OnDeck Capital reported a $4.5 million third-quarter loss as hurricane damage along the Gulf Coast prompted the digital lender to set aside more money for bad loans.
The New York-based company has now recorded losses in eight consecutive quarters — it lost $17.2 million in the third quarter of 2016 — but said that it is on track to achieve profitability in the fourth quarter of this year.
OnDeck, which specializes in loans to small businesses that often cannot get credit from banks, has struggled since going public in December 2014. Its shares were trading at just over $5 on Monday morning, down sharply from its initial public offering price of $20.
Back in February, OnDeck announced plans to cut its annual expenses by $20 million and to reduce its workforce by 11%.
That cost-cutting effort helped to limit OnDeck’s losses in the third quarter. The firm reported operating expenses of $37.3 million, down from $49.4 million in the same period a year earlier.
But OnDeck’s provision for loan losses climbed by $3 million to $39.6 million, which the company attributed to the damage that Hurricanes Harvey and Irma wreaked in Florida, Texas and Louisiana.
OnDeck said that 14.5% of its loans in hurricane disaster areas were at least 15 days late as of Sept. 30. That was up from just 7.3% three months earlier. Credit quality in other geographic areas improved slightly.
The company’s loan originations fell by 13% from a year earlier, to $531 million.
In a press release, OnDeck CEO Noah Breslow called the firm’s results “solid.”
He added, “Looking ahead, our business is well-positioned to build on our strong customer demand and disciplined operating performance.”
