OnDeck Reports Record Origination Volume in Third Quarter Report
November 6, 2018
Today, OnDeck released its third quarter earnings report, which revealed origination volume of $648 million, a record high for the company and an increase of 22% from a year ago. OnDeck recently passed the $10 billion mark in total originations. The average term loan size of $56,000 remained largely unchanged from last quarter.
“Lending volume from our strategic funding advisor and referral partner channels continues to build, reflecting growth at our network of partners and alignment between the quality of applications coming in and our risk appetite,” said OnDeck CEO Noah Breslow, “…[and] we were pleased that we saw increased website traffic leading to higher applications.”
Gross revenue increased to $103 million, up 8% from the previous quarter and up 23% from a year ago. This was driven by higher Interest income due to portfolio growth and higher yields, according to the company earnings statement.
In the middle of October, OnDeck announced the creation of ODX, which will focus on providing an online lending platform to banks to help them serve their clients more efficiently. At the end of the month, and coinciding with the Money 20/20 conference, OnDeck announced that PNC Bank was ODX’s first customer. ODX grew out of a successful partnership that OnDeck has developed with Chase bank, starting in 2016.
In response to a question after this morning’s earnings call, Breslow said that about $10 million is being spent on startup costs and infrastructure for ODX, and that the revenue model will be slightly different depending on the bank client.
“The revenue model [for ODX] does differ a bit between banks,” Breslow said. “But generally speaking, there is a technology licensing component, there is a professional services or customization component and then there is a volume-based component.”
OnDeck (ODX) Adds PNC Bank as Second Bank Client
October 22, 2018
PNC Bank announced today that in 2019 it plans to offer fully digital business lines of credit by using OnDeck’s Platform-as-a-Service solution, ODX, a new subsidiary of the online lender.
Last week, OnDeck announced the creation of ODX, which is an OnDeck subsidiary that will focus soleIy on helping banks become faster, more efficient online lenders to small businesses. A successful partnership with Chase bank in 2016 prompted OnDeck leadership to created a separate entity and PNC Bank is ODX’s first major client.
“We decided strategically this year to really make a big bet… [and be a] company that’s going to support many banks,” OnDeck CEO Noah Breslow told AltFinanceDaily.
OnDeck Launches New Subsidiary
October 16, 2018
OnDeck announced today that it has created a new subsidiary, called ODX, which will help banks become more efficient online lenders. OnDeck’s CEO Noah Breslow told AltFinanceDaily that ODX is an expansion of OnDeck’s successful partnership with JPMorgan, which started in 2016.
“We created what at the time was I think a pretty groundbreaking partnership with the largest bank in the country,” Breslow said. “Now today, we’re funding loans very efficiently using our platform and [Chase’s] marketing and their balance sheet. And it really is sort of the promise of a fintech working with a bank. So we decided strategically this year to really make a big bet in this area…[and create] a company that’s going to support many banks.”
OnDeck has chosen Brian Geary to serve as president of ODX. Breslow said this is because Geary launched and oversaw the collaboration with Chase, whereby OnDeck built a digital bank originations platform for the bank.
“Geary has really been the focal point of that entire effort,” Breslow said, “so he was a very natural choice to head this up.”
OnDeck has drawn talent from among its existing employees to create this company, but it also hired Raj Kolluri to serve as Head of Product and Technology for ODX. And Geary said they are actively hiring to build the team. Kolluri comes from SS&C Primatics, a software company, where he served as Vice President of Product and Engineering, helping to build the company’s software as a service analytics platform for banks.
When asked if helping banks to become faster online lenders is a way of aiding OnDeck’s own competitors, Geary said he didn’t see it that way.
“We don’t view it as competitive,” Geary said. “The banks and OnDeck are playing in different segments of the market. [Banks] have a tighter risk tolerance and certain customers they can serve. So we’re enabling them to serve those customers more efficiently.”
Breslow said that ODX, which he described as “a company within a company,” will soon be announcing its next bank partnership.
ODX will operate within the offices of OnDeck, including its offices in New York, Arlington, VA and Denver, CO.
OnDeck Small Business Online Lending Tops $10 Billion
September 12, 2018OnDeck is the world’s largest non-bank online small business lending platform.
Federal Reserve says small businesses are turning to online lenders in record numbers
NEW YORK, N.Y., September 12, 2018 – – OnDeck® (NYSE: ONDK), today announced it has achieved a milestone in the Financial Technology (FinTech) industry, becoming the first non-bank online lender to surpass $10 billion in total loans originated to small businesses. OnDeck, with operations in the United States, Canada and Australia, is now the world’s largest non-bank online lender to small business by total loan volume.
The achievement by OnDeck, a pioneer of the FinTech lending industry, is the latest indication that small businesses increasingly prefer to seek financing online. According to the recent Small Business Credit Survey from the Federal Reserve, small business owners are turning to online lenders in record numbers. In 2017, 24 percent of small businesses seeking credit applied online, up from 21 percent the previous year. Not only did the total number of loan applications to online lenders increase in 2017, but satisfaction rates of small businesses soared almost 50 percent year-over-year.1
OnDeck provided its first small business loan online in 2007, taking just 11 years to pass $10 billion in total loan volume in a digital lending market it helped create. The majority of OnDeck’s lending occurred in the last few years as it gained scale, with the company originating $2.1 billion in loans in 2017 alone.
