With Interest Rates Up, OnDeck’s Cost of Funds Comes Way Down

OnDeck’s cost of funds dropped significantly in 2018, according to their last quarterly report. The rate was 5.6% in Q4, compared to the 6.8% it started off at in Q1.

During the earnings call, OnDeck CEO Noah Breslow said, “We improved the terms and structures of our credit facilities and increased the number and quality of our funding providers, adding new banks and life insurance companies.”

That’s all before OnDeck even closed on an $85 million revolving credit facility with a lender group consisting of four banks earlier this month. The rate on that came in at 1 month LIBOR (currently around 2.5%) + 3.00%.

OnDeck’s loan yield in Q4 was the highest its been in the last 2 years at 36.6%.

The company enjoyed record earnings for Q4 2018 ($14 million) and full year 2018 ($27.7 million). They also had record origination volume of $658 million, a 2% increase from Q3 and a 21% increase from Q4 2017. Their sales and marketing expense for acquiring new customers remained flat compared to last quarter.