorded on our interest-only strips. The write down included a charge of $11.2
million related to an increase from 11% to 13% in the discount rate used to
value our interest-only strips. This change in the discount rate was considered
an other than temporary fair value adjustment and was recorded as an expense in
fiscal 2000. The write down also included a charge of $1.9 million for the
impact of changes in one-month LIBOR deemed to be other than temporary. As a
result of these changes, we had a loss of $5.0 for the fourth quarter of fiscal
2000 and reported net income of $6.4 million for the year ended June 30, 2000 as
compared to net income of $14.1 million for the year ended June 30, 1999. In
addition, we changed the prepayment assumptions used to value our interest-only
strips and servicing rights to reflect actual experience. The effect of these
changes was a $0.5 million increase in our interest-only strips which is netted
in the $12.6 million writedown above, and a $0.7 million write down on the value
of our servicing rights.
You may obtain an additional copy of the prospectus, dated October 15,
1999, free of charge from American Business Financial Services, Inc. by calling
(800) 776-4001.
[ABFS LOGO]
BalaPointe Office Centre, 111 Presidential Boulevard, Bala Cynwyd, PA 19004
2255 Glades Road, Suite 311E, Boca Raton, FL 33431
2425 East Camelback Road, Suite 1065, Phoenix, AZ 85016
www.abfsonline.com
<PAGE>
Filed Pursuant to Rule 424(b)(3)
File No. 333-87333
--------------------------------------------------------------------------------
American Business Financial Services, Inc.
Rate Supplement
Investment Notes
Prospectus Supplement Dated October 23, 2000
American Business Financial Services, Inc.
------------------------------------------------------------------------
TERM RATE ANNUAL YIELD* RENEWAL RATE RENEWAL YIELD*
------------------------------------------------------------------------
3-5 mos. 7.75% 8.05% 8.25% 8.59%
6-11 mos. 8.75% 9.14% 9.85% 10.35%
12-17 mos. 10.45% 11.01% 10.90% 11.51%
18-23 mos. 10.10% 10.62% 11.00% 11.62%
24-29 mos. 10.20% 10.73% 11.10% 11.73%
30-35 mos. 11.50% 12.18% 11.50% 12.18%
36-47 mos. 10.60% 11.18% 11.50% 12.18%
48-59 mos. 10.90% 11.51% 11.50% 12.18%
60-119 mos. 11.50% 12.18% 11.75% 12.46%
120 mos. 11.75% 12.46% 11.90% 12.63%
------------------------------------------------------------------------
Minimum for Investment Notes $1,000.
Ask about our rates for larger investments. Please call (800) 776-4001 for more
information.
American Business Financial Services, Inc. is a NASDAQ listed Company (ABFI).
*The Effective Annual Yield assumes all interest remains invested for 365 days.
American Business Financial Services, Inc. is a publicly traded Company (NASDAQ,
ABFI). An offer can only be made by the Prospectus dated October 15, 1999
delivered in conjunction with this Rate Supplement dated October 23, 2000. See
"Risk Factors" in the Prospectus for a discussion of certain factors which
should be considered in connection with an Investment in the Notes. Interest is
compounded daily based on a 365-day year.
THE INVESTMENT NOTES AND MONEY MARKET NOTES REPRESENT OBLIGATIONS OF AMERICAN
BUSINESS FINANCIAL SERVICES, INC. AND ARE NOT CERTIFICATES OF DEPOSIT OR INSURED
OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. This announcement is
neither an offer to sell nor a solicitation of an offer to buy Subordinated
Investment Notes. This offer is made by prospectus only. The rates are available
through October 31, 2000. These rates are available only to residents of the
following states whose investment notes automatically renew for the same term as
the original note: AK, AL, AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN,
KS, KY, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NH, NJ, NM, NV, NY, OH, OK, OR,
PA, RI, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY.
Updated Risks Related to the Offering of Debt Securities.
Since we have historically experienced negative cash flows from our operations
and expect to do so in the foreseeable future, our ability to repay the
investment notes could be impaired.
