May 3rd 2016, Daily News Digest

  • OnDeck reports wider losses than expected due to limited short-term securitization profits which will lead to better long-term profits. Stock drops 28%.
  • P2P lending volumes for April are out.
  • Ldger announces next auction on their secondary market liquidity platform for whole loans.
  • More details on Lending Club’s securitization, lots of numbers.

OnDeck Losses Grow as Lender Sells Fewer Loans, (Wall Street Journal), Rated: AAA

Shares in the New York company fell 28% to $5.90 in aftermarket trading.

OnDeck reported a net loss of $13.14 million, or 18 cents a share, compared with a net loss of $5.34 million, or 8 cents a share, in the first quarter of 2015. The average estimate of analysts polled by Thomson Reuters was for a loss of 7 cents a share.

“We had a more dramatic quarter than we anticipated” previously, said Chief Executive Noah Breslow on a conference call with analysts.

OnDeck’s quarterly loan volume was up 37% to a record $569.66 million, though the effective interest yield on outstanding loans decreased. OnDeck said that it had $44.6 million in operating expenses, up 33% from the same period in 2015. The firm attributed some of that increase to efforts to license its technology to banks such as JPMorgan Chase.

Much of the shortfall came from a reduction in gains OnDeck books when it sells loans to investors. The lender sold 26% of the loans it made during the quarter, down from 40% in the fourth quarter of 2015. Additionally, investors who did buy the loans paid lower premiums, sending the gain-on-sale rate down to 5.7% from 9.0%.

Finance chief Howard Katzenberg said that certain investment vehicles that historically purchased loans with the intention of packaging them into bonds and selling them off had slowed their activity as securitization markets became more challenged. As a result, OnDeck opted to hold more of the loans it makes on its balance sheet, foregoing that short-term revenue and requiring the company to set aside funds to cover potential defaults.

But Mr. Katzenberg added that over time OnDeck would collect a greater amount of interest on those loans than the upfront gains it would have booked on a sale. The lender has been taking steps to increase its balance sheet to give it more flexibility

International P2P Lending Marketplace Table – Loan Volumes April 2016, (P2p Banking), Rated: AAA

A table  containing the volume originated by some of the most preeminent  loan originations of p2p lending marketplaces in April. Lendinvest leads ahead of Ratesetter and Funding Circle UK.  Note: this table does not have any data for Lending Club and Prosper. Prosper and Lending Club no longer publish origination data for the most recent month.

Secondary Market Platform Ldger Announces Next Auction With a Twenty-Fold Increase In Loans, (PR Leap), Rated: AAA

Ldger, the primary platform for secondary market liquidity solutions for marketplace lending assets, has announced its second auction of Prosper Marketplace loans. The auction, tentatively scheduled for the third week in May, will mark the first open all-to-all secondary trading auction by the company.

Ldger has received selling interest from holders of $4.6mm in MPL whole loans, representing a twenty-fold increase in inventory from the initial auction held on April 6th, 2016.

“Currently, the portfolios listed for sale have assets with a weighted average loan age well past the age of 12 to 15 months where historically the cumulative default rates have flattened. As such, we expect strong demand from onshore and offshore buyers looking for seasoned, premium assets.”

Ldger has expressed their aim to standardize secondary markets across lending platforms. Their auctions currently support Prosper whole loans but will expand to include additional lending platforms.

Details on Lending Club’s securitization, (Lending Club presentation), Rated: AAA

There will be a presale on May 3rd.
For this new program, buyers who securitize will buy from the Lending Club Investment Trust (LCIT) shelf. The depositor will be the buyer and not Lending Club.
Wells Fargo will be the backup servicer.
The offering is composed of 3 layers:
non-prime (NP) with FICOs between 600-659
prime low(PL) with grades of C, D, E, F, G
prime high (PH) with A & B grades
The weight adjusted FICO will be 640.
The composition will be at 91.2% of 3-year loans and 8.8%  of 5-year loans.
The weight average coupon will be 28.5. (The first deal will be the Near Prime assets)
Underwriting and marketing :
Jefferies will do the first deal 2016-NP1 in May
Goldman Sachs will do a PL deal following the Jeffries deal.
It is likely that PH will not be sold.
The Kroll ratings for 2016-NP1 will be :
A 97.5mm 0.78yr A-
B 18.75mm 2.40yr BBB
OC 33.75mm
Overcollateralization is 22.5% and growing towards 40%.

Fincera Reports 2015 Year-End Financial Results, (Market Wired), Rated: A

Fincera Inc. (“Fincera” or the “Company”) (OTCQB: AUTCF), a provider of web-based financing and ecommerce services for small and medium-sized businesses and individuals in China, today reported financial results for the year ended December 31, 2015.

  • The Company continued the wind down of its legacy truck-leasing business, which is now classified as a discontinued operation, and expects to continue servicing and collecting payments on existing commercial vehicle leases until all obligations related to the individual leases are met.
  • The Company’s Internet-based business segment, which was launched in November 2014 and consists of financial services, payment and settlement, and ecommerce offerings, continues to grow: the electronic payments platform CeraPay was used to make payment transactions totaling over RMB9.7 billion during 2015. The online marketplace lending platform CeraVest originated over RMB2.6 billion in loans during 2015, an increase of over twenty times the 2014 amount, and had a loan portfolio of approximately $251 million at December 31, 2015.

Full-year 2015 Financial Highlights (comparisons are year over year)

  • Total revenues of $56.3 million, compared to $5.4 million. Both 2015 and 2014 reported revenues no longer include the Company’s legacy truck-leasing business, which is now treated as discontinued operations.
  • Net income from continuing operations of $76,000, or $0.003 per diluted share, compared to a net loss of $16.3 million, or $0.68 per diluted share, primarily as a result of the reclassification of the legacy truck-leasing business as a discontinued operation while the Company’s overhead is still included in continuing operations.

HK, China peers join hands in fintech development, (Ejinsight), Rated: B

The China Internet Development Foundation and the Chinese Financial Association of Hong Kong recently signed an agreement on fintech cooperation.

Hong Kong, although an international financial center, has lagged behind in fintech development and it didn’t have any P2P lending platform until WeLend was launched in July last year.

With the above-mentioned agreement, Hong Kong peers are expected to have deeper engagement in the development of China’s fintech businesses, in terms of fund-raising, talent communication, organizational cooperation, etc.

Author: George Popescu

George Popescu


About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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