NEW YORK, April 30, 2020 /PRNewswire/ -- OnDeck® (NYSE:
ONDK), the leader in online lending for small business, today
announced first quarter 2020 Gross Revenue of $110.6 million, Net loss of $59.0 million, and Adjusted Net loss of
$57.6 million. The first
quarter loss was driven by an increase in the Allowance for credit
losses to reflect the increase in expected credit losses related to
the COVID-19 pandemic.
"In the span of several weeks, the spread of COVID-19 led to
government-mandated lockdowns for small businesses both in the US
and globally, placing our customers under unprecedented economic
stress," said Noah Breslow, chief
executive officer. "After a successful and rapid transition to
remote work, we effected immediate changes to our business to
preserve liquidity, support our customer base, manage our loan
portfolio and reduce costs. With an uncertain timetable for the
reopening of the economy, and the effectiveness of government
stimulus for small businesses unclear, we will be reducing debt
balances in the second quarter and focusing on managing our
portfolio, delivering government stimulus to our customer base and
ensuring the company has the runway to scale operations again when
the economy reopens."
Review of Financial Results for the First Quarter of
2020
Net loss was $59.0 million, or
$0.94 per diluted share, compared to
Net income of $9.3 million,
$0.13 per diluted share, in the prior
quarter and $5.7 million, or
$0.07 per diluted share, in the
year-ago period.
Adjusted Net loss was $57.6
million, or $0.92 per diluted
share, compared to Adjusted Net income of $3.3 million, or $0.05 per diluted share, in the prior quarter and
$8.1 million, or $0.10 per diluted share, in the year-ago
period.
Loans and finance receivables grew $26
million, or 2%, sequentially and $89
million, or 7%, from a year ago to $1.3 billion reflecting growth in lines of credit
and, for the comparison to 2019, the closing of the Canadian
business combination in April 2019.
The increase from a year ago was also driven by lengthening the
duration of the portfolio as the weighted average maturity of term
loans originated in the first quarter of 2020 was 13.3 months
compared to 11.7 months in the year-ago quarter. Origination volume
of $592 million decreased 4% from the
prior quarter and 7% from the year-ago quarter primarily reflecting
credit tightening in March. Lines of credit accounted for 24% of
total loans and finance receivables at quarter-end, up from 23% at
December 31, 2019 and 18% a year
ago.
Gross Revenue of $110.6 million
was essentially flat with the prior and year-ago quarters.
Portfolio Yield of 33.3% decreased from 34.8% in the prior quarter
and 35.6% in the year-ago quarter reflecting higher past due
balances and a lower blended yield on new originations; the annual
comparison also reflects the addition of the portfolio from the
Canadian business combination. The changes in Other revenue were
driven by ODX, with the sequential increase reflecting new
relationships and the decrease from the year-ago quarter reflecting
the wind-down of a prior relationship.
Interest expense increased from the prior and year-ago quarter
to $11.6 million reflecting higher
debt balances to fund portfolio growth, share repurchase and
increased cash-on-hand. The Cost of Funds Rate was 4.8%, flat
with the prior quarter and improved from 5.4% in the year-ago
quarter reflecting lower market interest rates and lower borrowing
spreads on outstanding debt.
Net Interest Margin was 27.6%, down from 29.1% the prior quarter
and 29.5% in the year-ago quarter primarily reflecting a lower
yield on the portfolio, increased leverage due in part to growth
and share repurchase, and a higher proportion of cash in earnings
assets.
Provision for credit losses was $107.9
million reflecting an increase in the Allowance for credit
losses stemming from higher expected losses related to the COVID-19
pandemic. The Allowance for credit losses increased to $206 million at March 31,
2020, up $55 million or 36.1%
from year-end and $58 million or
39.5% from a year ago. The Reserve Ratio was 16.3% at March 31, 2020, up from 12.2% at December 31, 2019 and 12.5% a year ago. The Net
Charge-off Rate increased to 15.8% reflecting higher gross
charge-offs and reduced recoveries from the comparable periods,
with particular softness in the manufacturing, trade and
transportation sectors. The 15+ Day Delinquency Ratio increased to
10.3% from 9.0% the prior quarter and 8.7% a year-ago reflecting a
broad-based decline in portfolio collections since mid-March.
Total operating expense of $51.1
million decreased $3.3 million
from the prior quarter as it included discrete items. The
increase of $2.8 million from the
year-ago quarter is largely due to the additional expenses related
to the Canadian business combination that occurred on April 1, 2019. The Efficiency Ratio improved to
46.2% from 48.7% the prior quarter and increased from 43.9% the
year-ago quarter, while the Adjusted Efficiency Ratio* improved to
45.0% from 46.7% the prior quarter and increased from 41.1% the
year-ago quarter.
We did not record a tax benefit on the first quarter's GAAP
pre-tax loss due to uncertainties in our 2020 financial forecast
related to the COVID-19 pandemic. There was a tax benefit of
$5.4 million in the prior quarter,
which was driven by a $7.5 million
discrete release of the valuation allowance against our deferred
tax asset, and a $1.7 million income
tax provision in the year-ago quarter.
Total assets increased 3% from the prior quarter and 9% from a
year ago to $1.3 billion reflecting a
higher cash balance and portfolio growth, including the business
combination in Canada. Cash and
cash equivalents were $121 million,
up from $56 million the prior quarter
and $60 million the year-ago quarter
as we fully utilized our revolving corporate credit facility in
March to fortify our cash position. Debt increased to $1.0 billion from $915
million at December 31, 2019
and $842 million a year ago driven by
the funding of portfolio growth and share repurchases, as well as
increased cash balances.