We have historically experienced negative cash flow from operations since
1996 primarily because our strategy of selling loans through securitization
requires us to build an inventory of loans over time. During the period we are
building this inventory of loans, we incur costs and expenses. We do not
recognize a gain on the sale of loans until we complete a securitization, which
may not occur until a subsequent period. In addition, our gain on a
securitization results from our retained interests in the securitized loans,
consisting primarily of interest-only strips, which do not generate cash flow
immediately. We expect this negative cash flow from operations to continue in
the foreseeable future. Should we continue to experience negative cash flows
from operations, it could impair our ability to make principal and interest
payments due under the terms of the investor notes. At June 30, 2000, there was
$177.7 million of investment notes which will mature through June 30, 2001.
We obtain the funds to repay the investment notes at their maturities by
securitizing our loans, selling whole loans and selling additional investment
notes. We may in the future generate cash flows by securitizing or selling
interest-only strips and selling servicing rights generated in past
securitizations. If we are unable in the future to securitize our loans, to sell
whole loans, or to realize cash flows from interest-only strips and servicing
rights generated in past securitizations, our ability to repay the investment
notes could be impaired.
<PAGE>
Our estimates of the value of interest-only strips and servicing rights we
retain when we securitize loans could be inaccurate and could result in reduced
profits and impair our ability to repay the notes.
We generally retain interest-only strips and servicing rights in the
securitization transactions we complete. We estimate the fair value of the
interest-only strips and servicing rights based upon discount rates established
by management of our company and prepayment and default assumptions. Together,
these two assets represent 59.5% of our total assets at June 30, 2000. The value
of our interest-only strips totaled $277.9 million and the value of our
servicing rights totaled $74.9 million at June 30, 2000. Although we believe
that these amounts represent the fair value of these assets, the amounts were
estimated based on discounting the expected cash flows to be received in
connection with our securitizations using discount rates established by us,
prepayment rates and default rate assumptions. Changes in market interest rates
may impact our discount rate assumptions and our actual prepayment and default
experience may vary materially from these estimates. Even a small unfavorable
change in these assumptions utilized could have a significant adverse impact on
the value of these assets. In the event of an unfavorable change in these
assumptions, the fair value of these assets would be overstated, requiring an
adjustment which would adversely affect our income in the period of adjustment
and impair our ability to repay the notes. We anticipate recording a write-down
of our interest-only strips as a result of a contemplated change in the discount
rate used to value the interest-only strips. The adjustment to the carrying
value of the interest-only strips will be recorded as an expense and we will
have a loss for the fourth quarter of fiscal 2000.
A write down in the value of our interest-only strips during fiscal 2000 due to
a change in the discount rate resulted in a loss for the fourth quarter and
reduced profits for fiscal 2000.
During the year ended June 30, 2000, a write down of $12.6 million was
recorded on our interest-only strips. The write down included a charge of $11.2
million related to an increase from 11% to 13% in the discount rate used to
value our interest-only strips. This change in the discount rate was considered
an other than temporary fair value adjustment and was recorded as an expense in
fiscal 2000. The write down also included a charge of $1.9 million for the
impact of changes in one-month LIBOR deemed to be other than temporary. As a
result of these changes, we had a loss of $5.0 for the fourth quarter of fiscal
2000 and reported net income of $6.4 million for the year ended June 30, 2000 as
compared to net income of $14.1 million for the year ended June 30, 1999. In
addition, we changed the prepayment assumptions used to value our interest-only
strips and servicing rights to reflect actual experience. The effect of these
changes was a $0.5 million increase in our interest-only strips which is netted
in the $12.6 million write down above, and a $0.7 million write down on the
value of our servicing rights.
You may obtain an additional copy of the prospectus, dated October 15,
1999, free of charge from American Business Financial Services, Inc. by calling
(800) 776-4001.
[ABFS LOGO]
BalaPointe Office Centre, 111 Presidential Boulevard, Bala Cynwyd, PA 19004
2255 Glades Road, Suite 311E, Boca Raton, FL 33431
2425 East Camelback Road, Suite 1065, Phoenix, AZ 85016
www.abfsonline.com
