ON DECK CAPITAL, INC., 10-K filed on 3/3/2016
Annual Report
Document And Entity Information Document (USD $)
12 Months Ended
Dec. 31, 2015
Feb. 22, 2016
Jun. 30, 2015
Document And Entity Information [Abstract]
 
 
 
Entity Registrant Name
On Deck Capital, Inc. 
 
 
Entity Central Index Key
0001420811 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2015 
 
 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
70,403,696 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 536,469,983 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Assets
 
 
Cash and cash equivalents
$ 159,822 
$ 220,433 
Restricted cash
38,463 
29,448 
Loans held for investment
552,742 
504,107 
Less: Allowance for loan losses
(53,311)
(49,804)
Loans held for investment, net
499,431 
454,303 
Loans held for sale
706 
1,523 
Deferred debt issuance costs
4,227 
5,374 
Property, equipment and software, net
26,187 
13,929 
Other assets
20,416 
4,622 
Total assets
749,252 
729,632 
Liabilities:
 
 
Accounts payable
2,701 
4,065 
Interest payable
757 
819 
Debt
382,812 
399,928 
Accrued expenses and other liabilities
33,560 
14,215 
Total liabilities
419,830 
419,027 
Commitments and contingencies
   
   
Stockholders’ equity (deficit):
 
 
Common stock—$0.005 par value, 1,000,000,000 shares authorized and 73,107,848 and 72,069,768 shares issued and 70,060,208 and 69,031,719 outstanding at December 31, 2015 and 2014, respectively
366 
360 
Treasury stock—at cost
(5,843)
(5,656)
Additional paid-in capital
457,003 
442,969 
Accumulated deficit
(128,341)
(127,068)
Accumulated other comprehensive loss
(372)
Total On Deck Capital, Inc. stockholders' equity
322,813 
310,605 
Noncontrolling interest
6,609 
Total equity
329,422 
310,605 
Total liabilities and equity
749,252 
729,632 
Funding debt
 
 
Liabilities:
 
 
Debt
380,112 
387,928 
Corporate debt
 
 
Liabilities:
 
 
Debt
$ 2,700 
$ 12,000 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Common stock, par value (in dollars per share)
$ 0.005 
$ 0.005 
Common stock, shares authorized (shares)
1,000,000,000 
1,000,000,000 
Common stock, shares issued (shares)
73,107,848 
72,069,768 
Common stock, shares outstanding (shares)
70,060,208 
69,031,719 
Consolidated Statements of Operations and Comprehensive Income (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Revenue:
 
 
 
Interest income
$ 195,048 
$ 145,275 
$ 62,941 
Gain on sales of loans
53,354 
8,823 
788 
Other revenue
6,365 
3,966 
1,520 
Gross revenue
254,767 
158,064 
65,249 
Cost of revenue:
 
 
 
Provision for loan losses
74,863 
67,432 
26,570 
Funding costs
20,244 
17,200 
13,419 
Total cost of revenue
95,107 
84,632 
39,989 
Net revenue
159,660 
73,432 
25,260 
Operating expense:
 
 
 
Sales and marketing
60,575 
33,201 
18,095 
Technology and analytics
42,653 
17,399 
8,760 
Processing and servicing
13,053 
8,230 
5,577 
General and administrative
45,304 
21,680 
12,169 
Total operating expense
161,585 
80,510 
44,601 
Loss from operations
(1,925)
(7,078)
(19,341)
Other expense:
 
 
 
Interest expense
(306)
(398)
(1,276)
Warrant liability fair value adjustment
(11,232)
(3,739)
Total other expense
(306)
(11,630)
(5,015)
Loss before provision for income taxes
(2,231)
(18,708)
(24,356)
Provision for income taxes
Net loss
(2,231)
(18,708)
(24,356)
Series A and Series B preferred stock redemptions
(5,300)
Accretion of dividends on redeemable convertible preferred stock
(12,884)
(7,470)
Net loss attributable to noncontrolling interest
958 
Net loss attributable to On Deck Capital, Inc. common stockholders
(1,273)
(31,592)
(37,080)
Net loss per share attributable to On Deck Capital, Inc. common shareholders:
 
 
 
Basic and diluted (in dollars per share)
$ (0.02)
$ (0.60)
$ (8.64)
Weighted-average common shares outstanding:
 
 
 
Basic and diluted (shares)
69,545,238 
52,556,998 
4,292,026 
Comprehensive loss:
 
 
 
Foreign currency translation adjustment
(678)
Comprehensive loss
(2,909)
(18,708)
(24,356)
Comprehensive loss attributable to noncontrolling interests
306 
Comprehensive loss attributable to On Deck Capital, Inc. common stockholders
$ (1,645)
$ (18,708)
$ (24,356)
Consolidated Statements of Changes in Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Total Stockholders' Equity
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Treasury Stock
Accumulated Other Comprehensive Income (Loss)
Noncontrolling interest
Beginning balance at Dec. 31, 2012
$ (57,159)
$ (57,159)
$ 31 
$ 739 
$ (57,446)
$ (483)
$ 0 
$ 0 
Beginning balance (shares) at Dec. 31, 2012
 
 
4,765,504 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock-based compensation
448 
448 
 
448 
 
 
 
 
Series A and Series B preferred stock redemptions
(5,300)
(5,254)
 
 
(5,254)
 
 
 
Issuance of common stock warrant
45 
45 
 
45 
 
 
 
 
Redemption of warrants
(950)
(950)
 
 
(950)
 
 
 
Exercise of stock options (shares)
 
 
1,227,206 
 
 
 
 
 
Exercise of stock options
389 
389 
382 
 
 
 
 
Redemption of common stock (shares)
(1,525,096)
 
 
 
 
 
 
 
Redemption of common stock
(5,173)
(5,173)
 
 
 
(5,173)
 
 
Accretion of dividends on redeemable convertible preferred stock
(7,470)
(7,470)
 
 
(7,470)
 
 
 
Net income (loss)
(24,356)
(24,356)
 
 
(24,356)
 
 
 
Ending balance at Dec. 31, 2013
(99,480)
(99,480)
38 
1,614 
(95,476)
(5,656)
Ending balance (shares) at Dec. 31, 2013
 
 
4,467,614 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Issuance of common stock in connection with initial public offering, net of underwriting discounts (shares)
 
 
11,500,000 
 
 
 
 
 
Issuance of common stock in connection with IPO, net of underwriting discounts
209,990 
209,990 
57 
209,933 
 
 
 
 
Stock-based compensation
3,095 
3,095 
 
3,095 
 
 
 
 
Series A and Series B preferred stock redemptions
 
 
 
 
 
 
 
Conversion of preferred stock warrants to common stock warrants upon IPO
4,912 
4,912 
 
4,912 
 
 
 
 
Conversion of preferred stock to common stock (shares)
 
 
47,457,356 
 
 
 
 
 
Conversion of preferred stock to common stock
221,504 
221,504 
237 
221,267 
 
 
 
 
Vesting of restricted stock units (shares)
 
 
11,667 
 
 
 
 
 
Vesting of restricted stock units
 
 
 
 
 
Issuance of common stock warrant
64 
64 
 
64 
 
 
 
 
Exercise of stock options and warrants (shares)
 
 
5,596,181 
 
 
 
 
 
Exercise of stock options and warrants
2,106 
2,106 
28 
2,078 
 
 
 
 
Accretion of dividends on redeemable convertible preferred stock
(12,884)
(12,884)
 
 
(12,884)
 
 
 
Net income (loss)
(18,708)
(18,708)
 
 
(18,708)
 
 
 
Ending balance at Dec. 31, 2014
310,605 
310,605 
360 
442,969 
(127,068)
(5,656)
Ending balance (shares) at Dec. 31, 2014
69,031,719 
 
69,032,818 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Stock-based compensation
10,750 
10,750 
 
10,750 
 
 
 
 
Series A and Series B preferred stock redemptions
 
 
 
 
 
 
 
Investments by noncontrolling interests
7,873 
 
 
 
 
 
 
7,873 
Vesting of restricted stock units (shares)
 
 
88,124 
 
 
 
 
 
Vesting of restricted stock units
41 
41 
40 
 
 
 
 
Exercise of stock options (shares)
804,857 
 
747,224 
 
 
 
 
 
Exercise of stock options
214 
214 
210 
 
 
 
 
Accretion of dividends on redeemable convertible preferred stock
 
 
 
 
 
 
 
Employee stock purchase plan (shares)
 
 
202,732 
 
 
 
 
 
Employee stock purchase plan
3,244 
3,244 
3,243 
 
 
 
 
Repurchases of common stock (shares)
 
 
(10,690)
 
 
 
 
 
Repurchases of common stock
(187)
(187)
 
 
 
 
 
 
Other comprehensive Income
(678)
(372)
 
 
 
 
(372)
(306)
Other
(209)
(209)
 
 
 
 
 
 
Net income (loss)
(2,231)
(1,273)
 
 
(1,273)
 
 
(958)
Ending balance at Dec. 31, 2015
$ 329,422 
$ 322,813 
$ 366 
$ 457,003 
$ (128,341)
$ (5,843)
$ (372)
$ 6,609 
Ending balance (shares) at Dec. 31, 2015
70,060,208 
 
70,060,208 
 
 
 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash flows from operating activities
 
 
 
Net income (loss)
$ (2,231)
$ (18,708)
$ (24,356)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Provision for loan losses
74,863 
67,432 
26,570 
Depreciation and amortization
6,508 
4,071 
2,645 
Amortization of debt issuance costs
2,837 
2,676 
2,184 
Stock-based compensation
11,582 
2,842 
438 
Loss on disposal
516 
Debt discount
959 
Preferred stock warrant issuance and warrant liability fair value adjustment
11,232 
3,739 
Amortization of net deferred origination costs
32,939 
27,267 
17,322 
Changes in servicing rights, at fair value
1,270 
Gain on sales of loans
(53,354)
(8,823)
(788)
Unfunded loan commitment reserve
2,922 
1,253 
Common stock warrant issuance
64 
45 
Gain on extinguishment of debt
(421)
Changes in operating assets and liabilities:
 
 
 
Other assets
(12,269)
(2,681)
(143)
Accounts payable
236 
1,599 
(570)
Interest payable
(62)
(301)
(53)
Accrued expenses and other liabilities
16,034 
6,034 
4,028 
Originations of loans held for sale
(445,968)
(140,578)
(18,835)
Payments of net deferred origination costs of loans held for sale
(17,601)
(6,116)
(1,310)
Proceeds from sale of loans held for sale
489,364 
154,070 
19,510 
Principal repayments of loans held for sale
12,298 
1,347 
Net cash provided by operating activities
118,947 
103,196 
31,385 
Cash flows from investing activities
 
 
 
Change in restricted cash
(9,015)
(14,606)
(5,647)
Purchases of property, equipment and software
(13,692)
(7,576)
(3,705)
Capitalized internal-use software
(4,197)
(3,467)
(2,093)
Originations of term loans and lines of credit, excluding rollovers into new originations
(1,162,537)
(858,297)
(380,357)
Proceeds from sale of loans held for investment
177,014 
Payments of net deferred origination costs
(28,353)
(34,253)
(23,180)
Principal repayments of term loans and lines of credit
872,551 
546,629 
238,253 
Other
(186)
Net cash used in investing activities
(168,415)
(371,570)
(176,729)
Cash flows from financing activities
 
 
 
Investments by noncontrolling interests
7,873 
Proceeds from exercise of stock options and warrants
251 
4,625 
389 
Proceeds from public offering, net of underwriting discount
213,843 
Payments of initial public offering costs
(1,845)
(2,239)
Redemption of common stock and warrants
(187)
(6,123)
Issuance of common stock under employee stock purchase plan
1,825 
Proceeds from the issuance of redeemable convertible preferred stock
77,000 
49,717 
Redemption of preferred stock
(6,282)
Payments of debt issuance costs
(1,690)
(5,723)
(2,071)
Net cash provided by financing activities
(10,468)
484,137 
142,628 
Effect of exchange rate changes on cash and cash equivalents
(675)
Net increase (decrease) in cash and cash equivalents
(60,611)
215,763 
(2,716)
Cash and cash equivalents at beginning of year
220,433 
4,670 
7,386 
Cash and cash equivalents at end of year
159,822 
220,433 
4,670 
Supplemental disclosure of other cash flow information
 
 
 
Cash paid for interest
15,394 
14,968 
10,616 
Supplemental disclosures of non-cash investing and financing activities
 
 
 
Loans transferred from loans held for sale to loans held for investment
1,348 
Conversion of redeemable convertible preferred stock to common stock
221,504 
Unpaid offering expenses charged to equity
1,670 
Stock-based compensation included in capitalized internal-use software
877 
253 
10 
Unpaid principal balance of term loans rolled into new originations
265,933 
158,876 
59,623 
Conversion of debt to redeemable convertible preferred stock
8,959 
Accretion of dividends on redeemable convertible preferred stock
12,884 
7,470 
Funding debt
 
 
 
Cash flows from financing activities
 
 
 
Proceeds from the issuance of debt
212,562 
472,242 
201,860 
Repayment of debt
(219,957)
(272,611)
(109,862)
Corporate debt
 
 
 
Cash flows from financing activities
 
 
 
