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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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42-1709682
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1400 Broadway, 25th Floor, New York, New York
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10018
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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x
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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x
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Page
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PART I - FINANCIAL INFORMATION
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Item 1.
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Financial Statements (Unaudited)
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Unaudited Condensed Consolidated Balance Sheets
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Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
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Unaudited Condensed Consolidated Statements of Cash Flows
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Notes to Unaudited Condensed Consolidated Financial Statements
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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PART II - OTHER INFORMATION
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||
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3.
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Defaults Upon Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6
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Exhibits
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Signatures
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Item 1.
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Financial Statements (Unaudited)
|
|
September 30,
|
|
December 31,
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||||
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2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
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$
|
64,292
|
|
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$
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79,554
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|
Restricted cash
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56,729
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|
|
44,432
|
|
||
Loans held for investment
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957,203
|
|
|
1,000,445
|
|
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Less: Allowance for loan losses
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(104,872
|
)
|
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(110,162
|
)
|
||
Loans held for investment, net
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852,331
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|
|
890,283
|
|
||
Loans held for sale
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—
|
|
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373
|
|
||
Property, equipment and software, net
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24,975
|
|
|
29,405
|
|
||
Other assets
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17,069
|
|
|
20,044
|
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||
Total assets
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$
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1,015,396
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|
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$
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1,064,091
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Liabilities and equity
|
|
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|
||||
Liabilities:
|
|
|
|
||||
Accounts payable
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$
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2,918
|
|
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$
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5,271
|
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Interest payable
|
2,213
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|
|
2,122
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|
||
Funding debt
|
702,998
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|
726,639
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|
||
Corporate debt
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17,180
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|
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27,966
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Accrued expenses and other liabilities
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30,987
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38,496
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||
Total liabilities
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756,296
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|
|
800,494
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|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Stockholders’ equity (deficit):
|
|
|
|
||||
Common stock—$0.005 par value, 1,000,000,000 shares authorized and 77,002,976 and 74,801,825 shares issued and 73,623,312 and 71,605,708 outstanding at September 30, 2017 and December 31, 2016, respectively.
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385
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|
|
374
|
|
||
Treasury stock—at cost
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(7,561
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)
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(6,697
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)
|
||
Additional paid-in capital
|
489,465
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|
|
477,526
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|
||
Accumulated deficit
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(227,973
|
)
|
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(211,299
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)
|
||
Accumulated other comprehensive loss
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(6
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)
|
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(379
|
)
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||
Total On Deck Capital, Inc. stockholders' equity
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254,310
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|
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259,525
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||
Noncontrolling interest
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4,790
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|
4,072
|
|
||
Total equity
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259,100
|
|
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263,597
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|
||
Total liabilities and equity
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$
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1,015,396
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|
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$
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1,064,091
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Three Months Ended September 30,
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Nine Months Ended September 30,
|
||||||||||||
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2017
|
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2016
|
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2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Interest income