Total OnDeck stockholders' equity of $212
million decreased $82 million
from the prior quarter primarily reflecting the first quarter 2020
net loss and $33 million of share
repurchases executed in January and February. Our diluted
share count decreased to 60.8 million from 69.0 million at
December 31, 2019 and 79.5 million a
year ago. Book value per diluted common share outstanding
decreased to $3.49 from $4.26 at December 31,
2019 and $3.87 a year ago.
Authorization to Repurchase Common Shares
The company fully utilized its initial $50 million share repurchase authorization in the
first quarter of 2020. On February 10, 2020, the Board authorized the
company to repurchase up to an additional $50 million of common shares, and the company has
approximately $23 million of
remaining capacity under that authorization. The company suspended
share repurchases late February but maintains authorization to
resume purchases at its sole discretion. This press release is
neither an offer to purchase nor a solicitation of an offer to buy
any securities.
Current Expected Credit Loss (CECL) Implementation
OnDeck adopted the new accounting standard for measuring credit
losses on financial instruments January
1, 2020. Upon adoption, the net change in the required
Allowance for credit losses was minimal with a $3 million decrease driven by lower required
reserves for lines of credit. Additionally, the $7 million reserve for unfunded line of credit
commitments previously included in Other liabilities was released
as part of the adoption. These changes resulted in a net increase
of approximately $10 million in
Stockholder's equity at adoption. The new CECL standards were
followed in establishing the March 31,
2020 Allowance for credit losses.
2020 Outlook
OnDeck withdrew its financial guidance for 2020 on March 23, 2020 and, due to significant and
ongoing uncertainties stemming from the COVID-19 pandemic, the
company is not providing updated 2020 financial guidance at this
time. However, as we execute our current priorities focused
on liquidity and capital preservation and position the company for
growth when economic conditions improve, we expect our financial
results to reflect the following trends:
- Portfolio contraction reflecting an 80% or more reduction in
second quarter origination volume,
- Increased delinquency and charge-offs stemming from
COVID-related economic deterioration,
- Reduced Net Interest Margin reflecting a lower portfolio yield,
and
- Reduced operating expenses as we took actions to cut second
quarter expenses by approximately 25%.
Our Allowance for credit losses and financial outlook for 2020
assume the macro-economic, small business lending and capital
market environments remain stressed in the near-term with a
recovery path beginning in the second half of 2020.
* Net income (loss) as used in the narrative of this
release is Net income (loss) attributable to On Deck Capital, Inc.
common stockholders in the accompanying tables. Adjusted Net
income (loss) and Adjusted Efficiency Ratio are Non-GAAP financial
measures. See "About Non-GAAP Financial Measures."
Conference Call
OnDeck will host a conference call to discuss its first quarter
2020 financial results on April 30,
2020 at 8:00 AM ET. Hosting
the call will be Noah Breslow, Chief
Executive Officer, Ken Brause, Chief
Financial Officer, and Nick Brown,
Chief Risk Officer. The conference call can be accessed toll free
by dialing (866) 393-4306 for calls within the U.S., or by dialing
(734) 385-2616 for international calls. The Conference ID is
6597816. A live webcast of the call will also be available at
https://investors.ondeck.com under the Press, Events &
Presentations menu.
About OnDeck
OnDeck (NYSE: ONDK) is the proven leader in transparent and
responsible online lending to small business. Founded in 2006, the
company pioneered the use of data analytics and technology to make
real-time lending decisions and deliver capital rapidly to small
businesses. Today, OnDeck offers a wide range of online term
loans, lines of credit and secured equipment finance loans
customized for the needs of small business owners. The company also
offers bank clients a comprehensive technology and services
platform that facilitates online lending to small business
customers through ODX, a wholly-owned subsidiary. OnDeck has
provided over $13 billion in loans to
customers in 700 different industries across the United States, Canada and Australia. The company has an A+ rating with
the Better Business Bureau and is rated 5 stars by Trustpilot. For
more information, visit www.ondeck.com.
About Non-GAAP Financial Measures
This press release and its attachments include historical and
projected "Adjusted" metrics including Adjusted Net income (loss),
Adjusted Net income (loss) per share, Adjusted Efficiency Ratio,
Adjusted Return on Assets and Adjusted Return on Equity. These
financial measures are not calculated or presented in accordance
with United States generally
accepted accounting principles, or GAAP, because they all exclude
items required to be included in the most directly comparable
measure calculated and presented in accordance with GAAP.
Adjusted metrics exclude items management deems to be
non-representative of operating results or trends ("noteworthy
items") and expenses related to stock-based compensation, which are
non-cash expenses. We believe these non-GAAP measures provide
useful supplemental information for period-to-period comparisons of
our business and can assist investors and others in understanding
and evaluating our operating results. However, these non-GAAP
measures should not be considered in isolation or as a substitute
for or superior to any measures of financial performance calculated
and presented in accordance with GAAP. Other companies may
calculate these or similarly titled non-GAAP measures differently
than we do. See "Non-GAAP Reconciliation" and "Non-GAAP Guidance
Reconciliation" later in this press release for a description of
these non-GAAP measures and a reconciliation to the most directly
comparable financial measures prepared in accordance with GAAP.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and other legal authority. Forward-looking statements can be
identified by words such as "will," "enables," "targets,"
"expects," "intends," "may," "allows," "plans," "continues,"
"believes," "anticipates," "estimates" or similar expressions.