Proceeds from the issuance of debt
2,700 
9,000 
15,000 
Repayment of debt
$ (12,000)
$ (12,000)
$ 0 
Organization
Organization
Organization
On Deck Capital, Inc.’s principal activity is providing financing products to small businesses located throughout the United States as well as Canada and Australia, through term loans and lines of credit. We use technology and analytics to aggregate data about a business and then quickly and efficiently analyze the creditworthiness of the business using our proprietary credit-scoring model. We originate most of the loans in our portfolio and also purchase loans from issuing bank partners. We subsequently transfer most loans into one of our wholly-owned subsidiaries or sell them through OnDeck Marketplace®.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
We prepare our consolidated financial statements and footnotes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"). All intercompany transactions and accounts have been eliminated in consolidation. When used in these notes to consolidated financial statements, the terms "we," "us," "our" or similar terms refers to On Deck Capital, Inc. and its consolidated subsidiaries.
In the second quarter of 2015, we acquired a 55% interest in On Deck Capital Australia PTY LTD ("OnDeck Australia") with the remaining 45% owned by non-affiliated parties. We have entered into this transaction with local Australian partners to facilitate providing financing products to small businesses in Australia. In the third quarter of 2015, we acquired a 67% interest in Lancelot QBFOD LLC with the remaining 33% owned by Intuit Inc. ("Intuit"). We and Intuit jointly invested in Lancelot QBFOD LLC to provide integrated access to line of credit financing to Intuit customers utilizing Intuit's customer data. We consolidate the financial position and results of operations of OnDeck Australia and Lancelot QBFOD LLC. The noncontrolling interest, which is presented as a separate component of our consolidated equity, represents the minority owners' proportionate share of the equity of the jointly owned entities. The noncontrolling interest is adjusted for the minority owners' share of the earnings, losses, investments and distributions.
Segment Reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. Based upon the way our CODM reviews financial information and makes operating decisions and considering that our CODM reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance, our operations constitute a single operating segment and one reportable segment. Substantially all revenue was generated and all assets were held in the United States during the years ended December 31, 2015, 2014 and 2013.
Reclassifications
Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. We reclassified gain on sales of loans, payments of net deferred origination costs of loans held for sale and proceeds from sale of loans held for sale to be included as operating activities in the consolidated statement of cash flows. Previously, such amounts were presented as a component of net income and sales of loans held for sale.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Significant estimates include allowance for loan losses, valuation of warrants, stock-based compensation expense, servicing assets/liabilities, capitalized software development costs, the useful lives of long-lived assets and valuation allowance for deferred tax assets. We base our estimates on historical experience, current events and other factors we believe to be reasonable under the circumstances. These estimates and assumptions are inherently subjective in nature; actual results may differ from these estimates and assumptions.
Cash and Cash Equivalents
Cash and cash equivalents include checking, savings and money market accounts. We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
Restricted Cash
Restricted cash represents funds held in accounts as reserves on certain debt facilities and as collateral for issuing bank partner transactions. We have no ability to draw on such funds as long as they remain restricted under the applicable arrangements
Loans Held for Investment and Loans Held for Sale
Loans Held for Investment
Loans held for investment consist of term loans and lines of credit that require daily or weekly repayments. We have both the ability and intent to hold these loans to maturity. When we originate a term loan, the borrower grants us a security interest in its assets which we may perfect by publicly filing a financing statement. Loans are carried at amortized cost, reduced by a valuation allowance for loan losses estimated as of the balance sheet dates. In accordance with ASC Subtopic 310-20, Nonrefundable Fees and Other Costs, the amortized cost of a loan is equal to the unpaid principal balance, plus net deferred origination costs. Net deferred origination costs are comprised of certain direct origination costs, net of all loan origination fees received. Loan origination fees include fees charged to the borrower related to origination that increase the loan’s effective interest yield. Loan origination costs are limited to direct costs attributable to originating a loan, including commissions and personnel costs directly related to the time spent by those individuals performing activities related to loan origination. Direct origination costs in excess of loan origination fees received are included in the loan balance and for term loans are amortized over the life of the term loan using the effective interest method, while for lines of credit principal amounts drawn are amortized using the straight-line method over 6 months.
When a term loan is originated in conjunction with the extinguishment of a previously issued term loan, also known as a renewal, we determine whether such subsequent term loan is a new loan or a modification to an existing loan in accordance with ASC 310-20. If accounted for as a new loan, any remaining unamortized net deferred costs are recognized when the new loan is originated. Further, when a renewal is accounted for as a new loan, the cash flows of the origination and related net deferred origination costs of that new loan are presented as (i) operating cash outflows on the Statement of Cash Flows if the renewal is designated to be sold or (ii) as investing cash outflows if the renewal is designated to be held for investment. If a renewal is accounted for as a modification, any remaining unamortized net deferred costs are amortized over the life of the modified loan. When a renewal is accounted for as a modification, the additional cash flows associated with the origination and related net deferred origination costs of that modification are presented on the Statement of Cash Flows within the same section as the originally issued term loan prior to renewal.
Loans Held for Sale
OnDeck Marketplace is our proprietary whole loan sale platform whereby we sell certain term loans to third-party institutional investors and retain the related servicing rights. We sell these whole loans to purchasers in exchange for a cash payment. A loan is initially classified as held for sale when the whole loan is identified for sale and a plan exists for the sale. A loan that is initially designated as held for sale or held for investment may be reclassified when our intent for that loan changes. When a loan held for sale is reclassified to held for investment, the loan is recorded at amortized cost and a provision for loan loss is recorded. When a loan held for investment is reclassified to held for sale, any allowance for loan loss related to that loan is released. Loans held for sale, inclusive of net deferred origination costs, are recorded at the lower of amortized cost or fair value until the loans are sold or reclassified. To determine the fair value of loans held for sale we utilize industry-standard modeling, such as discounted cash flow models, to arrive at an estimate of fair value and may utilize third-party service providers to assist in the valuation process.
Servicing Rights
We service loans that we have sold to third parties and upon such sale, we may recognize a servicing asset or liability, collectively referred to as servicing rights. Receiving more than adequate compensation, as defined by ASC Topic 860 Transfers and Servicing, results in the recognition of a servicing asset. Receiving less than adequate compensation results in a servicing liability. Servicing assets and liabilities are recorded at fair value and are presented as a component of other assets or accrued expenses and other liabilities, respectively. The initial recognition of a servicing asset results in a corresponding increase to gain on sales of loans. The initial recognition of a servicing liability results in a corresponding decrease to gain on sales of loans. Subsequent adjustments to the fair value of servicing rights are recognized as an adjustment to other revenue. The initial recognition includes both servicing rights resulting from transfers of financial assets and when applicable, changes in inputs or assumptions used in the valuation model.
We utilize industry-standard modeling, such as discounted cash flow models, to arrive at an estimate of fair value and may utilize third-party service providers to assist in the valuation process. Significant assumptions used in valuing our servicing rights are as follows:
Adequate compensation: We estimate adequate compensation as the rate a willing market participant would require to service loans with similar characteristics as those in the serviced portfolio. In the event of a lack of transparency and quantity of transactions related to trades of servicing rights of comparable loans (i.e., loans with comparable terms, unpaid principal balances, renewal rates and default rates) we may consider the actual cost incurred as a basis for determining what a market participant would require to service the loans.
Discount rate: For servicing rights on loans, the discount rate reflects the time value of money and a risk premium intended to reflect the amount of compensation market participants would require.
Renewal rate: We estimate the timing and probability that a borrower may renew their loan in advance of scheduled repayment, thus reducing the projected unpaid principal balance and expected term of the loan, which are used to project future servicing revenues.
Default rate: We estimate the timing and probability of loan defaults and write-offs, thus reducing the projected unpaid principal balance and expected term of the loan, which are used to project future servicing revenues.
Allowance for Loan Losses
The allowance for loan losses (“ALLL”) is established with respect to our loans held for investment through periodic charges to the provision for loan losses. Loan losses are charged against the ALLL when we believe that the future collection of principal is unlikely. Subsequent recoveries, if any, are credited to the ALLL.
We evaluate the creditworthiness of our portfolio on a pooled basis due to its composition of small, homogeneous loans with similar general credit risk characteristics and diversification among variables including industry and geography. We use a proprietary forecasted loss rate at origination for new loans that have not had the opportunity to make payments when they are first funded. The forecasted loss rate is updated daily to reflect actual loan performance and the underlying ALLL model is updated monthly to reflect our assumptions. The allowance is subjective as it requires material estimates, including such factors as historical trends, known and inherent risks in the loan portfolio, adverse situations that may affect borrowers’ ability to repay and current economic conditions. Other qualitative factors considered may include items such as uncertainties in forecasting and modeling techniques, changes in portfolio composition, business conditions and emerging trends. Recovery of the carrying value of loans is dependent to a great extent on conditions that may be beyond our control. Any combination of the aforementioned factors may adversely affect our loan portfolio resulting in increased delinquencies and loan losses and could require additional provisions for credit losses, which could impact future periods.
Accrual for Unfunded Loan Commitments and Off-Balance Sheet Credit Exposures
For our lines of credit we estimate probable losses on unfunded loan commitments similarly to the ALLL process and include the calculated amount in accrued expenses and other liabilities. We believe the accrual for unfunded loan commitments is sufficient to absorb estimated probable losses related to these unfunded credit commitments. The determination of the adequacy of the accrual is based on evaluations of the unfunded credit commitments, including an assessment of the probability of commitment usage, credit risk factors for lines of credit outstanding to these customers and the terms and expiration dates of the unfunded credit commitments. As of December 31, 2015 and 2014, our off-balance sheet credit exposure related to the undrawn line of credit balances was $89.1 million and $28.7 million, respectively. The related accrual for unfunded loan commitments was $4.2 million and $1.3 million as of December 31, 2015 and 2014, respectively. Net adjustments to the accrual for unfunded loan commitments are included in general and administrative expenses.
Accrual for Third-Party Representations
We have made certain representations to third parties that purchase loans through OnDeck Marketplace. Our obligations under those representations are not secured by escrows or similar arrangements. However, if the representations are expected to be breached, we could be required to make accruals. Any significant estimated post-sale obligations or contingent obligations to the purchaser of the loans, such as loan repurchase obligations or excess loss indemnification obligations, would be accrued if probable and estimable in accordance with ASC 450, Contingencies. There are no restricted assets related to these agreements. As of December 31, 2015 and 2014, we have not incurred any significant losses and or material liability for probable obligations requiring accrual.
Nonaccrual Loans, Restructured Loans and Charged-Off Loans
We consider a loan to be delinquent when the daily or weekly payments are one day past due. We place loans on nonaccrual status and stop accruing interest income on loans that are delinquent and non-paying. Loans are returned to accrual status if they are brought to non-delinquent status or have performed in accordance with the contractual terms for a reasonable period of time and, in our judgment, will continue to make periodic principal and interest payments as scheduled.
Certain borrowers who have experienced or are expected to experience financial difficulty may not be able to maintain their regularly scheduled and contractually required payments. Following discussions with us, such borrowers may temporarily make reduced payments and/or make payments on a less frequent basis than contractually required. As part of our effort to maximize loan recoverability and as a temporary accommodation to the borrower, we may voluntarily forebear from pursuing our legal rights and remedies under the applicable loan agreement, which loan agreement we do not modify and which remains in full force and effect.
Generally, after the 90th day of delinquency, we will make an initial assessment of whether an individual loan should be charged off based on payment status and information gathered through collection efforts. A loan is charged off when we determine it is probable that we will be unable to collect all of the remaining principal payments.
Deferred Debt Issuance Costs and Debt
We borrow from various lenders to finance our lending activities and general corporate operations. Costs incurred in connection with financings, such as banker fees, origination fees and legal fees, are classified as deferred debt issuance costs. We capitalize these costs and amortize them over the expected life of the related financing agreements. The related fees are expensed immediately upon early extinguishment of the debt. In a debt modification, the initial issuance costs and any additional fees incurred as a result of the modification are deferred over the term of the modified agreement. Deferred debt issuance costs are amortized using the effective interest method for term debt and the straight-line method for revolving lines of credit. Interest expense and the amortization of deferred debt issuance costs incurred on debt used to fund loan originations are presented as funding costs in our consolidated statements of operations. Interest expense and the amortization of deferred debt issuance costs incurred on debt used to fund general corporate operations are recorded as interest expense, a component of other expense, in our consolidated statements of operations.
Property, Equipment and Software
Property, equipment and software consists of computer and office equipment, purchased software, capitalized internal-use software costs and leasehold improvements. Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense are recognized over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the terms of the respective leases or the estimated lives of the improvements.
In accordance with ASC Subtopic 350-40, Internal-Use Software, we begin to capitalize the costs to develop software for our website and other internal uses when the following criteria are met: (i) the preliminary project stage is completed (ii) we have authorized funding (iii) it is probable that the project will be completed and (iv) we conclude that the software will perform the function intended. Capitalized internal-use software costs primarily include salaries and payroll-related costs for employees directly involved in the development efforts, software licenses acquired and fees paid to outside consultants.
Software development costs incurred prior to meeting the criteria for capitalization and costs incurred for training and maintenance are expensed as incurred. Certain upgrades and enhancements to existing software that result in additional functionality are capitalized. Capitalized software development costs are amortized using the straight-line method over their expected useful lives, which is generally three years.
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying values of those assets may not be recoverable. An impairment loss will be recognized only if the carrying value of a long-lived asset is not recoverable and exceeds its fair market value. If there is an indication of impairment, we will estimate the future cash flows (undiscounted and without interest charges) expected from the use of the asset and its eventual disposition. If an impairment is determined to exist, the impairment loss will be measured as the amount by which the carrying value of the asset exceeds its fair value and recorded in the period the determination is made. Assets held for sale are reported at the lower of the carrying amount or fair value, less costs to sell.
Redeemable Convertible Preferred Stock
Until our initial public offering ("IPO") in December 2014, we had outstanding redeemable convertible preferred stock which was redeemable at the option of the holder after the passage of time and, therefore, had been classified outside of permanent equity in accordance with the SEC Staff Accounting Bulletin (“SAB”) Topic 3C, Redeemable Preferred Stock. We made periodic accretions to the carrying amount of the redeemable convertible preferred stock so that the carrying amount would equal the redemption. As all redeemable convertible preferred stock automatically converted into shares of common stock upon the closing of our IPO in December 2014, there was no accretion of dividends for the year ended December 31, 2015. As of December 31, 2015 and 2014 we had no redeemable convertible preferred stock outstanding.
Stock Warrants for Shares of Preferred Stock
At various dates prior to our IPO, we issued warrants for certain series of our redeemable convertible preferred stock to third parties in connection with certain agreements. As the warrant holders had the right to demand their preferred shares to be settled in cash after the passage of time, we recorded the warrants as liabilities and at each balance sheet date. We valued the warrants using the Black-Scholes-Merton Option Pricing Model. Any change in warrant value was recorded through a warrant liability fair value adjustment in our consolidated statements of operations. All warrants for shares of preferred stock automatically converted into warrants for shares of common stock upon closing of our IPO in December 2014. Upon conversion, the warrant liability was converted to permanent equity as a component of additional paid-in capital. No preferred stock or other warrants were issued during the year ended December 31, 2015.
Revenue Recognition
Interest Income
We generate revenue primarily through interest and origination fees earned on loans originated and held to maturity.
For term loans, we recognize interest and origination fee revenue over the terms of the underlying loans using the effective interest method. For lines of credit, we recognize interest income when earned in accordance with terms of the contract. Origination fees collected but not yet recognized as revenue are netted with direct origination costs and presented as a component of loans in our consolidated balance sheets.
Historically, borrowers who elected to prepay term loans were required to pay future interest and fees that would have been assessed had the term loan been repaid in accordance with its original agreement. Beginning in December 2014, certain term loans may be eligible for a discount of future interest and fees that would have been assessed had the loan been repaid in accordance with its original agreement.
Gain on Sales of Loans
We account for OnDeck Marketplace loan sales in accordance with ASC Topic 860, Transfers and Servicing, which states that a transfer of a financial asset, a group of financial assets, or a participating interest in a financial asset is accounted for as a sale if all of the following conditions are met:
 