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$
|
80,122
|
|
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$
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71,361
|
|
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$
|
250,954
|
|
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$
|
188,726
|
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Gain on sales of loans
|
146
|
|
|
2,670
|
|
|
1,890
|
|
|
12,594
|
|
||||
Other revenue
|
3,398
|
|
|
3,340
|
|
|
10,365
|
|
|
8,168
|
|
||||
Gross revenue
|
83,666
|
|
|
77,371
|
|
|
263,209
|
|
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209,488
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|
||||
Cost of revenue:
|
|
|
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|
|
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|
||||||||
Provision for loan losses
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39,582
|
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36,586
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|
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118,495
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|
|
94,294
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|
||||
Funding costs
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11,330
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8,452
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|
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34,223
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|
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22,548
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|
||||
Total cost of revenue
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50,912
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45,038
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|
|
152,718
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|
|
116,842
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|
||||
Net revenue
|
32,754
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|
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32,333
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|
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110,491
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|
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92,646
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|
||||
Operating expense:
|
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|
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||||||||
Sales and marketing
|
11,903
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16,789
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|
|
42,090
|
|
|
50,094
|
|
||||
Technology and analytics
|
11,748
|
|
|
15,050
|
|
|
41,960
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|
|
42,894
|
|
||||
Processing and servicing
|
4,160
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|
|
5,181
|
|
|
13,521
|
|
|
14,261
|
|
||||
General and administrative
|
9,440
|
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12,375
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|
30,917
|
|
|
34,233
|
|
||||
Total operating expense
|
37,251
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|
|
49,395
|
|
|
128,488
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|
|
141,482
|
|
||||
Loss from operations
|
(4,497
|
)
|
|
(17,062
|
)
|
|
(17,997
|
)
|
|
(48,836
|
)
|
||||
Other expense:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(35
|
)
|
|
(111
|
)
|
|
(706
|
)
|
|
(186
|
)
|
||||
Total other expense
|
(35
|
)
|
|
(111
|
)
|
|
(706
|
)
|
|
(186
|
)
|
||||
Loss before provision for income taxes
|
(4,532
|
)
|
|
(17,173
|
)
|
|
(18,703
|
)
|
|
(49,022
|
)
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net loss
|
(4,532
|
)
|
|
(17,173
|
)
|
|
(18,703
|
)
|
|
(49,022
|
)
|
||||
Net loss attributable to noncontrolling interest
|
458
|
|
|
539
|
|
|
2,073
|
|
|
1,920
|
|
||||
Net loss attributable to On Deck Capital, Inc. common stockholders
|
$
|
(4,074
|
)
|
|
$
|
(16,634
|
)
|
|
$
|
(16,630
|
)
|
|
$
|
(47,102
|
)
|
Net loss per share attributable to On Deck Capital, Inc. common shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(0.06
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.67
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
73,272,085
|
|
|
70,971,895
|
|
|
72,613,221
|
|
|
70,750,037
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(4,532
|
)
|
|
$
|
(17,173
|
)
|
|
$
|
(18,703
|
)
|
|
$
|
(49,022
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
246
|
|
|
210
|
|
|
682
|
|
|
393
|
|
||||
Comprehensive loss
|
(4,286
|
)
|
|
(16,963
|
)
|
|
(18,021
|
)
|
|
(48,629
|
)
|
||||
Comprehensive loss attributable to noncontrolling interests
|
(111
|
)
|
|
(95
|
)
|
|
(307
|
)
|
|
(177
|
)
|
||||
Net loss attributable to noncontrolling interest
|
458
|
|
|
539
|
|
|
2,073
|
|
|
1,920
|
|
||||
Comprehensive loss attributable to On Deck Capital, Inc. common stockholders
|
$
|
(3,939
|
)
|
|
$
|
(16,519
|
)
|
|
$
|
(16,255
|
)
|
|
$
|
(46,886
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(18,703
|
)
|
|
$
|
(49,022
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Provision for loan losses
|
118,495
|
|
|
94,294
|
|
||
Depreciation and amortization
|
7,623
|
|
|
6,887
|
|
||
Amortization of debt issuance costs
|
2,777
|
|
|
3,733
|
|
||
Stock-based compensation
|
9,521
|
|
|
11,423
|
|
||
Amortization of net deferred origination costs
|
36,419
|
|
|
25,837
|
|
||
Changes in servicing rights, at fair value
|
1,440
|
|
|
4,074
|
|
||
Gain on sales of loans
|
(1,890
|
)
|
|
(12,594
|
)
|
||
Unfunded loan commitment reserve
|
227
|
|
|
(405
|
)
|
||
Gain on extinguishment of debt
|
(312
|
)
|
|
(940
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Other assets
|
2,106
|
|
|
(1,221
|
)
|
||
Accounts payable
|
(2,353
|
)
|
|
1,386
|
|
||
Interest payable
|
91
|
|
|
826
|
|
||
Accrued expenses and other liabilities
|
(7,641
|
)
|
|
(844
|
)
|
||
Originations of loans held for sale
|
(44,489
|
)
|
|
(238,077
|
)
|
||
Capitalized net deferred origination costs of loans held for sale
|
(1,128
|
)
|
|
(8,074
|
)
|
||
Proceeds from sale of loans held for sale
|
45,921
|
|
|
246,051
|
|
||
Principal repayments of loans held for sale
|
1,039
|
|
|
6,189
|
|
||
Net cash provided by operating activities
|
149,143
|
|
|
89,523
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Change in restricted cash
|
(12,297
|
)
|
|
(4,364
|
)
|
||
Purchases of property, equipment and software
|
(1,129
|
)
|
|
(6,337
|
)
|
||
Capitalized internal-use software
|
(2,226
|
)
|
|
(3,702
|
)
|
||
Originations of term loans and lines of credit, excluding rollovers into new originations
|
(1,302,889
|
)
|
|
(1,333,192
|
)
|
||
Proceeds from sale of loans held for investment
|
12,396
|
|
|
57,238
|
|
||
Payments of net deferred origination costs
|
(32,747
|
)
|
|
(32,909
|
)
|
||
Principal repayments of term loans and lines of credit
|
1,220,673
|
|
|
881,077
|
|
||
Other
|
—
|
|
|
(201
|
)
|
||
Purchase of loans
|
(13,730
|
)
|
|
(6,672
|
)
|
||
Net cash used in investing activities
|
(131,949
|
)
|
|
(449,062
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Investments by noncontrolling interests
|
3,443
|
|
|
—
|
|
||
Purchase of treasury shares
|
(864
|
)
|
|
(576
|
)
|
||
Proceeds from exercise of stock options and warrants
|
490
|
|
|
131
|
|
||
Issuance of common stock under employee stock purchase plan
|
1,838
|
|
|
2,606
|
|
||
Proceeds from the issuance of funding debt
|
133,318
|
|
|
606,051
|
|
||
Proceeds from the issuance of corporate debt
|
24,200
|
|
|
10,000
|
|
||
Payments of debt issuance costs
|
(3,228
|
)
|
|
(4,655
|
)
|
||
Distribution to noncontrolling interest
