Debt Buyer Asta Funding Swings to Profit in Latest Quarter

Debt purchaser and collector Asta Funding, Inc. (Nasdaq: ASFI) Tuesday reported financial results for its fiscal third quarter of 2009 marked by positive net income, but decreases in revenue and collections compared to the year-ago period.

Englewood Cliffs, N.J.-based Asta reported net income of $1.5 million, or $0.10, for the three-month period ended June 30, 2009. The figures were down from the net income of $2.4 million, or $0.17 per share, for the same period in fiscal year 2008.

On a conference call with investors Tuesday afternoon, Asta Chairman and CEO Gary Stern noted, “I am pleased to report a return to profitability after two straight quarterly losses.”

The company reported revenues of $17.2 million for the fiscal third quarter, a 26.9 percent decrease from revenues in the same period a year ago. Net cash collections of consumer receivables acquired for liquidation were $37.6 million in the quarter, a 23.2 percent decline from Q3 2008, but a 2 percent increase from collections in the quarter ended March 31, 2009.

"Collections remain a significant challenge for the industry as well as for Asta Funding, in part due to the softness in the employment and housing markets with a decline in re-financings and fewer home sales," Stern said in a press release. "We have taken prudent actions in cost management and debt reduction, while at the same time retaining the flexibility to complete select purchases of new portfolios where we find an attractive blend of pricing and risk-return characteristics. We believe Asta Funding is well-positioned to continue to benefit from a cautious outlook that is appropriate to today’s environment together with an opportunistic approach to growth."

Asta completed $13.8 million of portfolio acquisitions with a face value of $335.6 million during the third quarter, compared to $2.7 million of acquisitions during the first six months of fiscal year 2009.

The company recorded non-cash impairments of $6.4 million in the third quarter of fiscal year 2009, as compared to $18.4 million for the second quarter of 2009, and $8.15 million for the third quarter of fiscal year 2008.