1.
The financial assets are isolated from the transferor and its consolidated affiliates as well as its creditors.

2.
The transferee or beneficial interest holders have the right to pledge or exchange the transferred financial assets.

3.
The transferor does not maintain effective control of the transferred assets.
For the years ended December 31, 2015, 2014 and 2013, all sales met the requirements for sale treatment in accordance with ASC Topic 860, Transfers and Servicing. We record the gain or loss on the sale of a loan at the sale date in an amount equal to the proceeds received, adjusted for initial recognition of servicing assets or liabilities obtained at the date of sale, less outstanding principal and net deferred origination costs. A change in inputs or assumptions used in the valuation model related to servicing assets or liabilities is recognized as a component of gain on sales of loans.
Other Revenue
Other revenue includes servicing fees related to loans previously sold, fair value adjustments to servicing rights, monthly fees charged to customers for our line of credit and marketing fees earned from our issuing bank partners, which are recognized as the related services are provided.
Stock-Based Compensation
In accordance with ASC Topic 718, Compensation—Stock Compensation, all stock-based compensation provided to employees, including stock options and restricted stock units, or RSU's, is measured based on the grant-date fair value of the awards and recognized as compensation expense on a straight-line basis over the period during which the award holder is required to perform services in exchange for the award (the vesting period). The fair value of stock options is estimated using the Black-Scholes-Merton Option Pricing Model. The use of the option valuation model requires subjective assumptions, including the fair value of our common stock, the expected term of the option and the expected stock price volatility, which is based on our stock as well as our peer companies. RSU's issued to employees and directors are measured based on the fair values of the underlying stock on the dates of grant. Additionally, the recognition of stock-based compensation expense requires an estimation of the number of options and RSUs that will ultimately be forfeited. Estimated forfeitures are subsequently adjusted to reflect actual forfeiture.
Options typically vest at a rate of 25% after one year from the vesting commencement date and then monthly over an additional three-year period. The options expire ten years from the grant date or, for terminated employees, 90 days after the employee’s termination date. RSUs typically vest at a rate of 25% annually, over four annual vesting periods. Compensation expense for the fair value of the options and RSUs at their grant date is recognized ratably over the vesting period.
Advertising Costs
Advertising costs are expensed as incurred and are included within sales and marketing in our consolidated statements of operations. For the years ended December 31, 2015, 2014 and 2013, advertising costs totaled $22.5 million, $14.4 million and $7.2 million, respectively.
Foreign Currency
In accordance with ASC 830, Foreign Currency Matters, we have determined the functional currency of our subsidiary, OnDeck Australia, is the Australian dollar. We translate the financial statements of this subsidiary to U.S. dollars using month-end exchange rates for assets and liabilities, and average exchange rates for revenue and expenses. Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders' equity. As of December 31, 2015 we had a cumulative translation loss of $0.4 million. The net loss resulting from foreign exchange transactions, which are transactions designated in currencies other than our functional currency, was $1.3 million for the year ended December 31, 2015 and was recorded within general and administrative expenses in our consolidated statements of operations. The impact of foreign currency transactions was not material for the year ended December 31, 2014.
Income Taxes
In accordance with ASC 740, Income Taxes, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount we believe is more likely than not to be realized.
Uncertain tax positions are recognized only when we believe it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. We recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. We did not have any accrued interest or penalties associated with uncertain tax positions as of December 31, 2015 and 2014.
We file income tax returns in the United States for federal, state and local jurisdictions. We are no longer subject to U.S. federal, certain states, and local income tax examinations for years prior to 2012, with certain states no longer subject for years prior to 2011, although carryforward attributes that were generated prior to 2012 may still be adjusted upon examination by the Internal Revenue Service if used in a future period. No income tax returns are currently under examination by taxing authorities.
Fair Value Measurement
In accordance with ASC 820, Fair Value Measurement, we use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:
Level 1: Quoted prices in active markets or liabilities in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for assets or liabilities for which there is little or no market data, which require us to develop our own assumptions. These unobservable assumptions reflect estimates of inputs that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flows, or similar techniques, which incorporate our own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation.
A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Basic and Diluted Net Loss per Common Share
Basic net loss per common share is computed by dividing net loss attributable to On Deck Capital, Inc. common stockholders by the weighted-average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. We compute net loss per common share using the two-class method required for participating securities. We consider all series of redeemable convertible preferred stock to be participating securities due to their cumulative dividend rights. In accordance with the two-class method, earnings allocated to these participating securities, which include participation rights in undistributed earnings, are subtracted from net income or loss to determine total undistributed earnings or losses to be allocated to common stockholders. All participating securities are excluded from basic weighted-average common shares outstanding. Upon the closing of our IPO in December 2014, all redeemable convertible preferred stock was converted to common stock and became included in our weighted-average common shares outstanding.

Diluted net loss per common share includes the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” or “if converted” methods, as applicable. Diluted net loss per common share is computed under the two-class method by using the weighted-average number of common shares outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options, warrants and convertible preferred stock. In addition, we analyze the potential dilutive effect of the outstanding participating securities under the “if converted” method when calculating diluted earnings per share in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. We report the more dilutive of the approaches (two-class or “if converted”) as our diluted net income per share during the period. Due to net losses for the years ended December 31, 2015, 2014 and 2013, basic and diluted net loss per common share were the same, as the effect of potentially dilutive securities was anti-dilutive.
Recent Accounting Pronouncements Not Yet Adopted
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amends ASC 835-30, Interest - Imputation of Interest. ASU 2015-03 requires entities to reclassify the presentation of deferred debt issuance costs in the financial statements. Under the ASU, an entity will be required to present such deferred costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. This accounting standard is mandatorily effective beginning January 1, 2016 and is to be applied retrospectively. In the first quarter of 2016 we will reclassify all deferred debt issuance costs as a reduction to Funding debt or Corporate debt in the Consolidated Balance Sheet, as applicable.
In May 2014, the FASB issued ASU 2014-09, Revenue Recognition, which creates ASC 606, Revenue from Contracts with Customers, and supersedes ASC 605, Revenue Recognition. ASU 2014-09 requires revenue to be recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for goods or services as described in ASU 2014-09. In July 2015, the FASB voted to defer the effective date of the new revenue standard by one year. The new guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, but not before the original effective date of December 15, 2016. We are currently in the process of assessing the impact that the adoption of this guidance will have on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases, which creates ASC 842, Leases, and supersedes ASC 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. We are currently in the process of assessing the impact the adoption of this guidance will have on our consolidated financial statements.
Net Loss Per Common Share
Net Loss Per Common Share
Net Loss Per Common Share
Basic and diluted net loss per common share is calculated as follows (in thousands, except share and per share data):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Numerator:
 
 
 
 
 
Net loss
$
(2,231
)
 
$
(18,708
)
 
$
(24,356
)
Less: Series A and B preferred stock redemptions

 

 
(5,254
)
Less: Accretion of dividends on the redeemable convertible preferred stock

 
(12,884
)
 
(7,470
)
Less: net loss attributable to noncontrolling interest
958

 

 

Net loss attributable to On Deck Capital, Inc. common stockholders
$
(1,273
)
 
$
(31,592
)
 
$
(37,080
)
Denominator:
 
 
 
 
 
Weighted-average common shares outstanding, basic and diluted
69,545,238

 
52,556,998

 
4,292,026

Net loss per common share, basic and diluted
$
(0.02
)
 
$
(0.60
)
 
$
(8.64
)


Diluted loss per common share is the same as basic loss per common share for all periods presented because the effects of potentially dilutive items were anti-dilutive given our net losses. The following common share equivalent securities have been excluded from the calculation of weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented: 
 
Year Ended December 31,
 
2015
 
2014
 
2013
Anti-Dilutive Common Share Equivalents
 
 
 
 
 
Redeemable convertible preferred stock:
 
 
 
 
 
Series A

 

 
4,438,662

Series B

 

 
10,755,262

Series C

 

 
9,735,538

Series C-1

 

 
1,701,112

Series D

 

 
14,467,756

Series E

 

 

Warrants to purchase redeemable convertible preferred stock

 

 
1,393,768

Warrants to purchase common stock
309,792

 
309,792

 
4,057,066

Restricted stock units
1,853,452

 
88,418

 

Stock options
10,711,321

 
10,371,469

 
7,814,970

Total anti-dilutive common share equivalents
12,874,565

 
10,769,679

 
54,364,134


The weighted-average exercise price for warrants to purchase 2,516,288 shares of common stock was $9.51 as December 31, 2015. For the year ended December 31, 2015 and 2014, a warrant to purchase 2,206,496 shares of common stock was excluded from anti-dilutive common share equivalents as performance conditions had not been met.
Interest Income
Interest Income
Interest Income
Interest income was comprised of the following components for the years ended December 31 (in thousands):
 
2015
 
2014
 
2013
Interest on unpaid principal balance
$
227,579

 
$
172,472

 
$
51,699

Interest on deposits
408

 
70

 
7

Amortization of net deferred origination costs
(32,939
)
 
(27,267
)
 
11,235

Total interest income
$
195,048

 
$
145,275

 
$
62,941

Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale
Loans Held for Investment and Allowance for Loan Losses
Loans held for investment consisted of the following as of December 31 (in thousands):
 
 
2015
 
2014
Term loans
$
482,596

 
$
466,386

Lines of credit
61,194

 
24,177

Total unpaid principal balance
543,790

 
490,563

Net deferred origination costs
8,952

 
13,544

Total loans held for investment
$
552,742

 
$
504,107



The activity in the allowance for loan losses for the years ended December 31 consisted of the following (in thousands):
 
 
2015
 
2014
 
2013
Balance at January 1
$
49,804

 
$
19,443

 
$
9,288

Provision for loan losses
74,863

 
67,432

 
26,570

Loans charged off
(78,485
)
 
(39,638
)
 
(17,651
)
Recoveries of loans previously charged off
7,129

 
2,567

 
1,236

Allowance for loan losses at December 31
$
53,311

 
$
49,804

 
$
19,443


We include both loans we originate and loans funded by our issuing bank partners and later purchased by us as part of our originations. During the years ended December 31, 2015, 2014 and 2013 we purchased loans in the amount of $231.7 million, $180.8 million and $73.5 million, respectively.
Historically, we typically sold previously charged-off loans to a third-party debt collector. The proceeds from these sales are recorded as a component of the recoveries of loans previously charged off. For the years ended December 31, 2015, 2014 and 2013, previously charged-off loans sold accounted for $5.5 million, $1.7 million and $1.0 million, respectively, of recoveries of loans previously charged off.
The following table illustrates the unpaid principal balance related to non-delinquent, paying and non-paying delinquent loans as of December 31 (in thousands):
 
