Asta Funding Inc. Reports Operating Results (10-Q)
Asta Funding, Inc. has a market cap of $121 million; its shares were traded at around $9.47 with a P/E ratio of 13.4 and P/S ratio of 3.2. The dividend yield of Asta Funding, Inc. stocks is 1.5%.
Highlight of Business Operations:As a result of the recent and current challenging economic environment and the impact it has had on the collections, for the non- medical account portfolio purchases acquired since the beginning of fiscal year 2009, we have extended our time frame of the expectation of recovering 100% of our invested capital to within a 24-29 month period from an 18-28 month period, and the expectation of recovering 130-140% of invested capital to a period of seven years, which is an increase from the previous five year expectation. The medical accounts have a shorter three year collection curve based on the nature of these accounts. We routinely monitor these expectations against the actual cash flows and, in the event the cash flows are below our expectations and we believe there are no reasons relating to mere timing differences or explainable delays (such as can occur particularly when the court system is involved) for the reduced collections, an impairment would be recorded as a provision for credit losses. Conversely, in the event the cash flows are in excess of our expectations and the reason is due to timing, we would defer the excess collection as deferred revenue.
Finance income. For the three months ended December 31, 2012, finance income decreased $1.3 million, or 13.3%, to $ 8.5 million from $9.8 million for the three months ended December 31, 2011. The decrease is primarily due to the lower level of portfolio purchases in recent years and, as a result, the increased number of our portfolios that are in the later stages of their yield curves. Income from fully amortized portfolios (zero basis revenue) decreased $0.5 million to $8.1 million in the three months ended December 31, 2012 compared to $8.6 million in the same prior year period. We did not purchase any consumer debt portfolios in the first quarter ended December 31, 2012. We acquired $1.4 million in portfolios with a face value of $3.1 million in the first quarter of fiscal year 2012.
On May 18, 2012, we formed BP Case Management, LLC (BPCM), a joint venture with California-based Balance Point Divorce Funding, LLC (BP Divorce Funding). BPCM provides non-recourse funding to a spouse in a matrimonial action. The Company provided a $1.0 million revolving line of credit to partially fund BP Divorce Fundings operations, with such loan bearing interest at the prevailing prime rate, with an initial term of twenty-four months. The revolving line of credit is collateralized by BP Divorce Fundings profit share in BPCM and other assets.
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