Debt buyer Asta Funding Inc. today reported a net income of $2.5 million for its fiscal first quarter ended Dec. 31, compared to a net loss of $7.8 million in the same period a year earlier. The company, based in Englewood Cliffs, N.J., buys unpaid consumer and credit card loans and tries to collect them.
In its fiscal fourth quarter ended Sept. 30, Asta Funding reported a net loss of $79.2 million after recording impairment charges in that quarter of $137.3 million, including $53 million from a February 2007 purchase of a $6.9 billion delinquent credit card portfolio from Great Seneca Financial Corp. The company paid $300 million for that portfolio, Collections & Credit Risk reported.
Asta Funding reported nearly $115.3 million in revenue from purchased debt in 2008, making it the seventh largest U.S. debt buyer based on research conducted by Collections & Credit Risk for its 2009 rankings.
In the fiscal first quarter, Asta Funding's net cash collections from consumer receivables acquired for liquidation totaled $29.4 million, including $2.6 million net cash collections represented by account sales. In the same period a year ago, the company reported $42 million in total net cash collections and $5.8 million from collections represented by account sales.
"The progress we made last year in strengthening our balance sheet and increasing our cash position has prepared us well for 2010, both to weather the current economic environment and to be selective buyers of attractive portfolios," says Gary Stern, Asta Funding's chairman and CEO. "[Going forward] we anticipate funding portfolio purchases through cash flow generated from operations. However, for the right opportunities that fit our strict investment criteria for purchasing debt portfolios, or pursuing other investment opportunities, we may consider seeking additional financing."