 
2015
 
2014
Non-delinquent loans
$
486,729

 
$
430,689

Delinquent: paying (accrual status)
28,192

 
40,049

Delinquent: non-paying (non-accrual status)
28,869

 
19,825

Total
$
543,790

 
$
490,563


The portion of the allowance for loan losses attributable to non-delinquent loans was $27.0 million and $20.5 million as of December 31, 2015 and December 31, 2014, respectively, while the portion of the allowance for loan losses attributable to delinquent loans was $26.3 million and $29.3 million as of December 31, 2015 and December 31, 2014, respectively.
The following table shows an aging analysis of the unpaid principal balance related to loans held for investment by delinquency status as of December 31 (in thousands):
 
 
2015
 
2014
By delinquency status:
 
 
 
Non-delinquent loans
$
486,729

 
$
430,689

1-14 calendar days past due
21,360

 
23,954

15-29 calendar days past due
8,703

 
9,462

30-59 calendar days past due
10,347

 
10,707

60-89 calendar days past due
7,443

 
7,724

90 + calendar days past due
9,208

 
8,027

Total unpaid principal balance
$
543,790

 
$
490,563


Loans Held for Sale
Loans held for sale consisted of the following as of December 31 (in thousands):
 
2015
 
2014
Loans held for sale
$
696

 
$
1,483

Net deferred origination costs
10

 
40

Loans held for sale, net
$
706

 
$
1,523

Servicing Rights
Servicing Rights
Servicing Rights
As of December 31, 2015 and 2014, we serviced term loans we sold with a remaining unpaid principal balance of $345.9 million and $79.7 million, respectively. During the years ended December 31, 2015, 2014 and 2013, we sold through OnDeck Marketplace loans with an unpaid principal balance of $600.0 million, $139.1 million and $17.5 million, respectively.
For the years ended December 31, 2015 and 2014, we earned $3.5 million, and $0.9 million of servicing revenue, respectively.
The following table summarizes the activity related to the fair value of our servicing assets for the year ended December 31:
 
 
2015
Fair value at the beginning of period
 
$

Addition:
 
 
Servicing resulting from transfers of financial assets
 
3,708

Changes in fair value:
 
 
Change in inputs or assumptions used in the valuation model
 
1,051

Other changes in fair value (1)
 
(1,270
)
Fair value at the end of period (Level 3)
 
$
3,489

  ___________
(1) Represents changes due to collection of expected cash flows through December 31, 2015.
Property, Equipment and Software, net
Property, Equipment and Software, net
Property, Equipment and Software, net
Property, equipment and software, net, consisted of the following as of December 31 (in thousands):
 
Estimated
Useful Life
 
2015
 
2014
Computer/office equipment
12 – 36 months
 
$
11,866

 
$
7,249

Capitalized internal-use software
36 months
 
15,674

 
10,599

Leasehold improvements
Life of lease
 
15,417

 
6,343

Total property, equipment and software, at cost
 
 
42,957

 
24,191

Less accumulated depreciation and amortization
 
 
(16,770
)
 
(10,262
)
Property, equipment and software, net
 
 
$
26,187

 
$
13,929


Amortization expense on capitalized internal-use software costs was $2.8 million, $1.8 million and $1.2 million for the years ended December 31, 2015, 2014 and 2013, respectively, and is included as a component of technology and analytics in our consolidated statements of operations.
Debt
Debt
Debt
The following table summarizes our outstanding debt as of December 31 (in thousands):
 
Description
Type
 
Maturity Date
 
Weighted Average Interest
Rate at December 31, 2015
 
December 31, 2015
 
December 31, 2014
Funding Debt:
 
 
 
 
 
 
 
ODAST Agreement
Securitization Facility
 
May 2018 (1)
 
3.4%
 
$
174,980

 
$
174,972

PORT Agreement
Revolving
 
June 2017
 
2.7%
 
59,415

 

RAOD Agreement
Revolving
 
May 2017
 
3.3%
 
47,465

 

ODART Agreement
Revolving
 
September 2017
 
2.6%
 
42,090

 
105,598

ODAC Agreement
Revolving
 
May 2017
 
8.6%
 
27,699

 
32,733

SBAF Agreement
Revolving
 
Various(2)
 
6.9%
 
12,783

 
16,740

ODAP Agreement
Revolving
 
August 2017 (3)
 
5.0%
 
8,819

 
56,686

Partner Synthetic Participations
Term
 
Various(4)
 
Various
 
6,861

 
1,199

 
 
 
 
 
 
 
380,112

 
387,928

Corporate Debt:
 
 
 
 
 
 
 
 
 
Square 1 Agreement
Revolving
 
October 2016
 
4.5%
 
2,700

 
12,000

 
 
 
 
 
 
 
$
382,812

 
$
399,928

 
(1)
The period during which remaining cash flow can be used to purchase additional loans expires April 30, 2016
(2)
Maturity dates range from January 2016 through August 2017
(3)
The period during which new borrowings may be made under this facility expires in August 2016
(4)
Maturity dates range from January 2016 through October 2017

Certain of our loans held for investment are pledged as collateral for borrowings in our funding debt facilities, with the exception of Partner Synthetic Participations. These loans totaled $417.1 million and $431 million as of December 31, 2015 and 2014, respectively. There is no collateral requirement for Partner Synthetic Participations. Our corporate debt facility is collateralized by substantially all of our assets.

During the three years ended December 31, 2015, the following significant activity took place related to our debt facilities:
ODAST Agreement
On May 8, 2014, ODAST entered into a $175 million securitization agreement with Deutsche Bank Securities (“Deutsche Bank”) as administrative agent. Of the total commitment, Deutsche Bank allowed for $156.7 million of Class A (primary group of lenders) asset backed notes and $18.3 million of Class B (subordinate group of lenders) asset backed notes. The agreement requires pooled loans to be transferred from us to ODAST with a minimum aggregate principal balance of approximately $183.2 million. Class A and Class B commitments bear interest at 3.15% and 5.68%, respectively. Monthly payments of interest were due beginning June 17, 2014 and principal and interest are due beginning in June 2016, with the final payment occurring in May 2018.
PORT Agreement
On June 12, 2015, through a wholly-owned bankruptcy remote subsidiary, we entered into a $100 million revolving line of credit with Bank of America, N.A. ("PORT Agreement"). The facility bears interest at LIBOR plus 2.25%, and matures in June 2017.
RAOD Agreement
On May 22, 2015, through a wholly-owned bankruptcy remote subsidiary, we entered into a $50 million revolving line of credit with SunTrust Bank ("RAOD Agreement"). The facility bears interest at LIBOR plus 3.00%, and matures in May 2017. On February 26, 2016, the RAOD Agreement was amended to increase the borrowing capacity from $50 million to $100 million.
ODART Agreement
On September 15, 2014, we entered into an amendment of the ODART agreement which provided for:
the increase of the total facility size from $111.8 million to $167.6 million. with the Class A commitments increased from $100 million to $150 million and the Class B commitments increased from $11.8 million to $17.6 million;
the decrease in the Class A interest rate to the applicable cost of funds rate plus 3%;
the decrease in the Class B interest rate to 7.25% plus the greater of 1% or LIBOR; and
the extensions of the commitment termination date of from August 16, 2015 to September 15, 2016.
On October 7, 2015 an amendment was made to the ODART Agreement which included for:
the decrease in Class A interest rate to the applicable cost of funds rate plus 2.25%;
the extension of the commitment termination date of the ODART Agreement by approximately one year to September 15, 2017;
the extension of the date on or prior to which early termination fees may be payable in the event of a termination or other permanent reduction of the revolving commitments by approximately one year to May 15, 2017, and the ability to make certain partial commitment terminations without early termination fees;
the ability to use up to a specified portion of the facility for financing of our weekly pay term loan product; and
the termination of the Class B revolving lending commitment, the effect of which is to reduce the total facility capacity to $150 million; the termination was made at ODART's request and consented to by the Class B Revolving Lender. The ODART Second A&R Credit Agreement also contemplates the reintroduction, at ODART's election and administrative agent's consent, of one or more Class B Revolving Lending resulting in Class B commitments up to $17.6 million, thereby potentially restoring the facility size to up to$167.6 million. The borrowing base advance rate for reintroduced Class B revolving loans is 95% and the interest rate will be LIBOR plus 7.00%.
ODAC Agreement
In October 2013, ODAC entered into a $25 million revolving credit agreement (the “ODAC Agreement”). On January 2, 2014, ODAC entered into a second amendment of the ODAC Agreement increasing the financing limit of the ODAC Agreement from $25 million to $50 million bearing an interest rate of LIBOR plus 8.25%. On December 19, 2014 amendments were made to the ODAC Agreement to among other items, extend the commitment termination date to October 2016 to introduce the ability to use up to a specified portion of the ODAC facility for the financing our line of credit product. On May 22, 2015, amendments were made to the ODAC Agreement to, among other items, extend the commitment termination date to May 2017 and to provide for the utilization of up to the entire ODAC facility solely for the financing of our line of credit product. In addition to other changes, this facility is now exclusively used to our line of credit product.
ODAP Agreement
In August 2014, ODAP entered into a $75 million revolving line of credit with Jefferies Mortgage Funding, LLC ("ODAP Agreement"). On August 13, 2015, an amendment was made to the ODAP Agreement converting the Lenders’ obligation from a commitment to make revolving loans to ODAP of up to $75 million to an agreement under which the Lenders are allowed to make, on an uncommitted basis, revolving loans to ODAP of up to $100 million; extending the revolving termination date (i.e., the period during which ODAP is permitted to request the advance of revolving loans) by approximately one year to August 13, 2016 and the amortization period end date by approximately one year to August 13, 2017; increasing the borrowing advance rate; and various other changes. On November 25, 2015 ODAP terminated its existing asset-backed revolving debt facility and simultaneously entered into a new-asset backed revolving debt facility with substantially similar terms to the terminated facility. The note bears interest at 4% plus the greater of 1% or LIBOR.
Square 1 Agreement
On October 2, 2015 an amendment was made to the Square 1 Agreement which extended the date of maturity of our corporate revolving line of credit from October 2015 to October 2016, added a minimum monthly interest payment and modified certain financial and portfolio covenants.
Other
In August 2013, and as subsequently amended, we entered into an $8 million senior subordinated loan and security agreement (“SSL&SA”) with certain entities collectively referred to as SF Capital. On January 22, 2014, we entered into a second amendment with SF Capital, increasing the credit limit available on SSL&SA from $8 million to $18 million with borrowings up to $8 million bearing the original interest rate of 16% and all borrowings in excess of $8 million bearing an interest rate of 12%. No other significant terms were modified under this amendment. On February 27, 2014, approximately $30 million of the proceeds of the issuance of the Series E redeemable convertible preferred shares was used to repay the SSL&SA in full and portions of certain other debt payable. On April 7, 2014, the SBLP II Agreement was terminated and the amount outstanding of $63.3 million was paid in full to the lenders.
As of December 31, 2015, future maturities of our borrowings were as follows (in thousands):
2016
$
69,046

2017
277,308

2018
36,458

2019

2020

Thereafter

Total
$
382,812

Warrant Liability
Warrant Liability
Warrant Liability
In conjunction with certain consulting agreements, we issued warrants to purchase shares of Series E redeemable convertible preferred stock (“Series E warrants”). The holders were entitled to purchase 30,000 shares of Series E shares for $14.71 per share. The warrants are exercisable upon vesting through the earlier of ten years after issuance (various dates through June 6, 2024), or two years after closing a qualified initial public offering, which occurred in December 2014. As the Series E warrants vested, they were recorded as liabilities in the accompanying consolidated balance sheets and subsequently adjusted to fair value each period because they were exercisable into redeemable securities. For the years ended December 31, 2014 and 2013, changes in the fair value of these and previously issued warrants were recognized in our consolidated statements of operations as warrant liability fair value adjustment. In connection with our IPO in December 2014, all warrants for shares of preferred stock converted to warrants for shares of common stock which are not subject to fair value adjustments. As of December 31, 2015, warrants to purchase 20,000 common shares have vested but have not been exercised.
In September 2014, in conjunction with a general marketing agreement, we issued a warrant to purchase shares of common stock (“common stock warrant”) to a strategic partner. As of December 31, 2015, the holder was entitled to purchase up to 2,206,496 shares of common stock for $10.66 per share. The number of exercisable shares is dependent upon performance conditions. The warrant is exercisable upon vesting through the earlier of ten years after issuance, September 29, 2024, or one year after the termination of the agreement. As the performance conditions are met, the common stock warrant will be recorded as a liability in our consolidated balance sheets and as sales and marketing expense in our consolidated statements of operations. The warrant liability will be adjusted to fair value each period and recognized in our consolidated statements of operations as warrant liability fair value adjustment. For the years ended December 31, 2015 and 2014, no performance conditions had been met and therefore no expense or liability has been recorded.
Redeemable Convertible Preferred Stock
Redeemable Convertible Preferred Stock
Redeemable Convertible Preferred Stock
Series A, Series B, Series C, Series C-1, Series D and Series E redeemable convertible preferred stock are collectively referred to as the “preferred stock” and individually as the “Series A”, “Series B”, “Series C”, “Series C-1”, “Series D” and “Series E." Each of the prices per share is referred to as the original issue price and excludes the cost of issuance. Any costs incurred in connection with the issuance of various classes of the preferred stock have been recorded as a reduction of the carrying amount.