These include statements regarding 2020 outlook and trends related
to portfolio contraction, originations volume, Net Interest Margin,
credit losses, economic deterioration, challenges in the small
business lending and capital markets, reduced operating expenses
resulting from cost saving efforts, Allowance for Credit Losses,
Net Charge-off Ratio, Provision for credit losses, Portfolio Yield,
repurchases of common stock under our share repurchase
authorization, CECL implementation, credit quality and
macro-economic and other external factors. They are based only on
our current beliefs, expectations and assumptions regarding the
future of our business, anticipated events and trends, the economy
and other future conditions. As such, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict and in many cases outside our control.
Therefore, you should not rely on any of these forward-looking
statements. Our expected results may not be achieved, and actual
results may differ materially from our expectations. The
impact of the novel strain of coronavirus SARs-CoV-2, causing the
Coronavirus Disease 2019, also known as COVID-19 could cause or
contribute to such differences. The COVID-19 health crisis is fast
moving and complex, creating material risks and uncertainties that
cannot be predicted with accuracy. Other important factors
that could cause or contribute to such differences, include the
following, many of which may be exacerbated due to the impact of
COVID-19: (1) our ability to achieve consistent profitability in
the future in light of our prior loss history and competition; (2)
our growth strategies, including the introduction of new products
or features, expanding our platform to other lenders through ODX
and maintaining ODX's current clients, expansion into international
markets, business development, offering equipment financing and our
ability to effectively manage and fund our growth; (3) possible
future acquisitions of complementary assets, businesses,
technologies or products with the goal of growing our business, and
the integration of any such acquisitions including Evolocity; (4)
any material reduction in our interest rate spread and our ability
to successfully mitigate this risk through interest rate hedging or
raising interest rates or other means; (5) worsening economic
conditions that may result in decreased demand for our loans or
services and increase our customers' default rates; (6) supply and
demand driven changes in credit and increases in the availability
of capital for our competitors that negatively impacts our loan
pricing; (7) our ability to accurately assess creditworthiness and
forecast and reserve for loan losses; (8) our ability to prevent or
discover security breaches, disruption in service and comparable
events that could compromise confidential information held in our
data systems or adversely impact our ability to service our loans;
(9) incorrect or fraudulent information provided to us by customers
causing us to misjudge their qualifications to receive a loan; (10)
the effectiveness of our efforts to identify, manage and mitigate
our credit, market, liquidity, operational and other risks
associated with our business and strategic objectives; (11) our
ability to continue to innovate or respond to evolving
technological changes and protect our intellectual property; (12)
our reputation and possible adverse publicity about us or our
industry; (13) failure of operating controls, including customer or
partner experience degradation, and related legal expenses,
increased regulatory cost, significant fraud losses and vendor
risk; (14) changes in federal or state laws or regulations, or
judicial decisions involving licensing or supervision of commercial
lenders, interest rate limitations, the enforceability of choice of
law provisions in loan agreements, the validity of bank sponsor
partnerships, the use of brokers or other significant changes; and
(15) risks associated with pursuing a bank charter, and risks
associated with either failing to obtain or obtaining a bank
charter; and other risks, including those described in Part I -
Item 1A. Risk Factors in our Annual Report on From 10-K for
the year ended December 31, 2019and
other documents that we file with the Securities and Exchange
Commission, or SEC, from time to time which are or will be
available on the SEC website at www.sec.gov.
Investor Contact:
Steve Klimas
646.668.3582
sklimas@ondeck.com
Media Contact:
Jim Larkin
203.526.7457
jlarkin@ondeck.com
OnDeck, the OnDeck logo, OnDeck Score, OnDeck
Marketplace, and ODX are trademarks of On Deck
Capital, Inc. or its subsidiaries.
|
On Deck Capital,