|
(1,000
|
)
|
|
—
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Repayments of funding debt principal
|
(156,477
|
)
|
|
(328,321
|
)
|
||
Repayments of corporate debt principal
|
(35,000
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
(33,280
|
)
|
|
285,236
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
824
|
|
|
429
|
|
||
Net decrease in cash and cash equivalents
|
(15,262
|
)
|
|
(73,874
|
)
|
||
Cash and cash equivalents at beginning of period
|
79,554
|
|
|
159,822
|
|
||
Cash and cash equivalents at end of period
|
$
|
64,292
|
|
|
$
|
85,948
|
|
Supplemental disclosure of other cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
31,467
|
|
|
$
|
16,282
|
|
Supplemental disclosures of non-cash investing and financing activities
|
|
|
|
||||
Stock-based compensation included in capitalized internal-use software
|
$
|
154
|
|
|
$
|
1,025
|
|
Loans transferred from loans held for sale to loans held for investment
|
$
|
—
|
|
|
$
|
861
|
|
Unpaid principal balance of term loans rolled into new originations
|
$
|
220,925
|
|
|
$
|
200,637
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(4,532
|
)
|
|
$
|
(17,173
|
)
|
|
$
|
(18,703
|
)
|
|
$
|
(49,022
|
)
|
Less: net loss attributable to noncontrolling interest
|
458
|
|
|
539
|
|
|
2,073
|
|
|
1,920
|
|
||||
Net loss attributable to On Deck Capital, Inc. common stockholders
|
$
|
(4,074
|
)
|
|
$
|
(16,634
|
)
|
|
$
|
(16,630
|
)
|
|
$
|
(47,102
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding, basic and diluted
|
73,272,085
|
|
|
70,971,895
|
|
|
72,613,221
|
|
|
70,750,037
|
|
||||
Net loss per common share, basic and diluted
|
$
|
(0.06
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.67
|
)
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Term loans
|
$
|
815,043
|
|
|
$
|
864,066
|
|
Lines of credit
|
125,837
|
|
|
116,385
|
|
||
Total unpaid principal balance
|
940,880
|
|
|
980,451
|
|
||
Net deferred origination costs
|
16,323
|
|
|
19,994
|
|
||
Total loans held for investment
|
$
|
957,203
|
|
|
$
|
1,000,445
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Balance at beginning of period
|
$
|
105,217
|
|
|
$
|
73,849
|
|
|
$
|
110,162
|
|
|
$
|
53,311
|
|
Provision for loan losses
|
39,582
|
|
|
36,586
|
|
|
118,495
|
|
|
94,294
|
|
||||
Loans charged off
|
(45,257
|
)
|
|
(25,268
|
)
|
|
(135,958
|
)
|
|
(65,411
|
)
|
||||
Recoveries of loans previously charged off
|
5,330
|
|
|
2,201
|
|
|
12,173
|
|
|
5,174
|
|
||||
Allowance for loan losses at end of period
|
$
|
104,872
|
|
|
$
|
87,368
|
|
|
$
|
104,872
|
|
|
$
|
87,368
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Non-delinquent loans
|
$
|
835,320
|
|
|
$
|
890,297
|
|
Delinquent: paying (accrual status)
|
61,953
|
|
|
36,073
|
|
||
Delinquent: non-paying (non-accrual status)
|
43,607
|
|
|
54,081
|
|
||
Total
|
$
|
940,880
|
|
|
$
|
980,451
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
By delinquency status:
|
|
|
|
||||
Non-delinquent loans
|
$
|
835,320
|
|
|
$
|
890,297
|
|
1-14 calendar days past due
|
34,724
|
|
|
25,899
|
|
||
15-29 calendar days past due
|
20,055
|
|
|
15,990
|
|
||
30-59 calendar days past due
|
20,975
|
|
|
22,677
|
|
||
60-89 calendar days past due
|
15,658
|
|
|
13,952
|
|
||
90 + calendar days past due
|
14,148
|
|
|
11,636
|
|
||
Total unpaid principal balance
|
$
|
940,880
|
|
|
$
|
980,451
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Fair value at the beginning of period
|
$
|
701
|
|
|
$
|
1,989
|
|
|
$
|
1,131
|
|
|
$
|
3,489
|
|
Addition:
|
|
|
|
|
|
|
|
||||||||
Servicing resulting from transfers of financial assets
|
275
|
|
|
717
|
|
|
938
|
|
|
2,272
|
|
||||
Changes in fair value:
|
|
|
|
|
|
|
|
||||||||
Other changes in fair value
(1)
|
(347
|
)
|
|
(1,019
|
)
|
|
(1,440
|
)
|
|
(4,074
|
)
|
||||
Fair value at the end of period (Level 3)
|
$
|
629
|
|
|
$
|
1,687
|
|
|
$
|
629
|
|
|
$
|
1,687
|
|
Description
|
Type
|
|
Maturity Date
|
|
Weighted Average Interest
Rate at September 30, 2017 |
|
September 30, 2017
|
|
December 31, 2016
|
||||
Funding Debt:
|
|
|
|
|
|
|
|
|
|
||||
ODAST II Agreement
|
Securitization Facility
|
|
May 2020
(1)
|
|
4.7%
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
ODART Agreement
|
Revolving
|
|
March 2019
|
|
3.9%
|
|
123,498
|
|
|
133,767
|
|
||
RAOD Agreement
|
Revolving
|
|
November 2018
|
|
3.7%
|
|
71,119
|
|
|
99,985
|
|
||
ODAF I Agreement
|
Revolving
|
|
February 2020
(2)
|
|
8.5%
|
|
81,633
|
|
|
100,000
|
|
||
ODAC Agreement
|
Revolving
|
|
May 2019
|
|
8.5%
|
|
76,321
|
|
|
65,486
|
|
||
PORT II Agreement
|
Revolving
|
|
December 2018
|
|
3.7%
|
|
67,296
|
|
|
52,397
|
|
||
Other Agreements
|
Various
|
|
Various
(3)
|
|
Various
|
|
39,385
|
|
|
30,887
|
|
||
|
|
|
|
|
|
|
709,252
|
|
|
732,522
|
|
||
Deferred Debt Issuance Cost
|
|
|
|
|
|
|
(6,254
|
)
|
|
(5,883
|
)
|
||
Total Funding Debt
|
|
|
|
|
|
|
$
|
702,998
|
|
|
$
|
726,639
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate Debt:
|
|
|
|
|
|
|
|
|
|
||||
Square 1 Agreement
|
Revolving
|
|
October 2018
|
|
5.5%
|
|
17,200
|
|
|
28,000
|
|
||
Deferred Debt Issuance Cost
|
|
|
|
|
|
|
(20
|
)
|
|
(34
|
)
|
||
Total Corporate Debt
|
|
|
|
|
|
|
$
|
17,180
|
|
|
$
|
27,966
|
|
(1)
|
The period during which remaining cash flow can be used to purchase additional loans expires April 2018.
|
(2)
|
The period during which new borrowings may be made under this facility expires in February 2019.
|
(3)
|
Maturity dates range from October 2017 to December 2018.
|
|
September 30, 2017
|
||||||||||||||
Description
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
:
|
|
|
|
|
|
|
|
||||||||
Servicing assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
629
|
|
|
$
|
629
|
|
Total assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
629
|
|
|
$
|
629
|
|
|
December 31, 2016
|
||||||||||||||
Description
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
:
|
|
|
|
|
|
|
|
||||||||
Servicing assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,131
|
|
|
$
|
1,131
|
|
Total assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,131
|
|
|
$
|
1,131
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
Servicing Assets
|
||||||
Default rate assumption:
|
|
|
|
||||
Default rate increase of 25%
|
$
|
(62
|
)
|
|
$
|
(98
|
)
|
Default rate increase of 50%
|
$
|
(120
|
)
|
|
$
|
(188
|
)
|
Cost to service assumption:
|
|
|
|
||||
Cost to service increase by 25%
|
$
|
(48
|
)
|
|
$
|
(60
|
)
|
Cost to service increase by 50%
|
$
|
(95
|
)
|
|
$
|
(120
|
)
|
|
September 30, 2017
|
||||||||||||||||||
Description
|
Carrying Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans held for investment
|
$
|
852,331
|
|
|
$
|
934,867
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
934,867
|
|
Total assets
|
$
|
852,331
|
|
|
$
|
934,867
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
934,867
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Description
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-rate debt
|
$
|
276,324
|
|
|
$
|
262,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
262,216
|
|
Total fixed-rate debt
|
$
|
276,324
|
|
|
$
|
262,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
262,216
|
|
|
December 31, 2016
|
||||||||||||||||||
Description
|
Carrying Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans held for investment
|
$
|
890,283
|
|
|
$
|
979,780
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
979,780
|
|
Loans held for sale
|
373
|
|
|
394
|
|
|
—
|
|
|
|
|
394
|
|
||||||
Total assets
|
$
|
890,656
|
|
|
$
|
980,174
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
980,174
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Description
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-rate debt
|
$
|
280,886