The following table presents a summary of activity for the preferred stock issued and outstanding for the years ended December 31, 2015, 2014 and 2013 (in thousands):
 
 
 
Series A
 
Series B
 
Series C
 
Series C-1
 
Series D
 
Series E
 
Total
Amount
Balance, January 1, 2013
 
3,250

 
21,838

 
23,113

 
5,025

 

 

 
53,226

Redemption of preferred stock(1)
 
(835
)
 
(193
)
 

 

 

 

 
(1,028
)
Issuance of preferred stock(2)
 

 

 

 

 
58,675

 

 
58,675

Accretion of dividends on preferred stock
 
144

 
1,273

 
1,636

 
376

 
4,041

 

 
7,470

Balance, December 31, 2013
 
$
2,559

 
$
22,918

 
$
24,749

 
$
5,401

 
$
62,716

 
$

 
$
118,343

Issuance of preferred stock(2)
 

 

 

 

 

 
76,985

 
76,985

Exercise of preferred stock warrants
 

 
5,982

 

 
7,225

 

 
85

 
13,292

Accretion of dividends on preferred stock
 
124

 
1,240

 
1,570

 
413

 
4,619

 
4,918

 
12,884

Conversion of preferred stock to common stock in connection with initial public offering
 
(2,683
)
 
(30,140
)
 
(26,319
)
 
(13,039
)
 
(67,335
)
 
(81,988
)
 
(221,504
)
Balance, December 31, 2014
 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
_________________________
(1)
During 2013, we redeemed 1,514,698 shares of Series A and 91,460 shares of Series B stock held by investors. The differential between the redemption price and the carrying value of the shares of $5.3 million was charged to accumulated deficit in accordance with accounting for distinguishing liabilities from equity.
(2)
Includes the conversion of a convertible note.
Dividends
Each series of preferred stock contained a cumulative annual dividend rate of 8% per share. No dividends were declared as of December 31, 2015 and 2014 or through the date of issuing these financial statements. Cumulative dividends were payable in the event of redemption. In addition to the preferential cumulative dividends, holders of preferred stock were entitled to receive, on an if-converted basis, any declared or paid dividends on our common stock.
Conversion
Each series of redeemable convertible preferred stock was mandatorily convertible upon the close of a qualified IPO or upon written consent of the majority of holders, as defined within each preferred stock agreement. All shares of preferred stock were automatically converted to shares of common on a 1:1 basis upon the close of our IPO.
Liquidation
In the event of any liquidation, dissolution, merger or consolidation (resulting in the common and preferred stockholders’ loss of majority), disposition or transfer of assets, or winding up of the company, whether voluntary or involuntary (a “Liquidation Event”), and after all declared dividends have been paid, holders of certain series of preferred stock were entitled to participate in the distribution of remaining company assets along with common stockholders with variable participation rights per series. These liquidation participation rights were nullified upon the conversion of the preferred shares to common shares which occurred upon the close of our IPO.
Redemption Rights
Each series of preferred stock was redeemable at the election of its holders. The redemption price was equal to any unpaid cumulative dividends and other dividends plus the original issue price. In connection with our IPO in December 2014, all preferred stock was converted to shares of common stock. At December 31, 2015, there were no preferred shares outstanding.
Voting Rights
Certain preferred series holders had rights to elect a variable number of members of the board of directors. At December 31, 2015, there were no preferred shares outstanding.
Stockholders' Equity
Stockholders' Equity
Stockholders’ Equity
Initial Public Offering
On December 22, 2014, we completed our IPO in which we sold 11.5 million shares of our common stock to the public at $20 per share. We received net proceeds of $210.0 million from the IPO, net of underwriting discounts, commissions and offering expenses. Upon the closing of the IPO, all shares of outstanding redeemable convertible preferred stock automatically converted into shares of common stock and all warrants for redeemable convertible preferred stock converted to warrants for common stock.
Retroactive Stock Split
On November 26, 2014, we further amended our amended and restated certificate of incorporation effecting a 2-for-1 forward stock split of our common stock and redeemable convertible preferred stock. The stock split caused an adjustment to the par value of common and preferred stock, from $0.01 per share to $0.005 per share, and a doubling of the number of authorized and outstanding shares of such stock. As a result of the stock split, the share amounts under our employee incentive plan and warrant agreements with third parties were also adjusted accordingly. All numbers of shares and per share data in the accompanying consolidated financial statements and related notes have been retroactively adjusted to reflect this stock split for all periods presented.
Income Tax
Income Tax
Income Tax
Our financial statements include a total income tax expense of $0 on net losses of $2.2 million, $18.7 million and $24.4 million for the years ended December 31, 2015, 2014 and 2013, respectively. A reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows for the years ended December 31:
 
 
2015
 
2014
 
2013
Federal statutory rate
34.0
 %
 
34.0
 %
 
34.0
 %
Effect of:
 
 
 
 
 
Change in valuation allowance
(28.0
)%
 
(35.7
)%
 
(40.3
)%
Federal effect of change in state and local tax valuation allowance
(6.0
)%
 
1.7
 %
 
6.3
 %
Income tax provision effective rate
 %
 
 %
 
 %

The significant components of our deferred tax asset were as follows as of December 31 (in thousands):
 
 
2015
 
2014
Deferred tax assets relating to:
 
 
 
Net operating loss carryforwards
$
19,183

 
$
12,271

Loan loss reserve
20,231

 
18,989

Imputed interest income
729

 
444

Loss on sublease
(20
)
 
145

Deferred rent
1,613

 
664

Miscellaneous items
5

 
4

Total gross deferred tax assets
41,741

 
32,517

Deferred tax liabilities:
 
 
 
Internally developed software
1,756

 
1,049

Property, equipment and software
4,613

 
214

Origination costs
3,394

 
5,164

Total gross deferred tax liabilities
9,763

 
6,427

Deferred assets less liabilities
31,978

 
26,090

Less: valuation allowance
(31,978
)
 
(26,090
)
Net deferred tax asset
$

 
$


In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and planned tax strategies in making this assessment. Based upon the level of historical losses and projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not that we will not realize the benefits of these deductible differences in the future. Therefore, we have recorded a full valuation allowance on our net deferred tax asset.
Deductions that are not deemed more likely than not to withstand examination by a taxing authority are considered to be "uncertain tax positions" as defined in ASC 740 Income Taxes. Prior to January 1, 2015, we had not recognized any uncertain tax positions. During the year ended December 31, 2015, we claimed deductions on our U.S. federal tax return for certain expenses related to our initial public offering that were validated at the level of substantial authority, but did not exceed the "more likely than not" threshold. We estimate the tax-effected exposure of these deductions to be approximately $2.2 million. These deductions did not result in any change to our tax payable or our provision for income taxes, both of which were $0 as of and for the year ended December 31, 2015. These deductions will increase our deferred tax asset as well as the corresponding valuation allowance. There will be no financial statement benefit derived from this additional deferred tax asset until such time as the valuation allowance is released.
Our net operating loss carryforwards for federal income tax purposes were approximately $50.6 million, $57.2 million and $53.4 million at December 31, 2015, 2014 and 2013, respectively, and, if not utilized, will expire at various dates beginning in 2027. State net operating loss carryforwards were $49.8 million, $56.4 million and $53.2 million at December 31, 2015, 2014 and 2013, respectively. Net operating loss carryforwards and tax credit carryforwards reflected above may be limited due to historical and future ownership changes.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
Fair Value of Financial Instruments

Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
We evaluate our financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. Due to the lack of transparency and quantity of transactions related to trades of servicing rights of comparable loans, we utilize an income valuation technique to estimate fair value. We utilize industry-standard modeling, such as discounted cash flow models, to arrive at an estimate of fair value and may utilize third-party service providers to assist in the valuation process. This determination requires significant judgments to be made.

The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31 (in thousands):
 
 
2015
Description
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Servicing assets
$

 
$

 
$
3,489

 
$
3,489

Total assets
$

 
$

 
$
3,489

 
$
3,489


There were no transfers between levels for the year ended December 31, 2015.

The following tables presents quantitative information about the significant unobservable inputs used for certain of our Level 3 fair value measurement at December 31, 2015.
 
December 31, 2015
 
Unobservable input
 
Weighted Average
Servicing assets
Discount rate
 
30.00
%
 
Cost of service(1)
 
0.09
%
 
Renewal rate
 
53.21
%
 
Default rate
 
10.00
%
(1) Estimated cost of servicing a loan as a percentage of unpaid principal balance.


The weighted averages above are indicative of the range for discount rate and cost of service. The renewal rate had a range of 31.78% to 53.21% while the default rate had a range of 6.43% to 10.36% during the year ended December 31, 2015. The above unobservable inputs were consistent during the year ended December 31, 2015, when servicing right assets were initially recognized.

Changes in certain of the unobservable inputs noted above may have a significant impact on the fair value of our servicing asset. The following table summarizes the effect adverse changes in estimate would have on the fair value of the servicing asset as of December 31, 2015 given a hypothetical changes in default rate and cost to service (in thousands):
 
Servicing Assets
Default rate assumption:
 
Default rate increase of 25%
$
(145
)
Default rate increase of 50%
$
(282
)
Cost to service assumption:
 
Cost to service increase by 25%
$
(79
)
Cost to service increase by 50%
$
(159
)


We had no servicing assets or liabilities as of December 31, 2014.
Warrant Liability
The following table presents the changes in the Level 3 instruments measured at fair value on a recurring basis for the years ended December 31 (in thousands):
 
 
2014
Warrant liability balance at January 1
$
4,446

Exercise of warrants
(10,766
)
Change in fair value
11,232

Conversion of preferred stock warrants to common stock warrants upon IPO
(4,912
)
Warrant liability balance at December 31
$


The warrant liability is classified within Level 3 due to the use of the value of our common stock, which in 2014 was a significant unobservable input, in determining the warrant liability's fair value. As the valuation of our common stock was determined prior to our initial public offering, we used a combination of the inputs including option pricing models, secondary transactions with third-party investors and an initial public offering scenario to determine the valuation of our common
stock.
Assets and Liabilities Disclosed at Fair Value
Because our loans held for investment, loans held for sale and fixed-rate debt are not measured at fair value, we are required to disclose their fair value in accordance with ASC 825. We utilize industry-standard modeling, such as discounted cash flow models, to arrive at an estimate of fair value and may utilize third-party service providers to assist in the valuation process. This determination requires significant judgments to be made.
 
December 31, 2015
Description
Carrying Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
 
Loans held for investment
$
499,431

 
$
545,740

 
$

 
$

 
$
545,740

Loans held for sale
706

 
763

 

 

 
763

Total assets
$
500,137

 
$
546,503

 
$

 
$

 
$
546,503

 
 
 
 
 
 
 
 
 
 
Description
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Fixed-rate debt
$
194,624

 
$
190,411

 
$

 
$

 
$
190,411

Total fixed-rate debt
$
194,624

 
$
190,411

 
$

 
$

 
$
190,411


The following techniques and assumptions are used in estimating fair value:
Loans held for investment and loans held for sale - Fair value is based on discounted cash flow models which contain certain unobservable inputs such as discount rate, renewal rate and default rate.
Fixed-rate debt - Our ODAST Agreement, SBAF Agreement and Partner Synthetic Participations is considered fixed-rate debt. Fair value of our fixed-rate debt is based on a discounted cash flow model with an unobservable input of discount rate.
As of December 31, 2014, loans held for investment and loans held for sale approximated fair value due to their short-term nature and are considered to be Level 3 assets. As of December 31, 2014, the carrying amounts of our financing obligations, such as fixed-rate debt, approximates fair value, considering the borrowing rates currently available to us for financing obligations with similar terms and credit risks.
Stock-Based Compensation and Employee Benefit Plans
Stock-Based Compensation and Employee Benefit Plans
Stock-Based Compensation and Employee Benefit Plans
Stock-Based Compensation Plans
2014 Equity Incentive Plan
Our board of directors adopted, and our stockholders approved, our 2014 Equity Incentive Plan (“2014 Plan”). Our 2014 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants. When initially adopted, there were up to 7,200,000 shares of our common stock authorized for issuance under the 2014 Plan subject to increase pursuant to the terms of the 2014 Plan. The shares of common stock available for issuance pursuant to the 2014 Plan is increased by shares returned that would otherwise return to our 2007 Plan as the result of the expiration or termination of awards. In addition, the number of shares available for issuance under the 2014 Plan will also include an annual increase on the first day of each fiscal year beginning in fiscal 2016 and ending immediately following fiscal 2020, equal to the least of:
 
7,200,000 shares of our common stock;
4% of the outstanding shares of our common stock as of the last day of our immediately preceding fiscal year, which is referred to as the threshold percentage;
a percentage equal to the threshold percentage, plus the difference between the threshold percentage and the percentage added to the 2014 Plan for each prior fiscal year; or
such other amount as our board of directors may determine.
2014 Employee Stock Purchase Plan
Our board of directors adopted, and our stockholders approved, the 2014 Employee Stock Purchase Plan (“ESPP”), which became effective in connection with our IPO in December 2014. The ESPP allows eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The offering periods generally start on the first trading day on or after March 15 and September 15 of each year and end on the first trading approximately six months later. The administrator may, in its discretion, modify the terms of future offering periods. Due to the timing of the IPO, the first offering period started December 22, 2014 and ended on September 15, 2015. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the last trading day of the offering period. When initially adopted, there were 1,800,000 shares of our common stock are available for sale under our ESPP. In addition, our ESPP provides for annual increases in the number of shares available for issuance under the ESPP on the first day of each fiscal year beginning in fiscal 2016, equal to the lesser of:
 
