OnDeck released its fourth quarter and full year earnings before the market's open on Thursday; the firm reported a net loss of $67.0 million for 2016 compared to a net profit of $10.3 million in 2015; originations were $2.4 billion in 2016 compared to $1.9 billion in 2015; revenue for the year increased to $264.8 million from $195.1 million; loan loss provisions were a factor contributing to the net loss with provisions increasing to $149.96 million in 2016 from $74.86 million in 2015. Sources
In January, Prosper began using its new PMI7 credit underwriting model; Prosper expects PMI7 to help improve returns and credit scoring metrics; the estimated return on loans issued for January is 7.86%; post-charge off recoveries have been higher than estimated which is expected to increase IRR calculations; delinquencies and pre-payments are also improving; the average coupon increased 300 bps in January to 15.99% as PMI7 caused an increase in higher risk loans. Source
The chart below shows the stock performance for Lending Club versus OnDeck since May 16, 2016, which is the day Lending Club's stock bottomed out after their CEO resigned; Lending Club is up 64% and OnDeck is up 8%; both companies have taken a hit this week after earnings, largely due to profit taking.
OnDeck released their Q4 earnings and also announced a reduction of 11% of its staff; the company added $19 million to their loss provision expenses in part due to underperformance seen in 15+ month loans; OnDeck is focused on being adjusted EBITDA positive in 2017 with GAAP profitability in 2018; originations were $632 million for Q4 2016; OnDeck continues to hold more loans on their balance sheet as revenue from loan purchasers remains flat. Source
Alternative data scoring considerations are becoming more prevalent in today's credit market; the Consumer Financial Protection Bureau (CFPB) has announced a public comment period seeking feedback on the potential use of alternative credit sources such as mobile phone bills and rent payments in credit approvals; the CFPB is seeking to identify how it might be able to serve consumers with minimal credit history; it says that approximately 26 million Americans have no credit histories and an additional 19 million consumers lack enough credit information to produce a credit score. Source
Lending Club's fourth quarter earnings release showed a decrease in investment from retail investors; the decrease follows an increased focus from the company on banks and institutional investors as the company seeks to regain credibility following issues in 2016; while originations have remained fairly steady over the past three quarters, the percentage of investment from institutional investors increased to 74% in the fourth quarter. Source
Silver Lake Partners is leading the next financing round for SoFi that is expected to add $500 million in new capital for the growing alternative finance company; investors include Japan's SoftBank Group Corp. and several other Asian investors along with DCM Ventures and Third Point; with the completion of the fundraising, SoFi will be valued at approximately $4.3 billion; recent acquisitions and product introductions have helped the firm expand its offerings from student loan refinancings to personal loans, mortgages, wealth management, life insurance and digital banking. Source
AutoGravity has added Westlake Financial Services to its network of financing companies; AutoGravity launched its app in 46 states in January; the platform allows consumers to shop for a car online, apply for financing and receive up to four auto financing offers. Source
The company has now increased its total capital raised to $300 million; Unison helps make homeownership affordable by providing capital in the form of equity in the home that tracks with the value of a home and is payable upon its sale; firm has added Ron Suber from Prosper Marketplace as an investor and strategic advisor; also announced several new leadership appointments and promotions. Source
PeerStreet is a platform founded by Brew Johnson? and Brett Crosby; initially launched to take advantage of inefficiencies in the real estate market, the platform has grown to service a wide range of accredited investors; the platform has originated over $200 million in real estate loans; it attributes its success to the platform's focus on short-term, first position lien loans, and a robust legal and compliance team; Brew Johnson will be speaking at LendIt USA 2017 on a panel discussing "Residential & Commercial Real Estate: What's next for real estate crowdfunding?" Source