OnDeck 1Q Sees Loan Growth, Better Credit Metrics

OnDeck Capital first quarter results, which were reported Tuesday (May 8), showed better credit metrics and headline numbers that topped the Street on the top and bottom lines.

Adjusted earnings came in at eight cents a share, topping the Street by four cents. Gross revenues were $90.3 million, better than the Street by $3 million.

The company said that loan originations in the quarter were $590.6 million, up 8 percent over the prior quarter.

The company’s provisions for losses was off 21 percent to $36.3 million.

In the conference call with analysts, CEO Noah Breslow said, “We delivered solid originations growth, while improving key credit metrics. We executed on real estate transactions that reduce future operating expenses and we also closed two important financing transactions in April. These financing transactions set new benchmarks in our industry and will support our growth going forward.”

Interest yield on that book of business is at 35.6 percent, up from 34.8 percent in the comparable period.

Credit metrics improved, as the net charge-off rate in the latest quarter was 10.9 percent, better than the previous 12.9 percent and 14.9 percent a year ago.

“We believe we are well-positioned to achieve 10 percent to 15 percent loan growth this year,” Breslow told analysts.

The April rollout of Instant Funding has garnered a positive reaction, he said, across what he termed a select group of customers. Work continues with JPMorgan amid OnDeck’s push into services. The company plans to announce a second bank partnership this year, as banks are looking to digitize originations, Breslow said. Incremental investments in technology, as noted in supplemental materials, will come in at $5 million this year.

Later in the call, Breslow stated that in terms of longer-term plans and larger trends, “We’re seeing kind of this once-in-a-generation transformation of analog to digital going on in the banking system, and that’s really the trend that we’re capitalizing on here.”