1% of the outstanding shares of our common stock on the first day of such fiscal year;
1,800,000 shares of our common stock; or
such other amount as may be determined by our board of directors.
2007 Stock Option Plan
Our Amended and Restated 2007 Stock Incentive Plan (“2007 Plan”) was terminated in connection with the IPO, and accordingly, no shares are available for issuance under this plan. Our 2007 Plan continues to govern outstanding awards granted thereunder. Our 2007 Plan allowed for the grant of incentive stock options, nonqualified stock options and restricted stock. The terms of the stock option grants under the 2007 Plan, including the exercise price per share and vesting periods, were determined by our Compensation Committee of the Board (“Committee”). Stock options were granted at exercise prices defined by the Committee but, historically, were equal to the fair market value of our common stock at the date of grant. As of December 31, 2014 and 2013, we had 0 and 1,109,292 shares, respectively, allocated to the 2007 Plan.
Options
The following table summarizes the assumptions used for estimating the fair value of stock options granted under our option plans for the years ended December 31:
 
 
2015
 
2014
 
2013
Risk-free interest rate
1.65-2.13%
 
1.02-2.08%
 
0.88-2.29%
Expected term (years)
5.5 - 6.0
 
3.2 - 6.1
 
5.8 - 8.5
Expected volatility
41 - 47%
 
35 - 59%
 
54 - 60%
Dividend yield
—%
 
—%
 
—%
Weighted-average grant date fair value per share
$5.70
 
$5.57
 
$0.65


The following is a summary of option activity for the year ended December 31, 2015:
 
 
Number of
Options
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value
(in thousands)
Outstanding at January 1, 2015
10,371,469

 
$
4.59

 

 

Granted
1,611,617

 
$
13.84

 

 

Exercised
(804,857
)
 
$
1.24

 

 

Forfeited
(430,878
)
 
$
7.42

 

 

Expired
(36,030
)
 
$
6.19

 

 

Outstanding at December 31, 2015
10,711,321

 
$
6.16

 
7.8

 
$
53,012

Exerciseable at December 31, 2015
5,146,604

 
$
3.18

 
7.1

 
$
37,857

Vested or expected to vest as of December 31, 2015
10,393,562

 
$
6.00

 
7.8

 
$
52,643

Total compensation cost related to nonvested option awards not yet recognized as of December 31, 2015 was $20.5 million and will be recognized over a weighted-average period of approximately 2.8. The aggregate intrinsic value of employee options exercised during the years ended December 31, 2015, 2014 and 2013 was $10.8 million, $12.1 million and $1.0 million, respectively.

Restricted Stock Units

During 2015, we began issuing RSUs to certain employees, officers and directors. The following table summarizes our activities of RSUs during the year ended December 31, 2015:
 
Number of RSUs
 
Weighted-Average Grant Date Fair Value
Unvested at December 31, 2014

 

RSUs granted
1,939,462

 
$
12.99

RSUs vested

 

RSUs forfeited/expired
(86,010
)
 
$
16.06

Unvested at December 31, 2015
1,853,452

 
$
12.85

Expected to vest after December 31, 2015
1,384,650

 
$
12.98



As of December 31, 2015, there was $21.5 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 3.6 years.

Employee Stock Purchase Plan

As of December 31, 2015, there was $0.3 million of unrecognized compensation expense related to the ESPP.
The assumptions used to calculate our Black-Scholes-Merton Option Pricing Model for each stock purchase right granted under the ESPP were as follows or the year ended December 31:
 
2015
 
2014
Risk-free interest rate
0.27
%
 
0.17
%
Expected term (years)
0.50

 
0.75

Expected volatility
42
%
 
42
%
Dividend yield
%
 
%

Stock-based compensation expense related to stock options, RSUs and ESPP are included in the following line items in our accompanying consolidated statements of operations for the year ended December 31 (in thousands):
 
 
2015
 
2014
Sales and marketing
$
3,081

 
$
686

Technology and analytics
2,351

 
539

Processing and servicing
775

 
219

General and administrative
5,375

 
1,398

Total
$
11,582

 
$
2,842



401(k) Plan
We maintain a 401(k) defined contribution plan that covers substantially all of our employees. Participants may elect to contribute their annual compensation up to the maximum limit imposed by federal tax law. During the years ended December 31, 2015, 2014 and 2013 we had $1.0 million, $0.3 million, and $0 in employer related match expense, respectively.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Lease Commitments
Operating Leases
In January 2013, we entered into an operating lease in Virginia for office space, which was amended in January 2015 (as amended, “Virginia Lease”) to extend the term of the lease and rent additional space. The Virginia Lease calls for monthly rental payments of $65,000, subject to escalation, and provides for a rent holiday of approximately six months and an aggregate $1 million leasehold improvement incentive.
During 2014 and 2015, we amended the lease of our corporate headquarters in New York City (as amended, “New York Lease”) to extend the term of the lease and rent additional space. We will occupy additional spaces under the New York Lease incrementally, as spaces becomes available, at which time we will incur additional rent payments. For all spaces delivered to us under the New York Lease as of December 31, 2015, our average monthly fixed rent payment will be approximately $0.4 million, subject to escalations. We are entitled to rent credits aggregating $3.8 million and a tenant improvement allowance not to exceed $5.8 million for all spaces delivered to us under the New York Lease as of December 31, 2015. The New York Lease is expected to terminate in December 2026.
In April 2015, we provided notice of termination to the landlord of one of our office spaces in Denver, Colorado (“Existing Denver Lease”) resulting in a termination fee of $0.4 million, which is included in general and administrative expenses for the year ended December 31, 2015. The Existing Denver Lease is scheduled to expire in January 2016.
In June 2015, we entered into a sublease in Denver, Colorado ("New Denver Lease") as the subtenant. The New Denver Lease calls for an average monthly fixed rent payment of approximately $144,000. The New Denver Lease also provides for a four-month rent holiday and a tenant improvement allowance not to exceed $2.6 million and is scheduled to expire in April 2026.
Certain of our leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease and record the difference between the rent paid and the straight-line rent expense as deferred rent within other liabilities on our consolidated balance sheets. Improvements funded by tenant allowances are recorded as leasehold improvements and depreciated over the improvements’ estimated useful lives or the remaining lease term, whichever is shorter. The incentive is recorded as deferred rent and amortized over the term of the lease.
Capital Leases
In January 2014, we entered into a capital lease agreement for additional data warehouses. The agreement called for monthly principal and interest payments of $18,000 through January 2017. As of December 31, 2015, total future minimum payments is $212,000.
For the years ended December 31, 2015 and 2014, we recorded depreciation expense of $0.2 million and $0.3 million, respectively, related to our fixed assets under capital leases. These capital leases are recorded in property, equipment and software, net with a corresponding liability in accrued expenses and other liabilities.
Lease Commitments
At December 31, 2015, future minimum lease commitments under operating and capital leases, net of sublease income of $2.1 million, for the remaining terms of the operating leases were as follows (in thousands):
 
For the years ending December 31,
 
2016
$
5,465

2017
7,872

2018
8,142

2019
8,686

2020
8,951

Thereafter
51,410

Total
$
90,526



Concentrations of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, cash equivalents, restricted cash and loans. We hold cash, cash equivalents and restricted cash in accounts at regulated domestic financial institutions in amounts that exceed or may exceed FDIC insured amounts and at non-U.S. financial institutions where deposited amounts may be uninsured. We believe these institutions to be of acceptable credit quality and we have not experienced any related losses to date.
We are exposed to default risk on loans we originate and hold and that we purchase from our issuing bank partner. We perform an evaluation of each customer's financial condition and during the term of the customer's loan(s), we have the contractual right to limit a customer's ability to take working capital loans or other financing from other lenders that may cause a material adverse change in the financial condition of the customer.

Concentrations of Credit Risk
For the year ended December 31, 2015, we had one group of customers that accounted for approximately 13% of total revenue, which was recognized through gain on sales of loans.
Contingencies
Two separate putative class actions were filed in August 2015 in the United States District Court for the Southern District of New York against us, certain of our executive officers, our directors and certain or all of the underwriters of our initial public offering. The suits allege that the registration statement for our IPO contained materially false and misleading statements regarding, or failed to disclose, specified information in violation of the Securities Act of 1933, as amended. The suits seek a determination that the case is a proper class action and/or certification of the plaintiff as a class representative, rescission or a rescissory measure of damages and/or unspecified damages, interest, attorneys’ fees and other fees and costs. On February 18, 2016 the court issued an order (1) consolidating the two cases, (2) selecting the lead plaintiff and (3) appointing lead class counsel.   Under the order, the plaintiffs are directed to file a consolidated complaint by March 18, 2016. Within 30 days of the filing of any consolidated complaint, the defendants are to answer the complaint or request a pre-motion conference with the court seeking permission to file a motion to dismiss. We intend to defend ourselves vigorously in these consolidated matters, although at this time we cannot predict the outcome.  
From time to time we are subject to other legal proceedings and claims in the ordinary course of business. The results of such matters cannot be predicted with certainty. However, we believe that the final outcome of any such current matters will not result in a material adverse effect on our consolidated financial condition, consolidated results of operations or consolidated cash flows.
Quarterly Financial Information (unaudited)
Quarterly Financial Information (unaudited)
Quarterly Financial Information (unaudited)
The following table contains selected unaudited financial data for each quarter of 2015 and 2014. The unaudited information should be read in conjunction with our financial statements and related notes included elsewhere in this report. We believe that the following unaudited information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.
 
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
 
March 31, 2014
Gross revenues
67,599

 
67,398

 
63,312

 
56,458

 
50,491

 
43,509

 
35,502

 
28,562

Net revenue
42,299

 
46,033

 
43,015

 
28,312

 
25,401

 
22,060

 
18,628

 
7,343

Net income (loss)
(5,144
)
 
3,507

 
4,748

 
(5,342
)
 
(4,291
)
 
354

 
(1,054
)
 
(13,717
)
Net loss attributable to common stockholders
(4,644
)
 
3,733

 
4,980

 
(5,342
)
 
(7,348
)
 
(3,273
)
 
(4,650
)
 
(16,321
)
Basic
(0.07
)
 
0.05

 
0.07

 
(0.08
)
 
(0.13
)
 
(0.51
)
 
(0.88
)
 
(3.47
)
Diluted
(0.07
)
 
0.05

 
0.07

 
(0.08
)
 
(0.13
)
 
(0.51
)
 
(0.88
)
 
(3.47
)
Schedule II - Valuation and Qualifying Accounts
Schedule II - Valuation and Qualifying Accounts
Schedule II—Valuation and Qualifying Accounts
Years Ended December 31, 2015, 2014 and 2013

Description
Balance at
Beginning
of Period
 
Charged
to Cost
and
Expenses
 
Charged
to Other
Accounts
 
Deductions—
Write offs
 
Balance
at End of
Period
 
(in thousands)
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
 
2015
49,804

 
74,863

 
7,129

 
(78,485
)
 
53,311

2014
19,443

 
67,432

 
2,567

 
(39,638
)
 
49,804

2013
9,288

 
26,570

 
1,236

 
(17,651
)
 
19,443

Deferred tax asset valuation allowance:
 
 
 
 
 
 
 
 
 
2015
26,090

 
(2,514
)
 
8,402

 

 
31,978

2014
26,199

 
(5,826
)
 
5,717

 

 
26,090

2013
17,266

 

 
8,933

 