|
|
|
$
|
275,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
275,200
|
|
Total fixed-rate debt
|
$
|
280,886
|
|
|
$
|
275,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
275,200
|
|
|
Number of
Options |
|
Weighted-
Average Exercise Price |
|
Weighted-
Average Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value (in thousands) |
||||||
Outstanding at January 1, 2017
|
11,426,296
|
|
|
$
|
6.10
|
|
|
—
|
|
|
—
|
|
|
Granted
|
368,894
|
|
|
$
|
4.13
|
|
|
—
|
|
|
—
|
|
|
Exercised
|
(1,351,648
|
)
|
|
$
|
0.87
|
|
|
—
|
|
|
—
|
|
|
Forfeited
|
(1,095,455
|
)
|
|
$
|
9.07
|
|
|
—
|
|
|
—
|
|
|
Expired
|
(1,120,351
|
)
|
|
$
|
11.36
|
|
|
—
|
|
|
—
|
|
|
Outstanding at September 30, 2017
|
8,227,736
|
|
|
$
|
5.76
|
|
|
6.7
|
|
|
$
|
13,831
|
|
Exercisable at September 30, 2017
|
5,948,010
|
|
|
$
|
4.98
|
|
|
6.1
|
|
|
$
|
13,510
|
|
Vested or expected to vest as of September 30, 2017
|
8,164,605
|
|
|
$
|
5.75
|
|
|
6.7
|
|
|
$
|
13,827
|
|
|
Number of RSUs
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested at January 1, 2017
|
3,888,768
|
|
|
$
|
8.46
|
|
RSUs and PRSUs granted
|
1,791,690
|
|
|
$
|
4.50
|
|
RSUs vested
|
(546,671
|
)
|
|
$
|
9.09
|
|
RSUs and PRSUs forfeited/expired
|
(1,604,916
|
)
|
|
$
|
8.15
|
|
Unvested at September 30, 2017
|
3,528,871
|
|
|
$
|
6.30
|
|
Expected to vest after September 30, 2017
|
3,121,430
|
|
|
$
|
6.36
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Sales and marketing
|
$
|
538
|
|
|
$
|
920
|
|
|
$
|
1,830
|
|
|
$
|
2,749
|
|
Technology and analytics
|
499
|
|
|
793
|
|
|
1,824
|
|
|
2,437
|
|
||||
Processing and servicing
|
99
|
|
|
227
|
|
|
429
|
|
|
781
|
|
||||
General and administrative
|
1,920
|
|
|
1,821
|
|
|
5,438
|
|
|
5,456
|
|
||||
Total
|
$
|
3,056
|
|
|
$
|
3,761
|
|
|
$
|
9,521
|
|
|
$
|
11,423
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
59,530
|
|
|
$
|
72,309
|
|
|
$
|
58,595
|
|
|
$
|
90,321
|
|
Restricted cash
|
58,659
|
|
|
46,478
|
|
|
59,316
|
|
|
38,884
|
|
||||
Loans held for investment
|
960,587
|
|
|
851,457
|
|
|
1,001,697
|
|
|
739,946
|
|
||||
Less: Allowance for loan losses
|
(103,397
|
)
|
|
(81,118
|
)
|
|
(109,486
|
)
|
|
(68,775
|
)
|
||||
Loans held for investment, net
|
857,190
|
|
|
770,339
|
|
|
892,211
|
|
|
671,171
|
|
||||
Loans held for sale
|
—
|
|
|
4,846
|
|
|
462
|
|
|
9,051
|
|
||||
Property, equipment and software, net
|
25,919
|
|
|
30,328
|
|
|
27,480
|
|
|
29,636
|
|
||||
Other assets
|
17,843
|
|
|
19,676
|
|
|
18,483
|
|
|
21,376
|
|
||||
Total assets
|
$
|
1,019,141
|
|
|
$
|
943,976
|
|
|
$
|
1,056,547
|
|
|
$
|
860,439
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
3,077
|
|
|
$
|
3,332
|
|
|
$
|
3,377
|
|
|
$
|
4,203
|
|
Interest payable
|
2,300
|
|
|
1,313
|
|
|
2,322
|
|
|
1,060
|
|
||||
Funding debt
|
710,601
|
|
|
597,678
|
|
|
737,864
|
|
|
505,406
|
|
||||
Corporate debt
|
11,078
|
|
|
7,699
|
|
|
20,213
|
|
|
4,698
|
|
||||
Accrued expenses and other liabilities
|
32,276
|
|
|
32,876
|
|
|
33,786
|
|
|
32,460
|
|
||||
Total liabilities
|
759,332
|
|
|
642,898
|
|
|
797,562
|
|
|
547,827
|
|
||||
Total On Deck Capital, Inc. stockholders' equity
|
254,731
|
|
|
295,989
|
|
|
253,716
|
|
|
306,913
|
|
||||
Noncontrolling interest
|
5,077
|
|
|
5,089
|
|
|
5,269
|
|
|
5,699
|
|
||||
Total equity
|
259,808
|
|
|
301,078
|
|
|
258,985
|
|
|
312,612
|
|
||||
Total liabilities and equity
|
$
|
1,019,140
|
|
|
$
|
943,976
|
|
|
$
|
1,056,547
|
|
|
$
|
860,439
|
|
|
|
|
|
|
|
|
|
||||||||
Memo:
|
|
|
|
|
|
|
|
||||||||
Unpaid Principal Balance
|
$
|
944,372
|
|
|
$
|
836,542
|
|
|
$
|
983,230
|
|
|
$
|
727,038
|
|
Interest Earning Assets
|
$
|
944,372
|
|
|
$
|
841,270
|
|
|
$
|
983,689
|
|
|
$
|
735,825
|
|
Loans
|
$
|
960,587
|
|
|
$
|
856,303
|
|
|
$
|
1,002,159
|
|
|
$
|
748,997
|
|
Loans Under Management
|
$
|
1,089,406
|
|
|
$
|
1,087,641
|
|
|
$
|
1,159,438
|
|
|
$
|
1,015,768
|
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation;
|
•
|
Adjusted EBITDA does not reflect interest associated with debt used for corporate purposes or tax payments that may represent a reduction in cash available to us;
|
•
|
Adjusted EBITDA does not reflect the potential costs we would incur if certain of our warrants were settled in cash.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(4,532
|
)
|
|
$
|
(17,173
|
)
|
|
$
|
(18,703
|
)
|
|
$
|
(49,022
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Corporate interest expense
|
35
|
|
|
111
|
|
|
706
|
|
|
186
|
|
||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Depreciation and amortization
|
2,451
|
|
|
2,452
|
|
|
7,623
|
|
|
6,887
|
|
||||
Stock-based compensation expense
|
3,056
|
|
|
3,761
|
|
|
9,521
|
|
|
11,423
|
|
||||
Adjusted EBITDA
|
$
|
1,010
|
|
|
$
|
(10,849
|
)
|
|
$
|
(853
|
)
|
|
$
|
(30,526
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Net Income (Loss) to Adjusted Net (Loss) Income
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(4,532
|
)
|
|
$
|
(17,173
|
)
|
|
$
|
(18,703
|
)
|
|
$
|
(49,022
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to noncontrolling interest
|
458
|
|
|
539
|
|
|
2,073
|
|
|
1,920
|
|
||||
Stock-based compensation expense
|
3,056
|
|
|
3,761
|
|
|
9,521
|
|
|
11,423
|
|
||||
Adjusted Net Loss
|
$
|
(1,018
|
)
|
|
$
|
(12,873
|
)
|
|
$
|
(7,109
|
)
|
|
$
|
(35,679
|
)
|
•
|
Net Interest Margin is the rate of net return we achieve on our Average Interest Earning Assets outstanding during a period. It does not reflect the return from loans sold through OnDeck
Marketplace
, specifically our gain on sale revenue. Similarly, Average Interest Earning Assets does not include the unpaid principal balance of loans sold through OnDeck
Marketplace
. Further, Net Interest Margin does not include servicing revenue related to loans previously sold, fair value adjustments to servicing rights, monthly fees charged to customers for our line of credit, and marketing fees earned from our issuing bank partners, which are recognized as the related services are provided.
|
•
|
Funding cost does not reflect interest associated with debt used for corporate purposes.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Interest Income to Net Interest Margin (NIM)
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
80,122
|
|
|
$
|
71,361
|
|
|
$
|
250,954
|
|
|
$
|
188,726
|
|
Less: funding costs
|
(11,330
|
)
|
|
(8,452
|
)
|
|
(34,223
|
)
|
|
(22,548
|
)
|
||||
Net interest income
|
68,792
|
|
|
62,909
|
|
|
216,731
|
|
|
166,178
|
|
||||
Divided by: business days in period
|
63
|
|
|
64
|
|
|
189
|
|
|
190
|
|
||||
Net interest income per business day
|
1,092
|
|
|
983
|
|
|
1,147
|
|
|
875
|
|
||||
Multiplied by: average business days per year
|
252
|
|
|
252
|
|
|
252
|
|
|
252
|
|
||||
Annualized net interest income
|
275,184
|
|
|
247,716
|
|
|
289,044
|
|
|
220,500
|
|
||||
Divided by: average Interest Earning Assets
|
$
|
944,372
|
|
|
$
|
841,270
|
|
|
$
|
983,689
|
|
|
$
|
735,825
|
|
Net Interest Margin (NIM)
|
29.1
|
%
|
|
29.4
|
%
|
|
29.4
|
%
|
|
30.0
|
%
|
•
|
Net Interest Margin After Credit Losses is the rate of net return we achieve on our Average Interest Earning Assets outstanding during a period. It does not reflect the return from loans sold through OnDeck
Marketplace
, specifically our gain on sale revenue. Similarly, Average Interest Earning Assets does not include the unpaid principal balance of loans sold through OnDeck
Marketplace
. Further, Net Interest Margin After Credit Losses does not include servicing revenue related to loans previously sold, fair value adjustments to servicing rights, monthly fees charged to customers for our line of credit, and marketing fees earned from our issuing bank partners, which are recognized as the related services are provided.