Inc. and Subsidiaries
|
|
Consolidated
Statements of Operations
|
|
(unaudited, $ in
thousands, except share and per share data)
|
|
|
Three Months
Ended,
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Interest and finance
income
|
$
|
106,935
|
|
|
$
|
108,772
|
|
|
$
|
105,799
|
|
|
Interest
expense
|
11,569
|
|
|
10,693
|
|
|
11,332
|
|
|
Net interest
income
|
95,366
|
|
|
$
|
98,079
|
|
|
94,467
|
|
|
Provision for credit
losses
|
107,907
|
|
|
44,031
|
|
|
43,291
|
|
|
Net interest income
(loss), after credit provision
|
(12,541)
|
|
|
54,048
|
|
|
51,176
|
|
|
Other
revenue
|
3,620
|
|
|
2,943
|
|
|
4,176
|
|
|
Operating
expense:
|
|
|
|
|
|
|
Sales and
marketing
|
11,664
|
|
|
12,990
|
|
|
11,960
|
|
|
Technology and
analytics
|
16,484
|
|
|
17,616
|
|
|
16,806
|
|
|
Processing and
servicing
|
6,689
|
|
|
6,896
|
|
|
5,489
|
|
|
General and
administrative
|
16,280
|
|
|
16,909
|
|
|
14,029
|
|
|
Total operating
expense
|
51,117
|
|
|
54,411
|
|
|
48,284
|
|
|
Income (loss) from
operations, before provision for income taxes
|
(60,038)
|
|
|
2,580
|
|
|
7,068
|
|
|
Provision for
(Benefit from) income taxes
|
—
|
|
|
(5,417)
|
|
|
1,740
|
|
|
Net income
(loss)
|
(60,038)
|
|
|
7,997
|
|
|
5,328
|
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
(1,063)
|
|
|
(1,313)
|
|
|
(338)
|
|
|
Net income (loss)
attributable to On Deck Capital, Inc. common
stockholders
|
$
|
(58,975)
|
|
|
$
|
9,310
|
|
|
$
|
5,666
|
|
|
Net income (loss) per
share attributable to On Deck Capital, Inc. common
stockholders:
|
|
|
|
|
|
|
Basic
|
$
|
(0.94)
|
|
|
$
|
0.13
|
|
|
$
|
0.08
|
|
|
Diluted
|
$
|
(0.94)
|
|
|
$
|
0.13
|
|
|
$
|
0.07
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
Basic
|
62,534,517
|
|
|
69,450,995
|
|
|
75,539,535
|
|
|
Diluted
|
62,534,517
|
|
|
72,038,198
|
|
|
79,115,037
|
|
|
On Deck Capital,
Inc. and Subsidiaries
|
|
Percentage of
Average Interest Earning Assets
|
|
(unaudited, $ in
thousands)
|
|
|
Three Months
Ended,
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Interest and finance
income
|
31.3
|
%
|
|
32.3
|
%
|
|
33.0
|
%
|
|
Interest
expense
|
3.4
|
%
|
|
3.2
|
%
|
|
3.5
|
%
|
|
Net interest
income:
|
27.9
|
%
|
|
29.1
|
%
|
|
29.5
|
%
|
|
Provision for credit
losses
|
31.6
|
%
|
|
13.1
|
%
|
|
13.6
|
%
|
|
Net interest income
(loss), after credit provision:
|
(3.7)
|
%
|
|
16.0
|
%
|
|
15.9
|
%
|
|
Other
revenue
|
1.1
|
%
|
|
0.9
|
%
|
|
1.3
|
%
|
|
Operating
expense:
|
|
|
|
|
|
|
Sales and
marketing
|
3.4
|
%
|
|
3.9
|
%
|
|
3.7
|
%
|
|
Technology and
analytics
|
4.8
|
%
|
|
5.1
|
%
|
|
5.2
|
%
|
|
Processing and
servicing
|
2.0
|
%
|
|
2.1
|
%
|
|
1.7
|
%
|
|
General and
administrative
|
4.8
|
%
|
|
5.0
|
%
|
|
4.4
|
%
|
|
Total operating
expense
|
15.0
|
%
|
|
16.1
|
%
|
|
15.0
|
%
|
|
Income (loss) from
operations, before provision for income taxes
|
(17.6)
|
%
|
|
0.8
|
%
|
|
2.2
|
%
|
|
Provision for
(Benefit from) income taxes
|
—
|
%
|
|
(1.5)
|
%
|
|
0.5
|
%
|
|
Net income
(loss)
|
(17.6)
|
%
|
|
2.3
|
%
|
|
1.7
|
%
|
|
Memo:
|
|
|
|
|
|
|
Average Interest
Earning Assets
|
$1,386,501
|
|
|
$1,337,646
|
|
|
$1,299,675
|
|
|
On Deck Capital,
Inc. and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(unaudited, $ in
thousands, except share and per share data)
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
121,148
|
|
|
$
|
56,344
|
|
|
$
|
60,085
|
|
|
Restricted
cash
|
29,094
|
|
|
40,524
|
|
|
44,632
|
|
|
Loans and finance
receivables
|
1,291,586
|
|
|
1,265,312
|
|
|
1,202,771
|
|
|
Less: Allowance for
credit losses
|
(205,703)
|
|
|
(151,133)
|
|
|
(147,406)
|
|
|
Loans and finance
receivables, net
|
1,085,883
|
|
|
1,114,179
|
|
|
1,055,365
|
|
|
Property, equipment
and software, net
|
23,714
|
|
|
20,332
|
|
|
16,180
|
|
|
Other
assets
|
77,339
|
|
|
73,204
|
|
|
48,636
|
|
|
Total
assets
|
$
|
1,337,178
|
|
|
$
|
1,304,583
|
|
|
$
|
1,224,898
|
|
|
Liabilities,
mezzanine equity and stockholders' equity
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
6,804
|
|
|
$
|
6,470
|
|
|
$
|
4,847
|
|
|
Interest
payable
|
3,100
|
|
|
2,334
|
|
|
2,808
|
|
|
Debt
|
1,043,924
|
|
|
914,995
|
|
|
842,314
|
|
|
Accrued expenses and
other liabilities
|
56,834
|
|
|
70,110
|
|
|
63,333
|
|
|
Total
liabilities
|
1,110,662
|
|
|
993,909
|
|
|
913,302
|
|
|
Mezzanine
equity:
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
13,112
|
|
|
14,428
|
|
|
—
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Common stock—$0.005
par value, 1,000,000,000 shares authorized and 80,247,423,
80,095,061, and 78,944,343 shares issued and 58,419,304,
66,363,555, and 75,907,393 outstanding at March 31, 2020, December
31, 2019, and March 31, 2019, respectively.