“If reaching $10 billion dollars in total loan volume online tells us anything, it’s that the days of old-fashioned lending to small businesses are numbered,” said Noah Breslow, Chairman and Chief Executive Officer, OnDeck. “We created OnDeck because we believed the Internet could revolutionize and speed up the way underserved small businesses access capital. Today, we are helping to fill a credit gap across hundreds of industries by providing fast, secure and transparent loans that enable small businesses to grow, generate economic activity and create jobs. We look forward to providing billions more in financing and powering the small business lending migration to the online model via our OnDeck-as-a-Service platform.”
Small businesses are the economic backbone of America, accounting for more than 99% of all U.S. companies1 and employing over half of all private sector workers2. However, they still face a growing credit gap. According to the Federal Reserve survey, 54% of small businesses report credit shortfalls3 and lower-income communities are disproportionately impacted. Traditional large banks deny 44% of all small business loan applications3 and many are steadily exiting the small business credit market. Since 2008, small business lending from traditional sources has fallen over 20%4.
Identifying the developing credit gap over a decade ago, OnDeck transformed the means by which small businesses access capital, using proprietary technology and a small business credit scoring system, the OnDeck Score®, to more efficiently evaluate a business’ creditworthiness and make lending decisions in real time. OnDeck provides term loans and lines of credit to small businesses and can supply customers with funding in as little as one business day. The economic impact of this online lending activity is substantial. Immediate infusions of capital enable small businesses to purchase inventory, cover operational costs, or expand without delay, which can stimulate economic growth and help create jobs in their communities.
OnDeck and the Impact of Online Lending on the Economy
An Analysis Group report commissioned by OnDeck in 2015 analyzed the economic impact from the first $3 billion OnDeck lent to small businesses. The report estimates that those loans powered $11 billion in business activity and created 74,000 jobs nationwide. In 2018, OnDeck announced it had provided small businesses more than $10 billion in capital.
In May of 2018, a report on small business online lending in the United States revealed that OnDeck and four other small business lending platforms funded nearly $10 billion in online loans from 2015 to 2017, generating $37.7 billion in gross output and creating 358,911 jobs and $12.6 billion in wages in U.S. communities. The upsurge in online lending is filling a critical financing gap for small businesses across industries, according to NDP Analytics, a Washington, D.C.-based economic research firm. See the NDP Report here: http://www.ndpanalytics.com/online-lending/
OnDeck Company Timeline
Download here: https://www.ondeck.com/wp-content/uploads/2018/09/10-year-timeline-02.pdf
OnDeck Profitable, Again
August 7, 2018OnDeck posted a profit this morning, the 2nd time in the last 3 quarters. The company reported $5.8 million in net income for Q2. The average loan size decreased and the average effective interest rate increased (36.1%).
Although the Fed has been gradually raising interest rates, OnDeck’s costs of funds actually went down to 6.6% from 6.8% the prior quarter. This was due to favorable refinancing rates on the $225 million securitization and new $100 million revolving credit facility that closed in April, they said.
OnDeck originated $587 million in loans for the quarter, down slightly from $591 million in Q1.
OnDeck Funded $591M to Small Businesses in Q1
May 8, 2018OnDeck’s originations were $591 million in Q1 of this year, according to their earnings report, up 3% year-over-year. 29% of that was generated by funding advisors, OnDeck’s term for brokers.
They reported a total net loss of $1.9 million.
Compared to the same quarter last year, OnDeck’s Cost of Funds Rate increased from 5.9% to 6.8%, the 15+ Day Delinquency Ratio decreased from 7.8% to 6.7%, the Net Charge-off Rate decreased from 14.9% to 10.9%, and their average APR increased from 44% to 46%.
During the Q&A, OnDeck CEO Noah Breslow said that they had a strong quarter with Chase originations and that their second major bank is on track to be announced later this year.
OnDeck CFO Moves On After 10 Years
March 13, 2018OnDeck announced yesterday that its CFO, Howard Katzenberg, would be leaving on March 26th and is being replaced by Kenneth A. Brause. An OnDeck spokesperson told AltFinanceDaily that Katzenberg’s departure is completely amicable.
“[Katzenberg] is still a young man and he’s looking to make the next mark in his career,” the spokesperson said.
Katzenberg started with OnDeck in 2008 as one of its first employees. He will stay on as an advisor through the middle of April to guarantee a smooth transition. Brause, his replacement, has more than 30 years of experience in the financial services industry and currently works as Executive Vice President & Treasurer at CIT Group.
OnDeck Shows A Path Forward
February 15, 2018
OnDeck announced this week very positive fourth quarter and full year 2017 financial results, including a fourth quarter GAAP net income of $5 million and an expectation for continued margin and profit growth in 2018.
“We worked hard in 2017, not just to achieve profitability, but to strengthen the key fundamentals of our business that drive our success,” OnDeck CFO Howard Katzenberg told AltFinanceDaily.
This was a very significant milestone for the New York-based online lender who has been challenged by critics in the past on their trajectory. The company also grew in revenue. Net revenue was $152.6 million in 2017, up from $108.9 million the previous year.
Founded in 2007, OnDeck is considered one of the original alternative online lending companies. In 2014, the company went public on the New York Stock Exchange and has made more than $8 billion in loans to small businesses.
“[Last year] was a transformative year for OnDeck, marked by our strategic decision to strengthen our financial profile and accelerate our path to profitability,” said CEO Noah Breslow. “Looking ahead to 2018, we expect to drive double digit loan growth due to our strong customer demand, disciplined risk management and focus on scaling responsibly.”
For the fourth quarter of 2017, OnDeck’s loan originations were $546 million, up three percent from the prior quarter. And the credit quality of new originations, measured by both OnDeck Score and personal credit scores improved.
“Since Q2 2017, we have cut out the riskiest parts of our customer base,” Katzenberg told AltFinanceDaily.
