• Gross revenue increased 5.7% to $13.2 million for the nine-month period ended September 30, 2017 compared to the same period in 2016.
• Opex (excluding non-recurring costs) decreased 19.3% to $2.2 million for the quarter ended September 30, 2017 compared to the same period last year. The Company achieved its target of quarterly operating costs of $2.0 million to $2.2 million on a normalized basis.
• The Company anticipates average quarterly operating expenses of approximately $1.6 million on a normalized basis in 2018.
• Provision for loans losses increased 12.9% to $2.5 million in the quarter. IOU is committed to address loan losses through higher loan quality originations. In addition, the Company has taken back service and collections previously outsourced to a third-party and has commissioned a consultant to review its credit policies.

MONTREAL, Nov. 29, 2017 /CNW Telbec/ - IOU FINANCIAL INC. ("IOU" or "the Company"; TSX-V: IOU), a leading online lender to small businesses, announced today its results for the three and nine month period ended September 30, 2017.

"IOU has met its goal of reduced operating costs in the quarter and will continue to seek additional operational efficiencies and seek favourable risk adjusted returns through higher loan quality originations in order to meet its objective of achieving profitability," said Phil Marleau, CEO.

FINANCIAL HIGHLIGHTS

• Loan originations for the second quarter ended September 30, 2017 were US$19.6 million versus originations of US$30.2 million for the same period last year. Loan originations decreased by 35.3% due to changes made to the Company's lending policies in response to increased delinquency levels. Year-to-date, loan originations amounted to US$67.8 million, representing a decrease of 22.5% over the origination of US$87.5 million for the same period last year.
• As of September 30, 2017, IOU's total loans under management amounted to approximately $60.9 million as compared to $78.6 million in 2016. On September 30, 2017, the principal balance of the loan portfolio amounted to $35.0 million compared to $40.9 million in 2016. The principal balance of IOU's servicing portfolio (loans being serviced on behalf of third-parties) amounted to approximately $25.8 million compared to $37.7 million in 2016.
• IOU recorded gross revenue during the second quarter of $4.5 million versus $5.7 million for the same period last year, representing a 19.8% decrease. The decrease in gross revenues was primarily driven by a decrease in interest income to $3,602,906 in 2017 from $4,498,671 in 2016, as a result of a decrease in the size of the loan portfolio. For the nine-month period ended September 30, 2017, gross revenues totaled $13,198,510 ($12,482,781 in 2016), representing an increase of 5.7%.
• Interest expense during the three-month period ended September 30, 2017 increased by 8.5% to $945,720, up from $871,289 over the previous year. The increase is attributable to an increase in borrowings under the credit facility partially offset by a reduction in the cost of funds borrowed versus the previous year. For the nine-month period ended September 30, 2017, interest expense amounted to $2.8 million compared to $2.2 million in 2016.
• Provision for loan losses (net of recoveries) increased to $2.5 million for the three-month period ended September 30, 2017, up from $2.2 million for the previous year. The increase is primarily attributable to an increase in defaults by borrowers and partially due to an increase in the average size of the loan portfolio. To improve loss performance, IOU Financial has made changes to its lending policies. In addition, the Company has implemented certain process changes to improve its servicing and collections which includes an aggressive litigation process against businesses who intentionally default on their loan obligations. For the nine-month period ended September 30, 2017, IOU recorded a provision for loan losses of $6.7 million compared to $4.2 million in 2016.
• Excluding non-recurring costs, operating expenses decreased 19.3% to $2.2 million for the three-month period ended September 30, 2017 as compared to $2.7 million for the previous year. During the quarter ended September 30, 2016, the Company adopted a plan to reduce operating expenses. The Company achieved its target of quarterly operating costs of $2.0 million to $2.2 million on a normalized basis in the third quarter. For the nine-month period ended September 30, 2017, operating expenses amounted to $7.2 million, excluding non-recurring costs, compared to $8.8 million in 2016, representing a decrease of 18.0%. The Company anticipates average quarterly operating expenses of approximately $1.6 million on a normalized basis in 2018.
• IOU closed its third quarter 2017 with a net loss of $1.4 million, or $0.02 per share, compared to a net loss of $0.4 million or $0.01 per share during the same period of 2016. For the nine-month period ended September 30, 2017, the net loss amounted to $4.5 million versus $3.1 million in 2016.
• IOU closed its third quarter 2017 with an adjusted net loss of $1.2 million, which excludes certain non-cash and non-recurring items, compared to an adjusted net loss of $0.1 million in the third quarter of 2016. Year-to-date, the adjusted net loss was $3.2 million compared to an adjusted net loss of $1.7 million for the same period in 2016.

OUTLOOK
IOU continues to focus on finding operational efficiencies, the performance of its loan portfolio and achieving profitability.

The Company will maintain its core strategy of identifying, recruiting, and partnering with business loan brokers throughout the United States while continuing to focus its efforts on building long-term partnerships with its existing broker base by investing time in offering great service through dedicated account executives.

IOU also intends to grow loan originations by forming new strategic partnerships with entities such as banks and small business suppliers and leveraging their relationships with small businesses to add new customers; expanding its product offering to allow it to serve small businesses whose needs are not met by its current products; investing in direct marketing and sales; and continuing its expansion into Canada.

IOU's financial statements and management discussion & analysis for the quarter ended September 30, 2017 have been filed on SEDAR and are available at www.sedar.com.

CONFERENCE CALL
The Company will hold a conference call at 4:30 p.m. (EDT) on Thursday, November 30, 2017, to discuss its financial results. The dial-in number to access the conference call from Canada and the United States is 1‑800‑259‑2693 (toll-free), conference ID: 3239813.

CORPORATE UPDATE
IOU wishes to confirm it entered into a consulting agreement with Rose of Sharon Capital Corporation, a newly-incorporated entity held by Benjamin Yi, to assist with a variety of corporate development and capital markets-related projects, including the provision of certain investor relations services. The overall agreement is for $7,500 per month until June 30, 2018. Mr. Yi did not have any material direct or indirect interest in the Company prior to entering into the agreement.

About IOU Financial Inc.
IOU Financial provides small businesses throughout the U.S. access to the capital they need to seize growth opportunities quickly. Typical customers include medical and dental practices, grocery and retail stores, restaurant and hotel franchisees and e-commerce companies. In a unique approach to lending, IOU Financial's advanced, automated application and approval system accurately assesses applicants' financial realities, with an emphasis on day-to-day cash flow trends. It makes loans of up to $300,000 to qualified U.S. applicants ($100,000 in Canada) within a few business days, with affordable charges favourable to cash-flow management. IOU Financial's speed and transparency make it a trusted alternative to banks. To learn more visit: www.ioufinancial.com.

Forward Looking Statements
Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of IOU including, but not limited to, the impact of general economic conditions, industry conditions, dependence upon regulatory and shareholder approvals, the execution of definitive documentation and the uncertainty of obtaining additional financing. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. IOU does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.

The TSX-V has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

SOURCE IOU Financial Inc.