Asta Funding Reports $79 Million Quarterly Net Loss

Asta Funding Inc., an asset-management company that buys unpaid credit card loans and tries to collect on them, Tuesday reported a net loss of $79.2 million for its fiscal fourth quarter ended Sept. 30. The Englewood Cliffs, N.J.-based company recorded impairment charges during the quarter of $137.3 million, including $53 million from the February 2007 purchase of a $6.9 billion delinquent credit card portfolio from Great Seneca Financial Corp. Asta Funding paid $300 million for that portfolio, according to Collections & Credit Risk, a CardLine sister publication. "A good portion of the impairments were recorded on portfolios acquired during the period of a healthier economy with a robust housing market and very low unemployment," Bob Michel, Asta Funding chief financial officer, said yesterday during a call with investors and analysts. "With the slowdown in the housing market, the larger payoff of judgments that was associated with a robust housing market has been substantially reduced. People are staying in their houses longer and waiting for their value to increase. As [the] unemployment rate rose to over 10%, garnishments, which became a larger part of the collection base, began to slow down." Asta ranks as the No. 7 debt buyer in Collection & Credit Risk’s 2009 industry rankings with nearly $115.3 million in revenue from purchased debt in 2008. Net cash collections of receivables acquired for liquidation totaled $30.8 million during the quarter, down 40% from $51.3 million a year ago.