|
406
|
|
|
405
|
|
|
399
|
|
|
Treasury stock—at
cost
|
(82,503)
|
|
|
(49,641)
|
|
|
(5,656)
|
|
|
Additional paid-in
capital
|
514,785
|
|
|
513,571
|
|
|
506,159
|
|
|
Accumulated
deficit
|
(217,509)
|
|
|
(169,002)
|
|
|
(191,293)
|
|
|
Accumulated other
comprehensive loss
|
(2,923)
|
|
|
(1,333)
|
|
|
(2,234)
|
|
|
Total On Deck
Capital, Inc. stockholders' equity
|
212,256
|
|
|
294,000
|
|
|
307,375
|
|
|
Noncontrolling
interest
|
1,148
|
|
|
2,246
|
|
|
4,221
|
|
|
Total stockholders'
equity
|
213,404
|
|
|
296,246
|
|
|
311,596
|
|
|
Total liabilities,
mezzanine equity and stockholders' equity
|
$
|
1,337,178
|
|
|
$
|
1,304,583
|
|
|
$
|
1,224,898
|
|
|
|
|
|
|
|
|
Memo:
|
|
|
|
|
|
|
Unpaid Principal
Balance1
|
$
|
1,263,364
|
|
|
$
|
1,238,409
|
|
|
$
|
1,177,609
|
|
|
Loans and finance
receivables2
|
$
|
1,291,586
|
|
|
$
|
1,265,312
|
|
|
$
|
1,202,771
|
|
|
Interest Earning
Assets3
|
$
|
1,441,828
|
|
|
$
|
1,362,181
|
|
|
$
|
1,307,488
|
|
|
Book Value Per
Diluted Share
|
$
|
3.49
|
|
|
$
|
4.26
|
|
|
$
|
3.87
|
|
|
On Deck Capital,
Inc. and Subsidiaries
|
|
Consolidated
Average Balance Sheets4
|
|
(unaudited, $ in
thousands)
|
|
|
Three Months
Ended,
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
64,245
|
|
|
$
|
51,606
|
|
|
$
|
48,115
|
|
|
Restricted
cash
|
38,206
|
|
|
48,022
|
|
|
48,182
|
|
|
Loans and finance
receivables
|
1,284,050
|
|
|
1,238,019
|
|
|
1,203,378
|
|
|
Less: Allowance for
credit losses
|
(164,840)
|
|
|
(149,054)
|
|
|
(145,742)
|
|
|
Loans and finance
receivables, net
|
1,119,210
|
|
|
1,088,965
|
|
|
1,057,636
|
|
|
Property, equipment
and software, net
|
22,159
|
|
|
19,699
|
|
|
16,494
|
|
|
Other
assets
|
73,614
|
|
|
70,463
|
|
|
38,843
|
|
|
Total
assets
|
$
|
1,317,434
|
|
|
$
|
1,278,755
|
|
|
$
|
1,209,270
|
|
|
Liabilities,
mezzanine equity and stockholders' equity
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
6,965
|
|
|
$
|
4,571
|
|
|
$
|
5,053
|
|
|
Interest
payable
|
2,621
|
|
|
2,518
|
|
|
2,646
|
|
|
Debt
|
961,977
|
|
|
884,238
|
|
|
838,867
|
|
|
Accrued expenses and
other liabilities
|
62,287
|
|
|
67,238
|
|
|
56,780
|
|
|
Total
liabilities
|
1,033,850
|
|
|
958,565
|
|
|
903,346
|
|
|
Mezzanine
equity:
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
13,958
|
|
|
14,660
|
|
|
—
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Total On Deck
Capital, Inc. stockholders' equity
|
267,800
|
|
|
303,126
|
|
|
301,469
|
|
|
Noncontrolling
interest
|
1,826
|
|
|
2,404
|
|
|
4,455
|
|
|
Total stockholders'
equity
|
269,626
|
|
|
305,530
|
|
|
305,924
|
|
|
Total liabilities,
mezzanine equity and stockholders' equity
|
$
|
1,317,434
|
|
|
$
|
1,278,755
|
|
|
$
|
1,209,270
|
|
|
|
|
|
|
|
|
Memo:
|
|
|
|
|
|
|
Unpaid Principal
Balance
|
$
|
1,256,429
|
|
|
$
|
1,212,341
|
|
|
$
|
1,177,801
|
|
|
Loans and finance
receivables
|
$
|
1,284,050
|
|
|
$
|
1,238,019
|
|
|
$
|
1,203,378
|
|
|
Interest Earning
Assets
|
$
|
1,386,501
|
|
|
$
|
1,337,646
|
|
|
$
|
1,299,675
|
|
|
Supplemental
Information
|
|
Key Performance
Metrics
|
|
($ in thousands,
except percentage data)
|
|
|
Three Months
Ended,
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Originations5
|
$
|
591,863
|
|
|
$
|
617,633
|
|
|
$
|
635,506
|
|
|
Gross
Revenue6
|
110,555
|
|
|
111,715
|
|
|
109,975
|
|
|
Portfolio
Yield7
|
33.3
|
%
|
|
34.8
|
%
|
|
35.6
|
%
|
|
Cost of Funds
Rate8
|
4.8
|
%
|
|
4.8
|
%
|
|
5.4
|
%
|
|
Net Interest
Margin9
|
27.6
|
%
|
|
29.1
|
%
|
|
29.5
|
%
|
|
Reserve
Ratio10
|
16.3
|
%
|
|
12.2
|
%
|
|
12.5
|
%
|
|
15+ Day Delinquency
Ratio11
|
10.3
|
%
|
|
9.0
|
%
|
|
8.7
|
%
|
|
Net Charge-off
Rate12
|
15.8
|
%
|
|
13.5
|
%
|
|
12.2
|
%
|
|
Efficiency
Ratio13
|
46.2
|
%
|
|
48.7
|
%
|
|
43.9
|
%
|
|
Adjusted Efficiency
Ratio14 (a)
|
45.0
|
%
|
|
46.7
|
%
|
|
41.1
|
%
|
|
Return on
Assets15
|
(17.9)
|
%
|
|
2.9
|
%
|
|
1.9
|
%
|
|
Adjusted Return on
Assets16 (a)
|
(17.5)
|
%
|
|
1.0
|
%
|
|
2.7
|
%
|
|
Return on
Equity17
|
(88.1)
|
%
|
|
12.3
|
%
|
|
7.5
|
%
|
|
Adjusted Return on
Equity18 (a)
|
(86.0)
|
%
|
|
4.3
|
%
|
|
10.8
|
%
|
|
|
|
|
|
|
|
Three Months
Ended,
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Activity in the
Allowance for Credit Losses
|
|
|
|
|
|
|
Allowance for loan
losses beginning of period
|
$
|
151,133
|
|
|
$
|
148,045
|
|
|
$
|
140,040
|
|
|
+
Provision for credit losses
|
107,907
|
|
|
44,031
|
|
|
43,291
|
|
|
- Gross
charge-offs
|
(55,228)
|
|
|
(46,774)
|
|
|
(39,839)
|
|
|
+
Recoveries
|
5,597
|
|
|