 
26,199

Summary of Significant Accounting Policies (Policies)
We prepare our consolidated financial statements and footnotes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"). All intercompany transactions and accounts have been eliminated in consolidation.
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. Based upon the way our CODM reviews financial information and makes operating decisions and considering that our CODM reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance, our operations constitute a single operating segment and one reportable segment. Substantially all revenue was generated and all assets were held in the United States during the years ended December 31, 2015, 2014 and 2013.
Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. We reclassified gain on sales of loans, payments of net deferred origination costs of loans held for sale and proceeds from sale of loans held for sale to be included as operating activities in the consolidated statement of cash flows. Previously, such amounts were presented as a component of net income and sales of loans held for sale.
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Significant estimates include allowance for loan losses, valuation of warrants, stock-based compensation expense, servicing assets/liabilities, capitalized software development costs, the useful lives of long-lived assets and valuation allowance for deferred tax assets. We base our estimates on historical experience, current events and other factors we believe to be reasonable under the circumstances. These estimates and assumptions are inherently subjective in nature; actual results may differ from these estimates and assumptions.
Cash and cash equivalents include checking, savings and money market accounts. We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
Restricted cash represents funds held in accounts as reserves on certain debt facilities and as collateral for issuing bank partner transactions. We have no ability to draw on such funds as long as they remain restricted under the applicable arrangements
Loans Held for Investment
Loans held for investment consist of term loans and lines of credit that require daily or weekly repayments. We have both the ability and intent to hold these loans to maturity. When we originate a term loan, the borrower grants us a security interest in its assets which we may perfect by publicly filing a financing statement. Loans are carried at amortized cost, reduced by a valuation allowance for loan losses estimated as of the balance sheet dates. In accordance with ASC Subtopic 310-20, Nonrefundable Fees and Other Costs, the amortized cost of a loan is equal to the unpaid principal balance, plus net deferred origination costs. Net deferred origination costs are comprised of certain direct origination costs, net of all loan origination fees received. Loan origination fees include fees charged to the borrower related to origination that increase the loan’s effective interest yield. Loan origination costs are limited to direct costs attributable to originating a loan, including commissions and personnel costs directly related to the time spent by those individuals performing activities related to loan origination. Direct origination costs in excess of loan origination fees received are included in the loan balance and for term loans are amortized over the life of the term loan using the effective interest method, while for lines of credit principal amounts drawn are amortized using the straight-line method over 6 months.
When a term loan is originated in conjunction with the extinguishment of a previously issued term loan, also known as a renewal, we determine whether such subsequent term loan is a new loan or a modification to an existing loan in accordance with ASC 310-20. If accounted for as a new loan, any remaining unamortized net deferred costs are recognized when the new loan is originated. Further, when a renewal is accounted for as a new loan, the cash flows of the origination and related net deferred origination costs of that new loan are presented as (i) operating cash outflows on the Statement of Cash Flows if the renewal is designated to be sold or (ii) as investing cash outflows if the renewal is designated to be held for investment. If a renewal is accounted for as a modification, any remaining unamortized net deferred costs are amortized over the life of the modified loan. When a renewal is accounted for as a modification, the additional cash flows associated with the origination and related net deferred origination costs of that modification are presented on the Statement of Cash Flows within the same section as the originally issued term loan prior to renewal.
Loans Held for Sale
OnDeck Marketplace is our proprietary whole loan sale platform whereby we sell certain term loans to third-party institutional investors and retain the related servicing rights. We sell these whole loans to purchasers in exchange for a cash payment. A loan is initially classified as held for sale when the whole loan is identified for sale and a plan exists for the sale. A loan that is initially designated as held for sale or held for investment may be reclassified when our intent for that loan changes. When a loan held for sale is reclassified to held for investment, the loan is recorded at amortized cost and a provision for loan loss is recorded. When a loan held for investment is reclassified to held for sale, any allowance for loan loss related to that loan is released. Loans held for sale, inclusive of net deferred origination costs, are recorded at the lower of amortized cost or fair value until the loans are sold or reclassified. To determine the fair value of loans held for sale we utilize industry-standard modeling, such as discounted cash flow models, to arrive at an estimate of fair value and may utilize third-party service providers to assist in the valuation process.
Servicing Rights
We service loans that we have sold to third parties and upon such sale, we may recognize a servicing asset or liability, collectively referred to as servicing rights. Receiving more than adequate compensation, as defined by ASC Topic 860 Transfers and Servicing, results in the recognition of a servicing asset. Receiving less than adequate compensation results in a servicing liability. Servicing assets and liabilities are recorded at fair value and are presented as a component of other assets or accrued expenses and other liabilities, respectively. The initial recognition of a servicing asset results in a corresponding increase to gain on sales of loans. The initial recognition of a servicing liability results in a corresponding decrease to gain on sales of loans. Subsequent adjustments to the fair value of servicing rights are recognized as an adjustment to other revenue. The initial recognition includes both servicing rights resulting from transfers of financial assets and when applicable, changes in inputs or assumptions used in the valuation model.
We utilize industry-standard modeling, such as discounted cash flow models, to arrive at an estimate of fair value and may utilize third-party service providers to assist in the valuation process. Significant assumptions used in valuing our servicing rights are as follows:
Adequate compensation: We estimate adequate compensation as the rate a willing market participant would require to service loans with similar characteristics as those in the serviced portfolio. In the event of a lack of transparency and quantity of transactions related to trades of servicing rights of comparable loans (i.e., loans with comparable terms, unpaid principal balances, renewal rates and default rates) we may consider the actual cost incurred as a basis for determining what a market participant would require to service the loans.
Discount rate: For servicing rights on loans, the discount rate reflects the time value of money and a risk premium intended to reflect the amount of compensation market participants would require.
Renewal rate: We estimate the timing and probability that a borrower may renew their loan in advance of scheduled repayment, thus reducing the projected unpaid principal balance and expected term of the loan, which are used to project future servicing revenues.
Default rate: We estimate the timing and probability of loan defaults and write-offs, thus reducing the projected unpaid principal balance and expected term of the loan, which are used to project future servicing revenues.
Allowance for Loan Losses
The allowance for loan losses (“ALLL”) is established with respect to our loans held for investment through periodic charges to the provision for loan losses. Loan losses are charged against the ALLL when we believe that the future collection of principal is unlikely. Subsequent recoveries, if any, are credited to the ALLL.
We evaluate the creditworthiness of our portfolio on a pooled basis due to its composition of small, homogeneous loans with similar general credit risk characteristics and diversification among variables including industry and geography. We use a proprietary forecasted loss rate at origination for new loans that have not had the opportunity to make payments when they are first funded. The forecasted loss rate is updated daily to reflect actual loan performance and the underlying ALLL model is updated monthly to reflect our assumptions. The allowance is subjective as it requires material estimates, including such factors as historical trends, known and inherent risks in the loan portfolio, adverse situations that may affect borrowers’ ability to repay and current economic conditions. Other qualitative factors considered may include items such as uncertainties in forecasting and modeling techniques, changes in portfolio composition, business conditions and emerging trends. Recovery of the carrying value of loans is dependent to a great extent on conditions that may be beyond our control. Any combination of the aforementioned factors may adversely affect our loan portfolio resulting in increased delinquencies and loan losses and could require additional provisions for credit losses, which could impact future periods.
Accrual for Unfunded Loan Commitments and Off-Balance Sheet Credit Exposures
For our lines of credit we estimate probable losses on unfunded loan commitments similarly to the ALLL process and include the calculated amount in accrued expenses and other liabilities. We believe the accrual for unfunded loan commitments is sufficient to absorb estimated probable losses related to these unfunded credit commitments. The determination of the adequacy of the accrual is based on evaluations of the unfunded credit commitments, including an assessment of the probability of commitment usage, credit risk factors for lines of credit outstanding to these customers and the terms and expiration dates of the unfunded credit commitments. As of December 31, 2015 and 2014, our off-balance sheet credit exposure related to the undrawn line of credit balances was $89.1 million and $28.7 million, respectively. The related accrual for unfunded loan commitments was $4.2 million and $1.3 million as of December 31, 2015 and 2014, respectively. Net adjustments to the accrual for unfunded loan commitments are included in general and administrative expenses.
Accrual for Third-Party Representations
We have made certain representations to third parties that purchase loans through OnDeck Marketplace. Our obligations under those representations are not secured by escrows or similar arrangements. However, if the representations are expected to be breached, we could be required to make accruals. Any significant estimated post-sale obligations or contingent obligations to the purchaser of the loans, such as loan repurchase obligations or excess loss indemnification obligations, would be accrued if probable and estimable in accordance with ASC 450, Contingencies. There are no restricted assets related to these agreements. As of December 31, 2015 and 2014, we have not incurred any significant losses and or material liability for probable obligations requiring accrual.
Nonaccrual Loans, Restructured Loans and Charged-Off Loans
We consider a loan to be delinquent when the daily or weekly payments are one day past due. We place loans on nonaccrual status and stop accruing interest income on loans that are delinquent and non-paying. Loans are returned to accrual status if they are brought to non-delinquent status or have performed in accordance with the contractual terms for a reasonable period of time and, in our judgment, will continue to make periodic principal and interest payments as scheduled.
Certain borrowers who have experienced or are expected to experience financial difficulty may not be able to maintain their regularly scheduled and contractually required payments. Following discussions with us, such borrowers may temporarily make reduced payments and/or make payments on a less frequent basis than contractually required. As part of our effort to maximize loan recoverability and as a temporary accommodation to the borrower, we may voluntarily forebear from pursuing our legal rights and remedies under the applicable loan agreement, which loan agreement we do not modify and which remains in full force and effect.
Generally, after the 90th day of delinquency, we will make an initial assessment of whether an individual loan should be charged off based on payment status and information gathered through collection efforts. A loan is charged off when we determine it is probable that we will be unable to collect all of the remaining principal p
We borrow from various lenders to finance our lending activities and general corporate operations. Costs incurred in connection with financings, such as banker fees, origination fees and legal fees, are classified as deferred debt issuance costs. We capitalize these costs and amortize them over the expected life of the related financing agreements. The related fees are expensed immediately upon early extinguishment of the debt. In a debt modification, the initial issuance costs and any additional fees incurred as a result of the modification are deferred over the term of the modified agreement. Deferred debt issuance costs are amortized using the effective interest method for term debt and the straight-line method for revolving lines of credit. Interest expense and the amortization of deferred debt issuance costs incurred on debt used to fund loan originations are presented as funding costs in our consolidated statements of operations. Interest expense and the amortization of deferred debt issuance costs incurred on debt used to fund general corporate operations are recorded as interest expense, a component of other expense, in our consolidated statements of operations.
Property, equipment and software consists of computer and office equipment, purchased software, capitalized internal-use software costs and leasehold improvements. Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense are recognized over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the terms of the respective leases or the estimated lives of the improvements.
In accordance with ASC Subtopic 350-40, Internal-Use Software, we begin to capitalize the costs to develop software for our website and other internal uses when the following criteria are met: (i) the preliminary project stage is completed (ii) we have authorized funding (iii) it is probable that the project will be completed and (iv) we conclude that the software will perform the function intended. Capitalized internal-use software costs primarily include salaries and payroll-related costs for employees directly involved in the development efforts, software licenses acquired and fees paid to outside consultants.
Software development costs incurred prior to meeting the criteria for capitalization and costs incurred for training and maintenance are expensed as incurred. Certain upgrades and enhancements to existing software that result in additional functionality are capitalized. Capitalized software development costs are amortized using the straight-line method over their expected useful lives, which is generally three years.
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying values of those assets may not be recoverable. An impairment loss will be recognized only if the carrying value of a long-lived asset is not recoverable and exceeds its fair market value. If there is an indication of impairment, we will estimate the future cash flows (undiscounted and without interest charges) expected from the use of the asset and its eventual disposition. If an impairment is determined to exist, the impairment loss will be measured as the amount by which the carrying value of the asset exceeds its fair value and recorded in the period the determination is made. Assets held for sale are reported at the lower of the carrying amount or fair value, less costs to sell.
Until our initial public offering ("IPO") in December 2014, we had outstanding redeemable convertible preferred stock which was redeemable at the option of the holder after the passage of time and, therefore, had been classified outside of permanent equity in accordance with the SEC Staff Accounting Bulletin (“SAB”) Topic 3C, Redeemable Preferred Stock. We made periodic accretions to the carrying amount of the redeemable convertible preferred stock so that the carrying amount would equal the redemption. As all redeemable convertible preferred stock automatically converted into shares of common stock upon the closing of our IPO in December 2014, there was no accretion of dividends for the year ended December 31, 2015.
At various dates prior to our IPO, we issued warrants for certain series of our redeemable convertible preferred stock to third parties in connection with certain agreements. As the warrant holders had the right to demand their preferred shares to be settled in cash after the passage of time, we recorded the warrants as liabilities and at each balance sheet date. We valued the warrants using the Black-Scholes-Merton Option Pricing Model. Any change in warrant value was recorded through a warrant liability fair value adjustment in our consolidated statements of operations. All warrants for shares of preferred stock automatically converted into warrants for shares of common stock upon closing of our IPO in December 2014. Upon conversion, the warrant liability was converted to permanent equity as a component of additional paid-in capital.
Interest Income
We generate revenue primarily through interest and origination fees earned on loans originated and held to maturity.
For term loans, we recognize interest and origination fee revenue over the terms of the underlying loans using the effective interest method. For lines of credit, we recognize interest income when earned in accordance with terms of the contract. Origination fees collected but not yet recognized as revenue are netted with direct origination costs and presented as a component of loans in our consolidated balance sheets.
Historically, borrowers who elected to prepay term loans were required to pay future interest and fees that would have been assessed had the term loan been repaid in accordance with its original agreement. Beginning in December 2014, certain term loans may be eligible for a discount of future interest and fees that would have been assessed had the loan been repaid in accordance with its original agreement.
Gain on Sales of Loans
We account for OnDeck Marketplace loan sales in accordance with ASC Topic 860, Transfers and Servicing, which states that a transfer of a financial asset, a group of financial assets, or a participating interest in a financial asset is accounted for as a sale if all of the following conditions are met:
 