|
•
|
Net Interest Margin After Credit Losses reflects net charge-offs in the period rather than provision for loan losses. To the extent that originations grow significantly, our charge-offs will likely be lower than the probable credit losses inherent in the portfolio upon origination. Furthermore, provision for loan losses consists of amounts charged to income during the period to maintain our ALLL. In addition to net charge-offs, our ALLL represents our estimate of the expected credit losses inherent in our portfolio of term loans and lines of credit and is based on a variety of factors, including the composition and quality of the portfolio, loan specific information gathered through our collection efforts, delinquency levels, our historical loss experience and general economic conditions.
|
•
|
Funding cost does not reflect interest associated with debt used for corporate purposes.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Interest Income to Net Interest Margin After Credit Losses (NIMAL)
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
80,122
|
|
|
$
|
71,361
|
|
|
$
|
250,954
|
|
|
$
|
188,726
|
|
Less: funding costs
|
(11,330
|
)
|
|
(8,452
|
)
|
|
(34,223
|
)
|
|
(22,548
|
)
|
||||
Net interest income
|
68,792
|
|
|
62,909
|
|
|
216,731
|
|
|
166,178
|
|
||||
Less: net charge-offs
|
(39,927
|
)
|
|
(23,067
|
)
|
|
(123,785
|
)
|
|
(60,237
|
)
|
||||
Net interest income after credit losses
|
28,865
|
|
|
39,842
|
|
|
92,946
|
|
|
105,941
|
|
||||
Divided by: business days in period
|
63
|
|
|
64
|
|
|
189
|
|
|
190
|
|
||||
Net interest income after credit losses per business day
|
458
|
|
|
623
|
|
|
492
|
|
|
558
|
|
||||
Multiplied by: average business days per year
|
252
|
|
|
252
|
|
|
252
|
|
|
252
|
|
||||
Annualized net interest income after credit losses
|
115,416
|
|
|
156,996
|
|
|
123,984
|
|
|
140,616
|
|
||||
Divided by: average Interest Earning Assets
|
$
|
944,372
|
|
|
$
|
841,270
|
|
|
$
|
983,689
|
|
|
$
|
735,825
|
|
Net Interest Margin After Credit Losses (NIMAL)
|
12.2
|
%
|
|
18.7
|
%
|
|
12.6
|
%
|
|
19.1
|
%
|
•
|
Adjusted Expense Ratio does not reflect the potentially dilutive impact of equity-based compensation.
|
•
|
Adjusted Expense Ratio is based on the unpaid principal balance of loans outstanding, regardless of funding source, and does not take into account the revenue earned in the period and may not correspond with the timing of the expenses incurred to originate new loans.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Operating Expense to Adjusted Expense Ratio (AER)
|
|
|
|
|
|
|
|
||||||||
Operating expense
|
$
|
37,251
|
|
|
$
|
49,395
|
|
|
$
|
128,488
|
|
|
$
|
141,482
|
|
Less: stock based compensation
|
(3,056
|
)
|
|
(3,761
|
)
|
|
(9,521
|
)
|
|
(11,423
|
)
|
||||
Operating expense (Ex. SBC)
|
34,195
|
|
|
45,634
|
|
|
118,967
|
|
|
130,059
|
|
||||
Divided by: business days in period
|
63
|
|
|
64
|
|
|
189
|
|
|
190
|
|
||||
Operating expense (Ex. SBC) per business day
|
543
|
|
|
713
|
|
|
629
|
|
|
685
|
|
||||
Multiplied by: average business days per year
|
252
|
|
|
252
|
|
|
252
|
|
|
252
|
|
||||
Operating expense (Ex. SBC)
|
136,836
|
|
|
179,676
|
|
|
158,508
|
|
|
172,620
|
|
||||
Divided by: average Loans Under Management
|
$
|
1,089,406
|
|
|
$
|
1,087,641
|
|
|
$
|
1,159,438
|
|
|
$
|
1,015,768
|
|
Adjusted Expense Ratio (AER)
|
12.6
|
%
|
|
16.5
|
%
|
|
13.7
|
%
|
|
17.0
|
%
|
•
|
Net Interest Margin After Credit Losses uses Average Interest Earning Assets in the denominator of the calculation whereas Adjusted Expense Ratio uses Average Loans Under Management in the denominator. Subtracting one metric from the other is purely illustrative and does not reflect the operating performance of the business.
|
•
|
Using Adjusted Operating Yield as a measure to compare Net Interest Margin After Credit Losses to Adjusted Expense Ratio assumes that loans sold through the OnDeck
Marketplace
are of similar origination, performance characteristics and return as loans held for investment and held for sale, which are funded on-balance sheet through our asset-backed revolving facilities, asset-backed securitization facilities, and internal equity.
|
•
|
Using Net Interest Margin After Credit Losses as a measure to compare against Adjusted Expense Ratio assumes that the rate of return of loans funded through the OnDeck
Marketplace
is similar to that of our loans held for investment or held for sale. Should our OnDeck
Marketplace
Gain on Sale Rates materially differ, both positively or negatively, this may limit the utility of comparing Net Interest Margin After Credit Losses to Adjusted Expense Ratio as a means of measuring the operations of the business.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
Percentage of Originations (Number of Loans)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Direct and Strategic Partner
|
76.5
|
%
|
|
79.8
|
%
|
|
77.5
|
%
|
|
80.3
|
%
|
Funding Advisor
|
23.5
|
%
|
|
20.2
|
%
|
|
22.5
|
%
|
|
19.7
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
Percentage of Originations (Dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Direct and Strategic Partner
|
73.4
|
%
|
|
73.0
|
%
|
|
73.4
|
%
|
|
73.1
|
%
|
Funding Advisor
|
26.6
|
%
|
|
27.0
|
%
|
|
26.6
|
%
|
|
26.9
|
%
|
•
|
the business must be approximately 50% paid down on its existing loan;
|
•
|
the business must be current on its outstanding OnDeck loan with no material delinquency history; and
|
•
|
the business must be fully re-underwritten and determined to be of adequate credit quality.
|
|
Q3 2017
|
Q2 2017
|
Q1 2017
|
Q4 2016
|
Q3 2016
|
Q2 2016
|
Q1 2016
|
2015
|
2014
|
2013
|
2012
|
Weighted Average Term Loan "Cents on Dollar" Borrowed, per Month
|
1.96¢
|
1.94¢
|
1.95¢
|
1.89¢
|
1.85¢
|
1.75¢
|
1.78¢
|
1.95¢
|
2.32¢
|
2.65¢
|
2.87¢
|
Weighted Average APR - Term Loans and Lines of Credit
|
43.8%
|
43.2%
|
44.0%
|
42.9%
|
42.1%
|
40.2%
|
40.6%
|
44.5%
|
54.4%
|
63.4%
|
69.0%
|
Weighted Average Term Loan Length at Origination
|
12.1
|
11.8
|
12.3
|
12.8
|
13.1
|
13.7
|
13.2
|
12.4
|
11.2
|
10.0
|
9.2
|
•
|
Channel Mix
- In general, loans originated from the strategic partner channel have lower EIYs than loans from the direct and funding advisor channel. This is primarily due to the lower pricing of loans in the strategic partner channel. The direct and strategic partner channels have, in the aggregate, made up
73%
and
73%
of total originations during the three months ended
September 30, 2017
, and
2016
, respectively. We expect the combined direct and strategic partner channels', as well as the funding advisor channel's, percentage of originations in 2017 to remain generally comparable to 2016 levels.
