IOU Financial Profitable, Again
IOU Financial originated $29.2 million during Q2 2018, according to the company’s quarterly financial statement released today. This is an increase of 11.6% compared to the same period last year, and an increase of 19.1% over originations of $24.5 million from last quarter. This is also IOU’s third consecutive quarter with positive earnings.
“It’s the contribution from our team, our account executives, broker partners [and] product expansion,” IOU CEO Phil Marleau told deBanked as an explanation for the company’s growth.
Marleau said that over the past year IOU has been originating loans for larger amounts and for longer terms, like longer than 12 months. He also said IOU has been expanding into new industries.
Benjamin Yi, who leads IOU’s Capital Markets & Corporate Development efforts, characterized the company’s results as a “mini version of OnDeck,” alluding to OnDeck’s profitable 2018 Q2 earnings report.
Additionally, provision for loan losses (net of recoveries) decreased by 61.2% to $900,000 for the three month period ending June 30, 2018. Marleau said this is largely because the company has been using a more aggressive litigation strategy against businesses that default on their loan obligations.
And the principal balance of IOU’s servicing portfolio (loans being serviced on behalf of third-parties) amounted to approximately $44.1 million compared to $24.1 million in 2017. Marleau said that servicing loans is part of IOU’s business model and that this near doubling of its servicing portfolio in a single year is simply a reflection of the overall growth of the company.
Most of IOU’s revenue comes from making loans, of up to $300,000, to American small businesses. According to the company website, almost half of IOU’s merchants use the business loans to purchase equipment. Other loans are used for business expansion and temporary cash flow. To date, IOU has originated $563 million in loans.
Despite the focus on the American market, the company’s headquarters is in Montreal and its stock is listed on the Toronto Stock Exchange. While IOU’s footprint in the Canadian market is still very small, Marleau expects that to change and is looking forward to expanding in Canada.
“We’re part Canadian,” Yi said.
Marleau, who is Canadian, met cofounder and IOU President Robert Gloer at a fintech conference in San Francisco, and the company’s first loan was made in 2009. Gloer had ties to Atlanta, which is why IOU’s U.S. office is located there. While the company’s headquarters is in Montreal, the Atlanta office is larger and is where the company’s sales operations take place. The company has about 40 employees, but only about ten work at the Montreal headquarters.Last modified: August 24, 2018
Todd Stone is a reporter for deBanked.