5,831
|
|
|
3,914
|
|
|
-
Transition to CECL Adjustment
|
(3,304)
|
|
|
—
|
|
|
—
|
|
|
-
Foreign Currency Translation
|
(402)
|
|
|
—
|
|
|
—
|
|
|
Allowance for credit
losses end of period
|
$
|
205,703
|
|
|
$
|
151,133
|
|
|
$
|
147,406
|
|
|
|
|
|
|
|
|
Activity in Loans
and Finance Receivables Held for Investment Balances
|
Three Months
Ended,
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Unpaid Principal
Balance beginning of period
|
$
|
1,238,409
|
|
|
$
|
1,203,322
|
|
|
$
|
1,144,954
|
|
|
+ Total
originations(b)
|
591,863
|
|
|
617,633
|
|
|
635,506
|
|
|
- Net
charge-offs
|
(49,631)
|
|
|
(40,943)
|
|
|
(35,925)
|
|
|
-
Principal paid down
|
(517,277)
|
|
|
(541,602)
|
|
|
(566,926)
|
|
|
Unpaid Principal
Balance end of period
|
1,263,364
|
|
|
1,238,409
|
|
|
1,177,609
|
|
|
+ Net
deferred origination costs
|
28,222
|
|
|
26,903
|
|
|
25,162
|
|
|
Loans and finance
receivables held for investment
|
1,291,586
|
|
|
1,265,312
|
|
|
1,202,771
|
|
|
-
Allowance for credit losses
|
(205,703)
|
|
|
(151,133)
|
|
|
(147,406)
|
|
|
Loans and finance
receivables held for investment, net
|
$
|
1,085,883
|
|
|
$
|
1,114,179
|
|
|
$
|
1,055,365
|
|
|
(a) Non-GAAP measure. See "About
Non-GAAP Financial Measures," and "Non-GAAP Reconciliations" and
related footnotes elsewhere in this press release.
|
|
|
(b) Includes Unpaid Principal Balance
of term loans rolled into new originations of $79.7 million, $95.3
million, $98.5 million in the three months ended March 31, 2020,
December 31, 2019, and March 31, 2019, respectively.
|
|
Supplemental
Information
|
|
|
Non-GAAP
Reconciliations
|
|
(in thousands, except
share and per share data)
|
|
|
Three Months
Ended,
|
|
Reconciliation of
Net Income to Adjusted Net Income
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Net income (loss)
attributable to On Deck Capital, Inc. common
stockholders
|
$
|
(58,975)
|
|
|
$
|
9,310
|
|
|
$
|
5,666
|
|
|
Adjustments
(after-tax):
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
1,416
|
|
|
1,449
|
|
|
2,436
|
|
|
Discrete Tax
Benefit
|
—
|
|
|
(7,500)
|
|
|
—
|
|
|
Adjusted Net Income
(Loss)19
|
$
|
(57,559)
|
|
|
$
|
3,259
|
|
|
$
|
8,102
|
|
|
Adjusted Net Income
(Loss) per Share20:
|
|
|
|
|
|
|
Basic
|
$
|
(0.92)
|
|
|
$
|
0.05
|
|
|
$
|
0.11
|
|
|
Diluted
|
$
|
(0.92)
|
|
|
$
|
0.05
|
|
|
$
|
0.10
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
62,534,517
|
|
|
69,450,995
|
|
|
75,539,535
|
|
|
Diluted
|
62,534,517
|
|
|
72,038,198
|
|
|
79,115,037
|
|
|
|
Three Months
Ended,
|
|
Reconciliation of
Return on Assets to Adjusted Return on Assets
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Net income (loss)
attributable to On Deck Capital, Inc. common
stockholders
|
$
|
(58,975)
|
|
|
$
|
9,310
|
|
|
$
|
5,666
|
|
|
Average Total
Assets
|
1,317,434
|
|
|
1,278,755
|
|
|
1,209,270
|
|
|
Return on
Assets
|
(17.9)
|
%
|
|
2.9
|
%
|
|
1.9
|
%
|
|
Adjustments
(after-tax):
|
|
|
|
|
|
|
Stock-based
compensation expense
|
1,416
|
|
|
1,449
|
|
|
2,436
|
|
|
Discrete Tax
Benefit
|
—
|
|
|
(7,500)
|
|
|
—
|
|
|
Adjusted Net Income
(Loss)
|
$
|
(57,559)
|
|
|
$
|
3,259
|
|
|
$
|
8,102
|
|
|
Average Total
Assets
|
1,317,434
|
|
|
1,278,755
|
|
|
1,209,270
|
|
|
Adjusted Return on
Assets
|
(17.5)
|
%
|
|
1.0
|
%
|
|
2.7
|
%
|
|
|
Three Months
Ended,
|
|
Reconciliation of
Return on Equity to Adjusted Return on Equity
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Net income (loss)
attributable to On Deck Capital, Inc. common
stockholders
|
$
|
(58,975)
|
|
|
$
|
9,310
|
|
|
$
|
5,666
|
|
|
Average OnDeck
Stockholders' Equity
|
267,800
|
|
|
303,126
|
|
|
301,469
|
|
|
Return on
Equity
|
(88.1)
|
%
|
|
12.3
|
%
|
|
7.5
|
%
|
|
Adjustments
(after-tax):
|
|
|
|
|
|
|
Stock-based
compensation expense
|
1,416
|
|
|
1,449
|
|
|
2,436
|
|
|
Discrete Tax
Benefit
|
—
|
|
|
(7,500)
|
|
|
—
|
|
|
Adjusted Net Income
(Loss)
|
$
|
(57,559)
|
|
|
$
|
3,259
|
|
|
$
|
8,102
|
|
|
Average OnDeck
Stockholders' Equity
|
267,800
|
|
|
303,126
|
|
|
301,469
|
|
|
Adjusted Return on
Equity
|
(86.0)
|
%
|
|
4.3
|
%
|
|
10.8
|
%
|
|
|
Three Months
Ended,
|
|
Reconciliation of
Efficiency Ratio to Adjusted Efficiency Ratio
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Total operating
expense
|
$
|
51,117
|
|
|
$
|
54,411
|
|
|
$
|
48,284
|
|
|
Gross
revenue
|
110,555
|
|
|
111,715
|
|
|
109,975
|
|
|
Efficiency
Ratio
|
46.2
|
%
|
|
48.7
|
%
|
|
43.9
|
%
|
|
Adjustments
(pre-tax):
|
|
|
|
|
|
|
Stock-based
compensation expense
