The Company has focused on returning its loan origination volumes to pre-pandemic levels and returning to profitability on an annual basis by maximizing its exposure to the post-pandemic COVID-19 economic recovery. These goals are made possible by the company’s continued migration to a market strategy that has both increased origination capacity and freed up financial resources for other purposes, and supported by a focus on investing in the market. technology, products and distribution as part of the company’s post-pandemic growth plan. (PPGP) first described as part of its first quarter financial results.
The Company has bought $ 0.4 million into convertible debentures in the third quarter of 2021 as well as the redemption $ 0.9 million to November 4, 2021 bringing the total of convertible bond buybacks to $ 3.2 million. Redemptions will result in annual interest savings of more than $ 0.3 million. The remaining principal balance of the convertible debenture is $ 8.5 million and matures on December 31, 2023. The Company will continue its efforts to reduce the outstanding principal balance.
IOU continued to benefit from a reversal of provision for loan losses and recoveries of previously written off loans as well as a reduction in operating expenses due to the recognition of $ 1.5 million in employee retention credits during the quarter.
For 2021, the Company is targeting loan arrangements in the order of US $ 165 million To US $ 200 million compared to US $ 84.9M in 2020 and US $ 154.2 million in 2019.
“We are excited to meet our 2021 goal of exceeding pre-pandemic loan volume levels in the weeks following the end of the year celebration. $ 1 billion in total loan origination in the history of IOU Financial, ”added Gloer. “We are thrilled and proud to be a part of the comeback story of thousands of small businesses across North America. “
The Company continues to migrate towards a market strategy allowing it to accelerate the growth of loan origination. This strategy has the effect of placing more emphasis on service and other income rather than the interest income associated with holding loans as part of a loan portfolio. Interest income has decreased as the principal loan portfolio balance continues to decline while management and other income has increased in line with the increase in the management portfolio.
Due to the gradual reduction in the loan portfolio, there are no longer any interest charges associated with the financing credit facilities, as IOU repaid this outstanding debt at the end of 2020. Interest charges have decreased during the quarter, as the Company was able to use its financial resources to redeem some of its convertible debentures.
In addition, market strategy will make the loan loss allowance irrelevant and IOU will continue to focus on cash receipts on the remaining portfolio, which may result in loan loss allowance reversals and recoveries of loans. previously written off loans.
Please refer to the table below for adjustments to gross revenue and IFRS operating expenses to better reflect the actual operating performance of the company.
Origins of the loan: In the third quarter of 2021, the Company financed US $ 52.2 million in loans (2020: US $ 18.4 million), which represents an increase of 183.1% compared to the same period last year. For the first nine months of 2021, the Company funded US $ 111.9 million in loans (2020: US $ 65.7 million), which represents an increase of 70.3% compared to the same period last year.
Interest income: Interest income decreased by 95.3% for $ 0.1 million in Q3 2021 from $ 2.4 million in Q3 2020. The principal balance of the loan portfolio decreased by 80.0% to stand at $ 4.2 million in Q3 2021 from $ 20.8 million in the third quarter of 2020.
Maintenance and other income: Services and other products increased 121.8% for $ 3.1 million in Q3 2021 from $ 1.4 million in Q3 2020. The principal balance of the service portfolio increased by 75.2% to reach $ 99.7 million in Q3 2021 from $ 56.9 million in the third quarter of 2020.
Adjusted gross revenue: Decreased to $ 3.2 million (2020: $ 3.8 million), a decrease of 15.5% for the three-month period ended September 30, 2021 compared to the same period in 2020.
Interest charges: Interest expense continued to decline compared to $ 0.5 million in Q3 2020 vs $ 0.3 million in the third quarter of 2021.
(Recovery of) Provision for loan losses: Due to better than expected recovery on loans for which IOU recorded an allowance for loan losses in previous periods, the Company continues to benefit from reversals of the allowance for loan losses (reversal of $ 0.2 million in Q3 2021 vs $ 0.7 million in the third quarter of 2020).
Cost of income: Lay flat at ($ 0.2) million in Q3 2021 compared to Q3 2020.
Adjusted operating expenses: 35.9% increase at $ 3.0 million in Q3 2021 compared to $ 2.2 million in Q3 2020 mainly due to an increase in wages and salaries and data and IT costs.
Adjusted net profit (loss): IOU closed at the end of its third quarter June 30, 2021 with an adjusted net profit of $ 0.4 million compared to adjusted net income of $ 1.7 million for the third quarter ended September 30, 2020. IOU closed over the completed nine-month period September 30, 2021 with an adjusted net loss of $ 0.4 million, compared to the adjusted net loss of $ 3.1 million for the same period last year.
IFRS net profit (loss): IOU closed at the end of its third quarter September 30, 2021 with an IFRS net profit of $ 3.1 million, Where $ 0.03 per share, compared to IFRS net income of $ 1.7 million Where $ 0.02 per share for the same period in 2020. IOU closed over the nine-month period ended September 30, 2021 with an IFRS net profit of $ 3.0 million, Where $ 0.03 per share, compared to the IFRS net loss of $ 3.5 million Where (0.04) $ per share for the same period last year.
Financial statements and management discussion and analysis of IOU for the quarter ended September 30, 2021 have been filed on SEDAR and are available at www.sedar.com.
About IOU Financial Inc.
IOU Financial Inc. is a wholesale lender that provides quick and easy access to growth capital to small businesses through a network of preferred brokers across the United States and Canada. Built on its proprietary IOU360 technology platform that connects underwriters, traders and brokers in real time, IOU Financial has become a trusted alternative to banks by creating more $ 1 billion in loans to finance small business growth since 2009. IOU trades on the TSX Venture Exchange under the symbol IOU (TSXV: IOU) and on the US markets over the counter as IOUFF. To learn more about the history of IOU Financial, financial products or to join our broker network, please visit www.IOUFinancial.com.
Certain information contained in this press release may contain forward-looking statements involving important known and unknown risks and uncertainties. These forward-looking statements are subject to many risks and uncertainties, some of which are beyond the control of IOU, including, but not limited to, the impact of general economic conditions, industry conditions, dependence on l with regard to regulatory and shareholder approvals, documentation execution and the uncertainty of securing additional funding. Readers are cautioned that the assumptions used in preparing this information, although believed to be reasonable at the time of preparation, may prove to be imprecise and, as such, forward-looking statements should not be relied on unduly. IOU assumes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
- Adjusted gross revenue is defined as gross revenue prepared in accordance with IFRS for the period, plus amortization of management assets less gains on the sale of loans. The Company uses adjusted gross revenues because it eliminates items that do not necessarily reflect the performance of the Company. Specifically, it eliminates the non-cash gain on loan sales and the non-cash amortization of management assets that affect operating results based on the timing and amount of loan sales.
- Adjusted operating expenses are calculated as follows: total operating expenses prepared in accordance with IFRS for the period minus: stock-based compensation and non-recurring costs, plus non-recurring gains. The Company uses adjusted operating expenses because it eliminates items that do not necessarily reflect the performance of the Company. Specifically, it eliminates non-cash stock-based compensation that is paid at different times and at different prices and one-time costs and gains that only affect operating results periodically.
- The calculation of adjusted net profit (loss) is defined as the net profit (loss) for the period prepared in accordance with IFRS less: gain on sale of loans and non-recurring gains, plus: amortization of management assets, stock-based compensation and non-recurring costs.
SOURCE Financial IOU Inc.