Daily News: February 17, 2017

OnDeck Reports Higher FY Loss as Provision Charges Double


OnDeck presented its full year 2016 financial results, highlighted by continued execution of the company’s long-term plan, leading to record levels of loans under management, originations and gross revenue.

The company reported a net loss of $83.0 million for full-year 2016, up from a net loss of $1.3 million a year earlier. Gross revenue of $291.3 million was up 14.3% from $254.8 million in 2015. The company noted its provision for loan loss charges doubled from $74.9 million in 2015 to $150.0 million in 2016.

For the full year of 2016, OnDeck loaned over $2.4 billion to small businesses in the U.S., Canada and Australia and earned $291.3 million of gross revenue.

The following highlights were excerpted from the earnings report:

  • Loan originations of $2,404.0 million for full-year 2016 were up 23.3% from $1,874 million a year earlier
  • Loans and loans under management totaled $1,848.6 million as of December 31, 2016 were up 44.8% from $1,276.8 million a year earlier
  • Net charge offs of $93.1 million were up from $71.4 million a year earlier
  • The net interest margin in 2016 of 17.8% compared to 19.2% in 2015

“OnDeck made further progress executing our long-term plan during the fourth quarter of 2016,” said Noah Breslow, OnDeck’s chief executive officer. “We continued to benefit from steady growth of Loans Under Management, the expansion of our funding sources, and the signing of new strategic partners. We also drove continued efficiencies across our operating expense base as our Adjusted Expense Ratio* improved over 400 basis points from the prior year.”

“Portfolio delinquencies in the quarter continued to be generally consistent with historical levels,” continued Breslow. “However, we recorded a higher provision expense, reflecting overall portfolio growth and a $19 million addition to reserves resulting from a recalibration of loss estimates for loans with original maturities of 15 months or longer. Most of these loans were originated in 2016 as part of our expanded offerings to OnDeck customers and, even with the updated loss estimates, continue to generate attractive returns.”