Online lender OnDeck's quarterly profit tops estimates on record loan originations

By Anna Irrera and Aparajita Saxena

Feb 12 () - OnDeck Capital Inc on Tuesday reported fourth-quarter profit that beat analysts' estimates as the online lender issued more loans and earned more interest income.

Loan originations surged 21 percent to a record $658.5 million in the quarter while net interest income jumped 26 percent to $105.4 million.

The company forecast current-quarter adjusted net income of $5 million to $9 million, while analysts, on average, estimated $8.5 million, according to IBES data from Refinitiv.

Gross revenue in the current quarter is expected to be between $108 million and $112 million, higher than analysts' expectation of $106.09 million.

The company forecast adjusted 2019 net income between $30 million and $40 million, while analysts look for $44.4 million.

OnDeck shares were up 3.1 percent at $7.59 after the opening bell.

New York-based OnDeck lends to small businesses online and then resells the loans to institutions such as banks. It also provides lending technology and other services to banks through its ODX subsidiary, set up in October 2018.

The company's performance has improved over the past year after it tightened credit requirements and slashed costs.

Like other online lenders, OnDeck has faced concerns from investors who worried that companies in the nascent sector could not continue to grow at a fast pace while keeping loan quality under control.

"2018 was a pivotal year for OnDeck and we finished strong," Chief Executive Officer Noah Breslow said on a conference call with analysts. "We began the year with an ambitious agenda and we accomplished the objective we laid out."

Last year it partnered with PNC Financial Services Group Inc'sPNC Bank, which will use ODX to provide lines of credit of up to $100,000 to small business through its website.

Breslow said OnDeck had a strong pipeline of potential large and small bank partners.

"Most large banks now realize they must digitize their lending processes to remain competitive. Some will build and some may buy and others will partner in that transformation process and we want to be the partner of choice for those banks," Breslow said.

Net income attributable to common shareholders rose to $14 million, or 18 cents per share, in the fourth quarter, from $5.1 million, or 7 cents per share, a year earlier.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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