American Business Financial Services announced last week that it will report a net loss of $29.9 million for the fiscal year, primarily tied to its inability to close a securitization last quarter. In its 8-K filing with the Securities and Exchange Commission last week, ABFI indicated that its detailed full-year statement would follow shortly, which will address other aspects of its year, such as any liquidity issues associated with the inability to securitize during the second quarter (calendar).
Contributing to the loss is a pre-tax charge to the income statement of $45.2 million associated with net valuation adjustments on its securitizations, caused in large part by the spike in prepayments this year that have eaten away at retained interests. ABFI offset the initial $63.1 million adjustment to its retained securitization assets by reducing certain valuation discount rates to reflect the sustained decline in interest rates.
ABFI has sold approximately $483 million in whole loans since announcing its intention to do so earlier this year, according to Chief Financial Officer Ablert Mandia,. About $250 million of that figure is against the $700 million previously announced commitment from a single institution, although Mandia stressed that the company has established relationships and commitments from various other institutions.
"We're moving more towards whole loan sales," Mandia said. "We will be doing smaller securitizations than we have in the past, either private or publicly placed. The important thing is that we are in the process of changing our strategy and diversifying our funding sources."
Mandia added that whole loan sales versus securitizations tend to increase cash, but reduce revenue. The company was last in the market in March, with a $387 million deal via Bear Stearns, although its collateral has more recently appeared in dealer issuance vehicles.
"Unfortunately we've had to slow down originations this quarter but do expect to increase originations on an annualized basis," he added.
In August, had ABFI announced that was postponing its 10-K. The company's stock is currently trading slightly over $6.5.