|
1,416
|
|
|
2,273
|
|
|
3,083
|
|
|
Operating Expenses
Less Noteworthy Items
|
$
|
49,701
|
|
|
$
|
52,138
|
|
|
$
|
45,201
|
|
|
Gross
revenue
|
110,555
|
|
|
111,715
|
|
|
109,975
|
|
|
Adjusted Efficiency
Ratio
|
45.0
|
%
|
|
46.7
|
%
|
|
41.1
|
%
|
Adjusted Net Income is used in the calculation of Adjusted
Return on Assets and Adjusted Return on Equity, all of which are
Non-GAAP measures. Additionally, the same adjustment items
contained in the above reconciliation of Net Income to Adjusted Net
Income are used to adjust operating expense in the calculation of
the Adjusted Efficiency Ratio, a Non-GAAP measure. Amounts
may differ due to taxes.
|
Supplemental
Channel Information
|
|
|
Quarterly
Origination Channel Distribution
|
|
|
Three Months
Ended,
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2019
|
|
Percentage of
originations (dollars)
|
|
|
|
|
|
|
Direct
|
38
|
%
|
|
38
|
%
|
|
42
|
%
|
|
Strategic
Partner
|
34
|
%
|
|
33
|
%
|
|
31
|
%
|
|
Funding
Advisor
|
28
|
%
|
|
29
|
%
|
|
27
|
%
|
|
Notes:
|
|
(1)Unpaid
Principal Balance represents the total amount of principal
outstanding on Loans, plus outstanding advances relating to other
finance receivables and the amortized cost of loans purchased from
other than our issuing bank partner at the end of the period. It
excludes net deferred origination costs, allowance for credit
losses and any loans sold or held for sale at the end of the
period.
|
|
(2)Loans
and finance receivables represents the sum of term loans, lines of
credit, equipment finance loans and finance receivables.
|
|
(3)Interest Earning Assets represents the
sum of Loans and finance receivables plus Cash and cash equivalents
plus Restricted cash.
|
|
(4)Average
Balance Sheet line items for the period represent the average of
the balance at the beginning of the first month of the period and
the end of each month in the period.
|
|
(5)Originations represent the total
principal amount of Loans made during the period plus the total
amount advanced on other finance receivables. Many of our
repeat term loan customers renew their term loans before their
existing term loan is fully repaid. In accordance with industry
practice, originations of such repeat term loans are presented as
the full renewal loan principal, rather than the net funded amount,
which would be the renewal term loan's principal net of the Unpaid
Principal Balance on the existing term loan. Loans referred to, and
funded by, our issuing bank partner and later purchased by us are
included as part of our originations.
|
|
(6)Gross
Revenue represents the sum of interest and finance income, gain on
sales of loans and other revenue.
|
|
(7)Portfolio Yield is the rate of return
we achieve on Loans and finance receivables outstanding during a
period. It is calculated as annualized Interest and finance income
on Loans and finance receivables including amortization of net
deferred origination costs divided by average loans and finance
receivables. Annualization is based on 365 days per year and is
calendar day-adjusted.
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(8)Cost of
Funds Rate is calculated as interest expense divided by average
debt outstanding for the period. For periods of less than one
year, the metric is annualized based on four quarters per year and
is not business day or calendar day-adjusted.
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(9)Net
Interest Margin is calculated as annualized net interest and
finance income divided by average Interest Earning Assets. Net
interest and finance income represents Interest and finance
receivable income less Interest expense during the period.
Annualization is based on 365 days per year and is calendar
day-adjusted.
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(10)Reserve Ratio is our allowance for
credit losses at the end of the period divided by the Unpaid
Principal Balance at the end of the period.
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(11)15+
Day Delinquency Ratio equals the aggregate Unpaid Principal Balance
for our Loans that are 15 or more calendar days contractually past
due and for our finance receivables that are 15 or more payments
behind schedule, as a percentage of the Unpaid Principal Balance at
the end of the period. The Unpaid Principal Balance for our loans
and finance receivables that are 15 or more calendar days or
payments past due includes Loans and finance receivables that are
paying and non-paying.