|
•
|
Term Mix
- In general, term loans with longer durations have lower annualized interest rates. Despite lower EIYs, total revenues from customers with longer loan durations are typically higher than the revenue of customers with shorter-term, higher EIY loans because total payback is typically higher compared to a shorter length term for the same principal loan amount. With the introduction of our 24-month and 36-month term loans, the average length of term loan originations increased to
13.2
from
12.4
months for the years ended December 31,
2016
and
2015
, respectively. The average length of term loans originated during the three months ended
September 30, 2017
decreased to
12.1
months as part of our concerted effort to reduce the term length of our loans at origination to better control risk.
|
•
|
Customer Type Mix
- In general, loans originated from repeat customers historically have had lower EIYs than loans from new customers. This is primarily due to the fact that repeat customers typically have a higher OnDeck
Score
and are therefore deemed to be lower risk. In addition, repeat customers are more likely to be approved for longer terms than new customers given their established payment history and lower risk profiles. Finally, origination fees are generally reduced or waived for repeat customers due to our loyalty program, contributing to lower EIYs.
|
•
|
Product Mix
- In general, loans originated by line of credit customers have lower EIYs than loans from term loan customers. This is primarily due to the fact that lines of credit are expected to have longer lifetime usage than term loans, enabling more time to recoup upfront acquisition costs. For loans originated during the third quarter of 2017, the average line of credit APR was
32.2%
, compared to the average term loan APR which was
45.2%
. Further, draws by line of credit customers have increased to
19.6%
of total originations in the third quarter of
2017
from
18.0%
the first quarter of 2017.
|
•
|
Competition
- During 2015, new lenders entered the online lending market. Subsequent to 2015, we believe the number of new entrants into the market as well as the amount of funding invested in these competitors from private equity or venture capital sources slowed. At the same time, more traditional small business lenders such as banks have entered and may continue to enter the space. As these trends evolve, competitors may attempt to obtain new customers by pricing term loans and lines of credit below prevailing market rates. This could cause downward pricing pressure as these market participants attempt to win new customers even at the cost of pricing loans below market rates, or even at rates resulting in net losses to them. While the market for small business loans remains highly competitive, we do not believe it has had a significant impact on our EIY.
|
Effective Interest Yield
|
||||||||||||||||||
Q3 2017
|
|
Q2 2017
|
|
Q1 2017
|
|
Q4 2016
|
|
Q3 2016
|
|
Q2 2016
|
|
Q1 2016
|
|
2015
|
|
2014
|
|
2013
|
33.4%
|
|
32.8%
|
|
33.9%
|
|
33.2%
|
|
32.8%
|
|
33.3%
|
|
34.5%
|
|
35.4%
|
|
40.3%
|
|
43.5%
|
•
|
New loans which are designated at origination to be sold, referred to as “Originations of loans held for sale;” and
|
•
|
Loans which were originally designated as held for investment that are subsequently designated to be sold at the time of their renewal and which are considered modified loans, referred to as “Originations of loans held for investment, modified."
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Originations of loans held for sale
|
$
|
3,069
|
|
|
$
|
70,870
|
|
|
$
|
44,490
|
|
|
$
|
238,077
|
|
Originations of loans held for investment, modified
|
2,271
|
|
|
15,078
|
|
|
11,475
|
|
|
54,865
|
|
||||
Marketplace
originations
|
$
|
5,340
|
|
|
$
|
85,948
|
|
|
$
|
55,965
|
|
|
$
|
292,942
|
|
|
2012
|
2013
|
2014
|
2015
|
Q1 2016
|
Q2 2016
|
Q3 2016
|
Q4 2016
|
Q1 2017
|
Q2 2017
|
Q3 2017
|
Principal Outstanding as of September 30, 2017
|
—%
|
—%
|
—%
|
0.2%
|
1.4%
|
3.4%
|
6.1%
|
14.2%
|
27.2%
|
57.2%
|
88.3%
|
Originations
|
2013
|
2014
|
2015
|
Q1 2016
|
Q2 2016
|
Q3 2016
|
Q4 2016
|
Q1 2017
|
Q2 2017
|
Q3 2017
|
||||||||||||||||||||
All term loans (in thousands)
|
$
|
455,931
|
|
$
|
1,100,957
|
|
$
|
1,703,617
|
|
$
|
495,956
|
|
$
|
506,097
|
|
$
|
518,509
|
|
$
|
531,287
|
|
$
|
469,924
|
|
$
|
362,219
|
|
$
|
427,087
|
|
Weighted average term (months)
|
10.0
|
|
11.2
|
|
12.4
|
|
13.2
|
|
13.7
|
|
13.1
|
|
12.8
|
|
12.3
|
|
11.8
|
|
12.1
|
|
•
|
Demand for Our Loans
. In a strong economic climate, demand for our loans may increase as consumer spending increases and small businesses seek to expand. In addition, more potential customers may meet our underwriting requirements to qualify for a loan. At the same time, small businesses may experience improved cash flow and liquidity resulting in fewer customers requiring loans to manage their cash flows. In that climate, traditional lenders may also approve loans for a higher percentage of our potential customers. In a weakening economic climate or recession, the opposite may occur.
|
•
|
Credit Performance
. In a strong economic climate, our customers may experience improved cash flow and liquidity, which may result in lower loan losses. In a weakening economic climate or recession, the opposite may occur. We factor economic conditions into our loan underwriting analysis and reserves for loan losses, but changes in economic conditions, particularly sudden changes, may affect our actual loan losses. These effects may be partially mitigated by the short-term nature and repayment structure of our loans, which should allow us to react more quickly than if the terms of our loans were longer than our current offerings.
|
•
|
Loan Losses
. Our underwriting process is designed to limit our loan losses to levels compatible with our business strategy and financial model. The aggregate performance of loans originated from 2012 through 2015 was generally consistent with our expectations, while loans originated in 2016 are experiencing higher than expected losses. Through
September 30, 2017
, the aggregate performance of loans originated in the first half of
2017
is generally consistent with our expectations, excluding the loans impacted by the hurricanes. Our overall loan losses are affected by a variety of factors, including external factors such as prevailing economic conditions, general small business sentiment and unusual events such as natural disasters, as well as internal factors such as the accuracy of the OnDeck
Score
, the effectiveness of our underwriting process and the introduction of new types of loans, such as our line of credit, with which we have less experience to draw upon when forecasting their loss rates. Our loan loss rates may vary in the future.
|
•
|
Funding Costs.
