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Iou Financial Inc V.IOU

IOU Financial Inc. is a wholesale lender that provides access to growth capital to small businesses through a network of preferred brokers across the United States. The Company has built IOU360 technology platform that connects underwriters, merchants and brokers in real time. Its IOU Financial platform connects to dozens of data sources, aggregating and automatically processing hundreds of data points on a business in seconds. It also operates a commercial lending brokerage business through its wholly owned subsidiary, ZING Funding. The Company sells substantially all loans that it originates to institutional purchasers and retains the right to service those loans on behalf of the purchasers in exchange for servicing fees based on collections. Its customers include medical and dental practices, grocery and retail stores, restaurant and hotel franchisees and e-commerce companies.


TSXV:IOU - Post by User

Comment by Methodon Dec 22, 2021 10:07pm
213 Views
Post# 34256865

RE:MSR tricky beast

RE:MSR tricky beast

My calculations are very different. 

What is your revenue calculation if originations average US$60m/quarter for a year? 


ValueYSK wrote: Mortgage Servicing Rights can be a very lucrative capital light sector

However, the accounting is very tricky and has to be taken with a grain of salt. 

First right now, IOU Financial is nowhere breakeven. 
I'm not saying this is a fraud or anything, and they do have masive amount of receivable thet are winding down and cash on hand so that's your safety net. 

However their loan portfolio volume has to grow significantly
for the current SG&A overhead of approx $11m to be justified solely from their
servicing cashflow

from my very rough calculation they need to grow the loan portfolio 
about 5.5X or from current $103mil to about $567mil 

They currently have agreement with Neuberger Berman to purchase up to
US$150mil so in that case it will take about 3.1Years to breakeven.

let's say they make origination at about current speed. 
It will take about 9Q or 2.25years for them to break even at current speed.

Maybe Neuberger Berman is so happy they will increase the purchase speed in the future. 
I don't know yet

I'm student of graham so let's say we look down at project a scenario 3years out 
when they breakeven with current agreement


 

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