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(12)Net
Charge-off Rate is calculated as our annualized net charge-offs for
the period divided by the average Unpaid Principal Balance
outstanding during the period. Net charge-offs are charged-off
loans and finance receivables in the period, net of recoveries of
prior charged-off loans and finance receivables in the
period. For periods of less than one year, the metric is
annualized based on four quarters per year and is not business day
or calendar day-adjusted.
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(13)Efficiency Ratio is a measure of
operating efficiency and is calculated as Total operating expense
for the period divided by Gross Revenue for the
period.
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(14)Adjusted Efficiency Ratio is non-GAAP
measure calculated as total operating expense divided by Gross
Revenue for the period, adjusted to exclude (a) stock-based
compensation expense and (b) items management deems to be
non-representative of operating results or trends, all as shown in
the non-GAAP reconciliation presentation of this metric. We believe
Adjusted Efficiency Ratio is useful because it provides investors
and others with a supplemental operating efficiency metric to
present our operating efficiency across multiple periods without
the effects of stock-based compensation, which is a non-cash
expense based on equity grants made to participants in our equity
plans at specified prices and times but which does not necessarily
reflect how our business is performing, and items which may only
affect our operating results periodically. Our use of Adjusted
Efficiency Ratio has limitations as an analytical tool and you
should not consider it in isolation, as a substitute for or
superior to our Efficiency Ratio, which is the most comparable GAAP
metric.
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(15)Return
on Assets is calculated as annualized net income (loss)
attributable to On Deck Capital, Inc. common stockholders for the
period divided by average total assets for the period. For periods
of less than one year, the metric is annualized based on four
quarters per year and is not business day or calendar
day-adjusted.
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(16)Adjusted Return on Assets is a
non-GAAP measure calculated as Adjusted Net Income (Loss) for the
period divided by average total assets for the period. For periods
of less than one year, the metric is annualized based on four
quarters per year and is not business day or calendar day-adjusted.
We believe Adjusted Return on Assets is useful because it provides
investors and others with a supplemental metric to assess our
performance across multiple periods without the effects of
stock-based compensation, which is a non-cash expense based on
equity grants made to participants in our equity plans at specified
prices and times but which does not necessarily reflect how our
business is performing, and items which may only affect our
operating results periodically, all as shown in the non-GAAP
reconciliation presentation of this metric. Our use of Adjusted
Return on Assets has limitations as an analytical tool and you
should not consider it in isolation, as a substitute for or
superior to Return on Assets, which is the most comparable GAAP
metric.
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(17)Return
on Equity is calculated as annualized net income (loss)
attributable to On Deck Capital, Inc. common stockholders for the
period divided by average total On Deck Capital, Inc. stockholders'
equity for the period. For periods of less than one year, the
metric is annualized based on four quarters per year and is not
business day or calendar day-adjusted.
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(18)Adjusted Return on Equity is a
non-GAAP measure calculated as Adjusted Net Income (Loss)
attributable to On Deck Capital, Inc. common stockholders for the
period divided by average total On Deck Capital, Inc. stockholders'
equity for the period. For periods of less than one year, the
metric is annualized based on four quarters per year and is not
business day or calendar day-adjusted. We believe Adjusted Return
on Equity is useful because it provides investors with a
supplemental metric to assess our performance across multiple
periods without the effects of stock-based compensation, which is a
non-cash expense based on equity grants made to participants in our
equity plans at specified prices and times but which does not
necessarily reflect how our business is performing, and items which
may only affect our operating results periodically, all as shown in
the non-GAAP reconciliation presentation of this metric. Our use of
Adjusted Return on Equity has limitations as an analytical tool and
you should not consider it in isolation, as a substitute or
superior to Return on Equity, which is the most comparable GAAP
metric.
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(19)Adjusted Net Income (Loss) is a
non-GAAP measure calculated as net income (loss) attributable to On
Deck Capital, Inc. common stockholders adjusted to exclude from net
income (loss) attributable to On Deck Capital, Inc. common
stockholders (a) stock-based compensation expense and (b) items
management deems to be non-representative of operating results or
trends, all as shown in the non-GAAP reconciliation presentation of
this metric. We believe Adjusted Net Income (Loss) is useful
because it provides investors and others with a supplemental
profitability metric to present our performance across multiple
periods without the effects of stock-based compensation, which is a
non-cash expense based on equity grants made to participants in our
equity plans at specified prices and times but which does not
necessarily reflect how our business is performing, and items which
may only affect our operating results periodically. Our use of
Adjusted Net Income (Loss) has limitations as an analytical tool
and you should not consider it in isolation, as a substitute for or
superior to net income (loss) attributable to On Deck Capital, Inc.
common stockholders, which is the most comparable GAAP
metric.
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(20)Adjusted Net Income (Loss) per Share
is a non-GAAP measure calculated as Adjusted Net Income (Loss)
divided by the weighted average common shares outstanding during
the period. We believe Adjusted Net Income (Loss) per Share is
useful because it provides investors and others with a supplemental
profitability metric to present our performance across multiple
periods without the effects of stock-based compensation, which is a
non-cash expense based on equity grants made to participants in our
equity plans at specified prices and times but which does not
necessarily reflect how our business is performing, and items which
may only affect our operating results periodically. Our use of
Adjusted Net Income (Loss) per Share has limitations as an
analytical tool and you should not consider it in isolation, as a
substitute for or superior to net income (loss) attributable to On
Deck Capital, Inc. common stockholders per share, which is the most
comparable GAAP metric.
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SOURCE On Deck Capital, Inc.