Changes in macroeconomic conditions may affect generally prevailing interest rates, and such effects may be amplified or reduced by other factors such as fiscal and monetary policies, economic conditions in other markets and other factors. Interest rates may also change for reasons unrelated to economic conditions. To the extent that interest rates rise, our funding costs will increase and the spread between our Effective Interest Yield and our Cost of Funds Rate may narrow to the extent we cannot correspondingly increase the payback rates we charge our customers. We expect our Cost of Funds Rate to gradually increase during the remainder of
2017
due to, among other things, anticipated Federal Reserve interest rate increases.
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
$
|
80,122
|
|
|
95.8
|
%
|
|
$
|
71,361
|
|
|
92.2
|
%
|
|
$
|
8,761
|
|
|
12.3
|
%
|
Gain on sales of loans
|
146
|
|
|
0.2
|
|
|
2,670
|
|
|
3.5
|
|
|
(2,524
|
)
|
|
(94.5
|
)
|
|||
Other revenue
|
3,398
|
|
|
4.0
|
|
|
3,340
|
|
|
4.3
|
|
|
58
|
|
|
1.7
|
|
|||
Gross revenue
|
83,666
|
|
|
100.0
|
|
|
77,371
|
|
|
100.0
|
|
|
6,295
|
|
|
8.1
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for loan losses
|
39,582
|
|
|
47.3
|
|
|
36,586
|
|
|
47.3
|
|
|
2,996
|
|
|
8.2
|
|
|||
Funding costs
|
11,330
|
|
|
13.5
|
|
|
8,452
|
|
|
10.9
|
|
|
2,878
|
|
|
34.1
|
|
|||
Total cost of revenue
|
50,912
|
|
|
60.8
|
|
|
45,038
|
|
|
58.2
|
|
|
5,874
|
|
|
13.0
|
|
|||
Net revenue
|
32,754
|
|
|
39.2
|
|
|
32,333
|
|
|
41.8
|
|
|
421
|
|
|
1.3
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales and marketing
|
11,903
|
|
|
14.2
|
|
|
16,789
|
|
|
21.7
|
|
|
(4,886
|
)
|
|
(29.1
|
)
|
|||
Technology and analytics
|
11,748
|
|
|
14.0
|
|
|
15,050
|
|
|
19.5
|
|
|
(3,302
|
)
|
|
(21.9
|
)
|
|||
Processing and servicing
|
4,160
|
|
|
5.0
|
|
|
5,181
|
|
|
6.7
|
|
|
(1,021
|
)
|
|
(19.7
|
)
|
|||
General and administrative
|
9,440
|
|
|
11.3
|
|
|
12,375
|
|
|
16.0
|
|
|
(2,935
|
)
|
|
(23.7
|
)
|
|||
Total operating expenses
|
37,251
|
|
|
44.5
|
|
|
49,395
|
|
|
63.9
|
|
|
(12,144
|
)
|
|
(24.6
|
)
|
|||
Loss from operations
|
(4,497
|
)
|
|
(5.3
|
)
|
|
(17,062
|
)
|
|
(22.1
|
)
|
|
12,565
|
|
|
73.6
|
|
|||
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense
|
(35
|
)
|
|
—
|
|
|
(111
|
)
|
|
(0.1
|
)
|
|
76
|
|
|
68.5
|
|
|||
Total other expense:
|
(35
|
)
|
|
—
|
|
|
(111
|
)
|
|
(0.1
|
)
|
|
76
|
|
|
68.5
|
|
|||
Loss before provision for income taxes
|
(4,532
|
)
|
|
(5.3
|
)
|
|
(17,173
|
)
|
|
(22.2
|
)
|
|
12,641
|
|
|
73.6
|
|
|||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
$
|
(4,532
|
)
|
|
(5.3
|
)%
|
|
$
|
(17,173
|
)
|
|
(22.2
|
)%
|
|
$
|
12,641
|
|
|
73.6
|
%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|||||||||||||||||||
Interest income
|
$
|
80,122
|
|
|
95.8
|
%
|
|
$
|
71,361
|
|
|
92.2
|
%
|
|
$
|
8,761
|
|
|
12.3
|
%
|
Gain on sales of loans
|
146
|
|
|
0.2
|
|
|
2,670
|
|
|
3.5
|
|
|
(2,524
|
)
|
|
(94.5
|
)
|
|||
Other revenue
|
3,398
|
|
|
4.0
|
|
|
3,340
|
|
|
4.3
|
|
|
58
|
|
|
1.7
|
|
|||
Gross revenue
|
$
|
83,666
|
|
|
100.0
|
%
|
|
$
|
77,371
|
|
|
100.0
|
%
|
|
$
|
6,295
|
|
|
8.1
|
%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for loan losses
|
$
|
39,582
|
|
|
47.3
|
%
|
|
$
|
36,586
|
|
|
47.3
|
%
|
|
$
|
2,996
|
|
|
8.2
|
%
|
Funding costs
|
11,330
|
|
|
13.5
|
|
|
8,452
|
|
|
10.9
|
|
|
2,878
|
|
|
34.1
|
|
|||
Total cost of revenue
|
$
|
50,912
|
|
|
60.8
|
%
|
|
$
|
45,038
|
|
|
58.2
|
%
|
|
$
|
5,874
|
|
|
13.0
|
%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Sales and marketing
|
$
|
11,903
|
|
|
14.2
|
%
|
|
$
|
16,789
|
|
|
21.7
|
%
|
|
$
|
(4,886
|
)
|
|
(29.1
|
)%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
Period-to-Period
|
|||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
General and administrative
|
$
|
9,440
|
|
|
11.3
|
%
|
|
$
|
12,375
|
|
|
16.0
|
%
|
|
$
|
(2,935
|
)
|
|
(23.7
|
)%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
$
|
250,954
|
|
|
95.3
|
%
|
|
$
|
188,726
|
|
|
90.1
|
%
|
|
$
|
62,228
|
|
|
33.0
|
%
|
Gain on sales of loans
|
1,890
|
|
|
0.7
|
|
|
12,594
|
|
|
6.0
|
|
|
(10,704
|
)
|
|
(85.0
|
)
|
|||
Other revenue
|
10,365
|
|
|
4.0
|
|
|
8,168
|
|
|
3.9
|
|
|
2,197
|
|
|
26.9
|
|
|||
Gross revenue
|
263,209
|
|
|
100.0
|
|
|
209,488
|
|
|
100.0
|
|
|
53,721
|
|
|
25.6
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for loan losses
|
118,495
|
|
|
45.0
|
|
|
94,294
|
|
|
45.0
|
|
|
24,201
|
|
|
25.7
|
|
|||
Funding costs
|
34,223
|
|
|
13.0
|
|
|
22,548
|
|
|
10.8
|
|
|
11,675
|
|
|
51.8
|
|
|||
Total cost of revenue
|
152,718
|
|
|
58.0
|
|
|
116,842
|
|
|
55.8
|
|
|
35,876
|
|
|
30.7
|
|
|||
Net revenue
|
110,491
|
|
|
42.0
|
|
|
92,646
|
|
|
44.2
|
|
|
17,845
|
|
|
19.3
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales and marketing
|
42,090
|
|
|
16.0
|
|
|
50,094
|
|
|
23.9
|
|
|
(8,004
|
)
|
|
(16.0
|
)
|
|||
Technology and analytics
|
41,960
|
|
