Asta Funding, Inc. Announces First Quarter Results

ENGLEWOOD CLIFFS, N.J. — Asta Funding, Inc. (NASDAQ: ASFI) , (the "Company") a consumer receivable asset management and liquidation company, today announced results for its fiscal first quarter, the three months ended December 31, 2008.

For the three months ended December 31, 2008, the Company reported a net loss of $7.8 million, or $0.55 per basic and diluted share as compared to net income of $13.3 million, or $0.90 per diluted share for the December 2007 quarter. Finance income was $18.4 million for the quarter ended December 31, 2008, a decrease of $15.7 million or 46.1%, from $34.1 million for the three months ended December 31, 2007. As collections have slowed, and the environment for collections remains challenging, the Company’s finance income decreased, in part, as a result of the transfer of the large portfolio purchase in March of 2007 from the interest method to the cost recovery method in the third quarter of fiscal year 2008. Finance income related to this purchase was $8.8 million in the first quarter of fiscal year 2008 as compared to zero revenue recognized this fiscal year.

Net cash collections from consumer receivables acquired for liquidation for the quarter ended December 31, 2008 totaled $42.0 million, including $5.8 million of net cash collections represented by account sales, as compared to $57.9 million of total net cash collections, including $7.8 million from collections represented by account sales, for the same period a year ago.

Income from fully amortized portfolios (zero basis revenue) was $10.2 million for the three month period ended December 31, 2008, compared to $11.0 million for the three month period ended December 31, 2007.

Gary Stern, Chairman and Chief Executive Officer, said, "While our finance income contracted due to the transfer of our large portfolio purchase in March of 2007 to cost recovery and our slower than usual buying, we have sharply reduced our debt in this difficult economic environment. Debt levels as of February 26, 2009, excluding the subordinated debt, were approximately $169 million, consisting of approximately $53 million due to its consortium of banks under our revolving line of credit, and approximately $116 million due to the Bank of Montreal for its facility to finance Palisades XVI. This compares to debt at September 30, 2008 of $213 million consisting of $84 million due on the Credit Agreement and $129 million due to the Bank of Montreal. Total debt on December 31, 2007 was approximately $325 million. Purchases were minimal during the quarter, with the Company investing $1.1 million in new portfolios as compared to $37.5 million in the first quarter of fiscal year 2008, which also contributed to the decline of finance income in the current quarter."

Mr. Stern continued, "The Company recorded impairments of $21.4 million for the quarter ended December 31, 2008, which represents 67.8% of total expenses. Of the $21.4 million of impairments, approximately $12.5 million is attributable to three of our portfolios, including two portfolios that were transferred from the interest method to the cost recovery method. Despite the impairments taken, the balance of consumer receivables acquired for liquidation stood at $403.8 million on December 31, 2008."

Mr. Stern concluded, "Although the collection environment remains challenging, Asta has taken the necessary steps to lower its debt levels as well as maintaining the ability to purchase new portfolios as the opportunities arise. Pricing has recently become more attractive, however we will continue to remain cautious during this economic environment and make sure any transactions completed are ones that can meet our internal rates of return."

Conference Call Details

Interested parties may participate in the conference call by dialing USA/Canada (888) 427-4192, International (706) 679-4480 about 5-10 minutes prior to 12:00 noon ET on Tuesday, March 10th. Please refer to the Asta Funding earnings teleconference ID #88108642. A recording of the conference call will be available from 2:00 pm ET March 10th through March 17th, by dialing USA/Canada (800) 642-1687, International (706) 645-9291, conference ID # 88108642.

Based in Englewood Cliffs, NJ, Asta Funding, Inc., is a consumer receivable asset management company that specializes in the purchase, management and liquidation of performing and non-performing consumer receivables. For additional information, please visit our website at http://www.astafunding.com.