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IEG Holdings (IEGH) Reports 3Q Results, Declares Dividend & Resumes Advertising

11/13/2017
By Steven Ralston, CFA
 
OTC:IEGH


On November 9, 2017, IEG Holdings (OTC:IEGH) reported financial results for the quarter ending September 30, 2017. Total revenues decreased 26.9% to $407,370 from $557,551 in the comparable quarter in 2016, primarily due to a decrease in the average interest-earning loan book size of consumer receivables as a result of reduced advertising to new customers. However, during the third quarter, advertising was resumed with $180,808 in expenditures from the anemic pace of $3,460 during the first half.


Net loan receivables declined 31.4% YOY (1.6% sequentially) to $4,975,770 compared to $7,250,691 as of the end of the third quarter of 2016, due to lower loan originations.


As of September 30, 2017, the company had 81 loans with a total balance of $326,000 that were in default or delinquent (as defined as over 90 days past due), an improvement from the second quarter-end of 74 loans (total balance of $335,563). The unsecured personal loan delinquency rate improved to 5.5% sequentially from 5.6%. The quarterly provision for credit losses expense increased 16.4% YOY to $300,205 versus compared to $257,907 in the third quarter of 2016. The company carries a provision for credit losses which is estimated collectively based on the loan portfolio and general economic conditions, which currently targets a 16.0% allowance.


Salaries and compensation expenses increased 5.4% to $419,144 versus $397,795 in the third quarter of 2016, as the CEO’s annual base compensation was reinstituted and raised to $1.2 million beginning July 1st. Other operating expenses decreased 66.7% (or $210,383) to $104,985. Advertising expenses increased 95.3% (or $88,215) to $180,808 as management re-implemented a customer acquisition campaign through online advertising and direct mail for lead generation.  Rent expense decreased 49.7% (or $23,547) to $23,826 versus the comparable period in 2016, primarily due to termination of leases in Florida, Illinois and Arizona during 2016. Public company and corporate finance expenses increased 9.8% (or $39,402) to $449,321. Overall, total operating expenses declined 4.0% (or $62,036).

During the third quarter, IEG Holding recorded a $624,283 legal settlement charge related to a now-settled civil action with the Commonwealth of Virginia. Without admitting any wrongdoing, IEG agreed to refund interest collected in excess of 12% APR and to adjust current loans of Virginia-resident borrowers to an interest rate of 12% APR.

The company reported a net loss of $1,696,579 ($0.13 per diluted share) compared to a net loss of $986,424 ($0.10 per diluted share) in the comparable quarter last year. As of September 30, 2017, stockholders’ equity was $6,954,961, a 1.3% decrease as compared to $6,820,887 on December 31, 2016. 

Preferred Stock Offering

On October 30, 2017, Daseke issued 934,589 shares of Series H preferred stock at $1.00 per share to four non-U.S. persons. Gross proceeds were $934,589. All Series H preferred shares will automatically be converted into common shares on 4-for-1 basis on December 31, 2017. 

Share Repurchase Plan

On January 9, 2017, IEG Holdings announced an open market stock repurchase program of up to $2 million worth of common stock. The Board of Directors (Paul Mathieson being the sole Director and holder of 54% of the shares outstanding) authorized the repurchase, which was initially active through December 31, 2017. 

The repurchase of shares was delayed until the tender offer for share of OneMain was closed, which provided significant additional capital. However, during the third quarter, 418,773 shares were repurchased at a cost of $276,880 (an average of $0.66 per share).

On October 30, 2017, the Board of Directors approved an extension of the stock repurchase program to December 31, 2018. As October 30, 2017, $1,723,120 remains available under the stock repurchase authorization.

New Dividend Policy

IEG Holdings declared its maiden cash dividend of $0.005 per common share (record date June 5 and payable on August 21, 2017). 

Concurrent with the reporting of second quarter financial results, IEG Holdings declared its second cash dividend of $0.005 per common share (record date of August 11, 2017). The one-member Board expects to pay ongoing quarterly dividends going forward.

The company’s third cash dividend of $0.005 per common share was declared on October 30th with an ex-date of November 9, 2017 (record date of November 11th) and payable on November 20, 2017.

IEG Holdings Corp. is a consumer finance company that offers unsecured consumer loans (under the brand name “Mr. Amazing Loans”) to individuals in 19 states via an online platform (mramazingloans.com). The company provides $5,000 and $10,000 personal consumer loans over a term of five years in Alabama, Arizona, California, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Utah and Virginia. 

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