|
15.9
|
|
|
42,894
|
|
|
20.5
|
|
|
(934
|
)
|
|
(2.2
|
)
|
|||
Processing and servicing
|
13,521
|
|
|
5.1
|
|
|
14,261
|
|
|
6.8
|
|
|
(740
|
)
|
|
(5.2
|
)
|
|||
General and administrative
|
30,917
|
|
|
11.7
|
|
|
34,233
|
|
|
16.3
|
|
|
(3,316
|
)
|
|
(9.7
|
)
|
|||
Total operating expenses
|
128,488
|
|
|
48.7
|
|
|
141,482
|
|
|
67.5
|
|
|
(12,994
|
)
|
|
(9.2
|
)
|
|||
Loss from operations
|
(17,997
|
)
|
|
(6.7
|
)
|
|
(48,836
|
)
|
|
(23.3
|
)
|
|
30,839
|
|
|
63.1
|
|
|||
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense
|
(706
|
)
|
|
(0.3
|
)
|
|
(186
|
)
|
|
(0.1
|
)
|
|
(520
|
)
|
|
(279.6
|
)
|
|||
Total other expense:
|
(706
|
)
|
|
(0.3
|
)
|
|
(186
|
)
|
|
(0.1
|
)
|
|
(520
|
)
|
|
(279.6
|
)
|
|||
Loss before provision for income taxes
|
(18,703
|
)
|
|
(7.0
|
)
|
|
(49,022
|
)
|
|
(23.4
|
)
|
|
30,319
|
|
|
61.8
|
|
|||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
$
|
(18,703
|
)
|
|
(7.0
|
)%
|
|
$
|
(49,022
|
)
|
|
(23.4
|
)%
|
|
$
|
30,319
|
|
|
61.8
|
%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|||||||||||||||||||
Interest income
|
$
|
250,954
|
|
|
95.3
|
%
|
|
$
|
188,726
|
|
|
90.1
|
%
|
|
$
|
62,228
|
|
|
33.0
|
%
|
Gain on sales of loans
|
1,890
|
|
|
0.7
|
|
|
12,594
|
|
|
6.0
|
|
|
(10,704
|
)
|
|
(85.0
|
)
|
|||
Other revenue
|
10,365
|
|
|
4.0
|
|
|
8,168
|
|
|
3.9
|
|
|
2,197
|
|
|
26.9
|
|
|||
Gross revenue
|
$
|
263,209
|
|
|
100.0
|
%
|
|
$
|
209,488
|
|
|
100.0
|
%
|
|
$
|
53,721
|
|
|
25.6
|
%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for loan losses
|
$
|
118,495
|
|
|
45.0
|
%
|
|
$
|
94,294
|
|
|
45.0
|
%
|
|
$
|
24,201
|
|
|
25.7
|
%
|
Funding costs
|
34,223
|
|
|
13.0
|
|
|
22,548
|
|
|
10.8
|
|
|
11,675
|
|
|
51.8
|
|
|||
Total cost of revenue
|
$
|
152,718
|
|
|
58.0
|
%
|
|
$
|
116,842
|
|
|
55.8
|
%
|
|
$
|
35,876
|
|
|
30.7
|
%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
Period-to-Period
|
|||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
General and administrative
|
$
|
30,917
|
|
|
11.7
|
%
|
|
$
|
34,233
|
|
|
16.3
|
%
|
|
$
|
(3,316
|
)
|
|
(9.7
|
)%
|
Description
|
Maturity
Date |
|
Weighted
Average Interest Rate |
|
Borrowing
Capacity |
|
Principal
Outstanding |
||||
|
|
|
|
|
(in millions)
|
||||||
Funding debt:
|
|
|
|
|
|
||||||
OnDeck Asset Securitization Trust II LLC
|
May 2020
(1)
|
|
4.7%
|
|
$
|
250.0
|
|
|
$
|
250.0
|
|
OnDeck Account Receivables Trust 2013-1 LLC
|
March 2019
|
|
3.9%
|
|
214.1
|
|
|
123.5
|
|
||
Receivable Assets of OnDeck, LLC
|
November 2018
|
|
3.7%
|
|
100.0
|
|
|
71.1
|
|
||
OnDeck Asset Funding I, LLC
|
February 2020
(2)
|
|
8.5%
|
|
150.0
|
|
|
81.6
|
|
||
Prime OnDeck Receivable Trust II, LLC
|
December 2018
|
|
3.7%
|
|
125.0
|
|
(3)
|
67.3
|
|
||
On Deck Asset Company, LLC
|
May 2019
|
|
8.5%
|
|
100.0
|
|
|
76.3
|
|
||
Other Agreements
|
Various
(4)
|
|
Various
|
|
44.0
|
|
|
39.4
|
|
||
Total funding debt
|
|
|
|
|
$
|
983.1
|
|
|
$
|
709.2
|
|
Corporate debt:
|
|
|
|
|
|
|
|
||||
On Deck Capital, Inc.
|
October 2018
|
|
5.5%
|
|
$
|
30.0
|
|
|
$
|
17.2
|
|
|
As of and for the Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
64,292
|
|
|
$
|
85,948
|
|
Restricted cash
|
$
|
56,729
|
|
|
$
|
42,827
|
|
Loans held for investment, net
|
$
|
852,331
|
|
|
$
|
817,959
|
|
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
149,143
|
|
|
$
|
89,523
|
|
Investing activities
|
$
|
(131,949
|
)
|
|
$
|
(449,062
|
)
|
Financing activities
|
$
|
(33,280
|
)
|
|
$
|
285,236
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
On Deck Capital, Inc.
|
|
|
|
/s/ Howard Katzenberg
|
|
Howard Katzenberg
Chief Financial Officer
(Principal Financial Officer)
|
Date: November 7, 2017
|
|
|
|
|
/s/ Nicholas Sinigaglia
|
|
Nicholas Sinigaglia
Senior Vice President ( Principal Accounting Officer ) |
Date: November 7, 2017
|
|
Exhibit
Number
|
|
Description
|
|
Filed /
Incorporated by
Reference from
Form *
|
|
Incorporated
by Reference
from Exhibit
Number
|
|
Date Filed
|
|
|
8-K
|
|
3.1
|
|
12/22/2014
|
||
|
|
8-K
|
|
3.1
|
|
8/3/2016
|
||
|
|
S-1
|
|
4.1
|
|
11/10/2014
|
||
|
|
S-1
|
|
4.2
|
|
11/10/2014
|
||
|
|
S-1
|
|
4.6
|
|
11/10/2014
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
101.INS
|
|
XBRL Instance Document
|
|
Filed herewith.
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith.
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
*
|
All exhibits incorporated by reference to the Registrant's Form S-1 registration statement relate to Registration No. 333-200043
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of On Deck Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Noah Breslow
|
|
Noah Breslow
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of On Deck Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Howard Katzenberg
|
|
Howard Katzenberg
Chief Financial Officer
|
|
/s/ Noah Breslow
|
|
Noah Breslow
Chief Executive Officer
|
|
/s/ Howard Katzenberg
|
|
Howard Katzenberg
Chief Financial Officer
|