On Deck Capital, Inc. (NYSE:ONDK) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 08:00 am ET


On Deck Capital, Inc. (NYSE:ONDK) Q4 2018 Earnings Conference Call Transcript


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Good morning. My name is Liandra and I will be your conference operator today. At this time, I would like to welcome everyone to the OnDeck Fourth Quarter Earnings Call. (Operator Instructions) Thank you.

Mr. Steve Klimas, Head of Investor Relations. You may begin your conference.

Steve Klimas

Thank you, Liandra; and good morning, everyone. Welcome to OnDeck's fourth quarter earnings call. I'm here this morning with Noah Breslow, our Chief Executive Officer; and Ken Brause, our Chief Financial Officer. Our earnings release was issued earlier this morning and is available with our earnings presentation and financial supplement in the Investor Relations section of our website.

Certain statements, including those relating to our 2019 financial guidance are forward-looking statements. They are not facts and are subject to material risks and uncertainties described in our SEC filings. These statements are based on currently available information and we undertake no duty to update them except as required by law. Today's discussion is also subject to the forward-looking statement limitations in the earnings release and our actual results could differ materially and adversely from those anticipated.

During this call, we will use terms defined in the earnings release and refer to non-GAAP financial measures. For definitions and reconciliations to GAAP, please refer to the earnings release and the Appendix of the earnings presentation posted on our website.

Finally, to better align our performance measures with industry standards, we changed some of our reporting metrics this quarter. The changes and impacts are summarized on Slide 17 of the earnings presentation. All prior period data has been conformed to the current period presentation in all earnings related materials published today.

With that, I'll turn the call over to Noah.

Noah Breslow

Thank you, Steve; and thank you all for joining us today. We had a very successful year and have a lot to talk about this morning. I'll cover highlights from the fourth quarter and full year of 2018 and then I will discuss our strategic priorities for 2019. Then, Ken will provide more detail on the numbers, give an update on funding and review our 2019 guidance. Finally, we will take your questions.

2018 was a pivotal year for OnDeck and we finished strong. We began the year with an ambitious agenda and we accomplished the objectives we laid out. We grew the core lending franchise. We had record originations of nearly $2.5 billion, a 17% increase from 2017. We grew the portfolio over 22%, significantly exceeding the 10% to 15% target we set for the year. And we solidified our position as the top online lender to small businesses with approximately $11 billion of loans made since our inception.

We strengthened our risk management function. We tightened underwriting in 2017 and our net charge-offs improved considerably. We in-sourced collections on late-stage delinquent accounts to improve outcomes for us and our customers and we instilled a risk-based framework that enables us to rapidly adapt to changing market conditions as we responsibly grow the business. We improved efficiency. We consolidated