1.
The financial assets are isolated from the transferor and its consolidated affiliates as well as its creditors.

2.
The transferee or beneficial interest holders have the right to pledge or exchange the transferred financial assets.

3.
The transferor does not maintain effective control of the transferred assets.
For the years ended December 31, 2015, 2014 and 2013, all sales met the requirements for sale treatment in accordance with ASC Topic 860, Transfers and Servicing. We record the gain or loss on the sale of a loan at the sale date in an amount equal to the proceeds received, adjusted for initial recognition of servicing assets or liabilities obtained at the date of sale, less outstanding principal and net deferred origination costs. A change in inputs or assumptions used in the valuation model related to servicing assets or liabilities is recognized as a component of gain on sales of loans.
Other Revenue
Other revenue includes servicing fees related to loans previously sold, fair value adjustments to servicing rights, monthly fees charged to customers for our line of credit and marketing fees earned from our issuing bank partners, which are recognized as the related services are provided.
In accordance with ASC Topic 718, Compensation—Stock Compensation, all stock-based compensation provided to employees, including stock options and restricted stock units, or RSU's, is measured based on the grant-date fair value of the awards and recognized as compensation expense on a straight-line basis over the period during which the award holder is required to perform services in exchange for the award (the vesting period). The fair value of stock options is estimated using the Black-Scholes-Merton Option Pricing Model. The use of the option valuation model requires subjective assumptions, including the fair value of our common stock, the expected term of the option and the expected stock price volatility, which is based on our stock as well as our peer companies. RSU's issued to employees and directors are measured based on the fair values of the underlying stock on the dates of grant. Additionally, the recognition of stock-based compensation expense requires an estimation of the number of options and RSUs that will ultimately be forfeited. Estimated forfeitures are subsequently adjusted to reflect actual forfeiture.
Options typically vest at a rate of 25% after one year from the vesting commencement date and then monthly over an additional three-year period. The options expire ten years from the grant date or, for terminated employees, 90 days after the employee’s termination date. RSUs typically vest at a rate of 25% annually, over four annual vesting periods. Compensation expense for the fair value of the options and RSUs at their grant date is recognized ratably over the vesting period.
Advertising costs are expensed as incurred and are included within sales and marketing in our consolidated statements of operations.
In accordance with ASC 830, Foreign Currency Matters, we have determined the functional currency of our subsidiary, OnDeck Australia, is the Australian dollar. We translate the financial statements of this subsidiary to U.S. dollars using month-end exchange rates for assets and liabilities, and average exchange rates for revenue and expenses. Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders' equity. As of December 31, 2015 we had a cumulative translation loss of $0.4 million. The net loss resulting from foreign exchange transactions, which are transactions designated in currencies other than our functional currency, was $1.3 million for the year ended December 31, 2015 and was recorded within general and administrative expenses in our consolidated statements of operations.
In accordance with ASC 740, Income Taxes, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount we believe is more likely than not to be realized.
Uncertain tax positions are recognized only when we believe it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. We recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. We did not have any accrued interest or penalties associated with uncertain tax positions as of December 31, 2015 and 2014.
We file income tax returns in the United States for federal, state and local jurisdictions. We are no longer subject to U.S. federal, certain states, and local income tax examinations for years prior to 2012, with certain states no longer subject for years prior to 2011, although carryforward attributes that were generated prior to 2012 may still be adjusted upon examination by the Internal Revenue Service if used in a future period. No income tax returns are currently under examination by taxing authorities.
Deductions that are not deemed more likely than not to withstand examination by a taxing authority are considered to be "uncertain tax positions" as defined in ASC 740 Income Taxes. Prior to January 1, 2015, we had not recognized any uncertain tax positions.
In accordance with ASC 820, Fair Value Measurement, we use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:
Level 1: Quoted prices in active markets or liabilities in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for assets or liabilities for which there is little or no market data, which require us to develop our own assumptions. These unobservable assumptions reflect estimates of inputs that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flows, or similar techniques, which incorporate our own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation.
A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.
ur loans held for investment, loans held for sale and fixed-rate debt are not measured at fair value, we are required to disclose their fair value in accordance with ASC 825. We utilize industry-standard modeling, such as discounted cash flow models, to arrive at an estimate of fair value and may utilize third-party service providers to assist in the valuation process. This determination requires significant judgments to be made.
 
December 31, 2015
Description
Carrying Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
 
Loans held for investment
$
499,431

 
$
545,740

 
$

 
$

 
$
545,740

Loans held for sale
706

 
763

 

 

 
763

Total assets
$
500,137

 
$
546,503

 
$

 
$

 
$
546,503

 
 
 
 
 
 
 
 
 
 
Description
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Fixed-rate debt
$
194,624

 
$
190,411

 
$

 
$

 
$
190,411

Total fixed-rate debt
$
194,624

 
$
190,411

 
$

 
$

 
$
190,411


The following techniques and assumptions are used in estimating fair value:
Loans held for investment and loans held for sale - Fair value is based on discounted cash flow models which contain certain unobservable inputs such as discount rate, renewal rate and default rate.
Fixed-rate debt - Our ODAST Agreement, SBAF Agreement and Partner Synthetic Participations is considered fixed-rate debt. Fair value of our fixed-rate debt is based on a discounted cash flow model with an unobservable input of discount rate.
As of December 31, 2014, loans held for investment and loans held for sale approximated fair value due to their short-term nature and are considered to be Level 3 assets. As of December 31, 2014, the carrying amounts of our financing obligations, such as fixed-rate debt, approximates fair value, considering the borrowing rates currently available to us for financing obligations with similar terms and credit risks.
Basic net loss per common share is computed by dividing net loss attributable to On Deck Capital, Inc. common stockholders by the weighted-average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. We compute net loss per common share using the two-class method required for participating securities. We consider all series of redeemable convertible preferred stock to be participating securities due to their cumulative dividend rights. In accordance with the two-class method, earnings allocated to these participating securities, which include participation rights in undistributed earnings, are subtracted from net income or loss to determine total undistributed earnings or losses to be allocated to common stockholders. All participating securities are excluded from basic weighted-average common shares outstanding. Upon the closing of our IPO in December 2014, all redeemable convertible preferred stock was converted to common stock and became included in our weighted-average common shares outstanding.

Diluted net loss per common share includes the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” or “if converted” methods, as applicable. Diluted net loss per common share is computed under the two-class method by using the weighted-average number of common shares outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options, warrants and convertible preferred stock. In addition, we analyze the potential dilutive effect of the outstanding participating securities under the “if converted” method when calculating diluted earnings per share in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. We report the more dilutive of the approaches (two-class or “if converted”) as our diluted net income per share during the period.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amends ASC 835-30, Interest - Imputation of Interest. ASU 2015-03 requires entities to reclassify the presentation of deferred debt issuance costs in the financial statements. Under the ASU, an entity will be required to present such deferred costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. This accounting standard is mandatorily effective beginning January 1, 2016 and is to be applied retrospectively. In the first quarter of 2016 we will reclassify all deferred debt issuance costs as a reduction to Funding debt or Corporate debt in the Consolidated Balance Sheet, as applicable.
In May 2014, the FASB issued ASU 2014-09, Revenue Recognition, which creates ASC 606, Revenue from Contracts with Customers, and supersedes ASC 605, Revenue Recognition. ASU 2014-09 requires revenue to be recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for goods or services as described in ASU 2014-09. In July 2015, the FASB voted to defer the effective date of the new revenue standard by one year. The new guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, but not before the original effective date of December 15, 2016. We are currently in the process of assessing the impact that the adoption of this guidance will have on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases, which creates ASC 842, Leases, and supersedes ASC 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. We are currently in the process of assessing the impact the adoption of this guidance will have on our consolidated financial statements.
Net Loss Per Common Share (Tables)
Basic and diluted net loss per common share is calculated as follows (in thousands, except share and per share data):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Numerator:
 
 
 
 
 
Net loss
$
(2,231
)
 
$
(18,708
)
 
$
(24,356
)
Less: Series A and B preferred stock redemptions

 

 
(5,254
)
Less: Accretion of dividends on the redeemable convertible preferred stock

 
(12,884
)
 
(7,470
)
Less: net loss attributable to noncontrolling interest
958

 

 

Net loss attributable to On Deck Capital, Inc. common stockholders
$
(1,273
)
 
$
(31,592
)
 
$
(37,080
)
Denominator:
 
 
 
 
 
Weighted-average common shares outstanding, basic and diluted
69,545,238

 
52,556,998

 
4,292,026

Net loss per common share, basic and diluted
$
(0.02
)
 
$
(0.60
)
 
$
(8.64
)
The following common share equivalent securities have been excluded from the calculation of weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented: 
 
Year Ended December 31,
 
2015
 
2014
 
2013
Anti-Dilutive Common Share Equivalents
 
 
 
 
 
Redeemable convertible preferred stock:
 
 
 
 
 
Series A

 

 
4,438,662

Series B

 

 
10,755,262

Series C

 

 
9,735,538

Series C-1

 

 
1,701,112

Series D

 

 
14,467,756

Series E

 

 

Warrants to purchase redeemable convertible preferred stock

 

 
1,393,768

Warrants to purchase common stock
309,792

 
309,792

 
4,057,066

Restricted stock units
1,853,452

 
88,418

 

Stock options
10,711,321

 
10,371,469

 
7,814,970

Total anti-dilutive common share equivalents
12,874,565

 
10,769,679

 
54,364,134


The weighted-average exercise price for warrants to purchase 2,516,288 shares of common stock was $9.51 as December 31, 2015. For the year ended December 31, 2015 and 2014, a warrant to purchase 2,206,496 shares of common stock was excluded from anti-dilutive common share equivalents as performance conditions had not been met.
Interest Income (Tables)
Summary of Interest Income
Interest income was comprised of the following components for the years ended December 31 (in thousands):
 
2015
 
2014
 
2013
Interest on unpaid principal balance
$
227,579

 
$
172,472

 
$
51,699

Interest on deposits
408

 
70

 
7

Amortization of net deferred origination costs
(32,939
)
 
(27,267
)
 
11,235

Total interest income
$
195,048

 
$
145,275

 
$
62,941

Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale (Tables)
Loans held for investment consisted of the following as of December 31 (in thousands):
 
 
2015
 
2014
Term loans
$
482,596

 
$
466,386

Lines of credit
61,194

 
24,177

Total unpaid principal balance
543,790

 
490,563

Net deferred origination costs
8,952

 
13,544

Total loans held for investment
$
552,742

 
$
504,107

The activity in the allowance for loan losses for the years ended December 31 consisted of the following (in thousands):
 
 
2015
 
2014
 
2013
Balance at January 1
$
49,804

 
$
19,443

 
$
9,288

Provision for loan losses
74,863

 
67,432

 
26,570

Loans charged off
(78,485
)
 
(39,638
)
 
(17,651
)
Recoveries of loans previously charged off
7,129

 
2,567

 
1,236

Allowance for loan losses at December 31
$
53,311

 
$
49,804

 
$
19,443

The following table illustrates the unpaid principal balance related to non-delinquent, paying and non-paying delinquent loans as of December 31 (in thousands):
 
 
2015
 
2014
Non-delinquent loans
$
486,729

 
$
430,689

Delinquent: paying (accrual status)
28,192

 
40,049

Delinquent: non-paying (non-accrual status)
28,869

 
19,825

Total
$
543,790

 
$
490,563

The following table shows an aging analysis of the unpaid principal balance related to loans held for investment by delinquency status as of December 31 (in thousands):
 
 
2015
 
2014
By delinquency status:
 
 
 
Non-delinquent loans
$
486,729

 
$
430,689

1-14 calendar days past due
21,360

 
23,954

15-29 calendar days past due
8,703

 
9,462

30-59 calendar days past due
10,347

 
10,707

60-89 calendar days past due
7,443

 
7,724

90 + calendar days past due
9,208

 
8,027

Total unpaid principal balance
$
543,790

 
$
490,563

Loans held for sale consisted of the following as of December 31 (in thousands):
 
2015
 
2014
Loans held for sale
$
696

 
$
1,483

Net deferred origination costs
10

 
40

Loans held for sale, net
$
706

 
$
1,523

Servicing Rights (Tables)
Summary of Activity for Servicing Assets
The following table summarizes the activity related to the fair value of our servicing assets for the year ended December 31:
 
 
2015
Fair value at the beginning of period
 
$

Addition:
 
 
Servicing resulting from transfers of financial assets
 
3,708

Changes in fair value:
 
 
Change in inputs or assumptions used in the valuation model
 
1,051

Other changes in fair value (1)
 
(1,270
)
Fair value at the end of period (Level 3)
 
$
3,489

  ___________
(1) Represents changes due to collection of expected cash flows through December 31, 2015.
Property, Equipment and Software, net (Tables)
Summary of Property, Equipment and Software, net
Property, equipment and software, net, consisted of the following as of December 31 (in thousands):
 
Estimated
Useful Life
 
2015
 
2014
Computer/office equipment
12 – 36 months
 
$
11,866

 
$
7,249

Capitalized internal-use software
36 months
 
15,674

 
10,599

Leasehold improvements
Life of lease
 
15,417

 
6,343

Total property, equipment and software, at cost
 
 
42,957

 
24,191

Less accumulated depreciation and amortization
 
 
(16,770
)
 
(10,262
)
Property, equipment and software, net
 
 
$
26,187

 
$
13,929

Debt (Tables)
The following table summarizes our outstanding debt as of December 31 (in thousands):
 
Description
Type
 
Maturity Date
 
Weighted Average Interest
Rate at December 31, 2015
 
December 31, 2015
 
December 31, 2014
Funding Debt:
 
 
 
 
 
 
 
ODAST Agreement
Securitization Facility
 
May 2018 (1)
 
3.4%
 
$
174,980

 
$
174,972

PORT Agreement
Revolving
 
June 2017
 
2.7%
 
59,415

 

RAOD Agreement
Revolving
 
May 2017
 
3.3%
 
47,465

 

ODART Agreement
Revolving
 
September 2017
 
2.6%
 
42,090

 
105,598

ODAC Agreement
Revolving
 
May 2017
 
8.6%
 
27,699

 
32,733

SBAF Agreement
Revolving
 
Various(2)
 
6.9%
 
12,783

 
16,740

ODAP Agreement
Revolving
 
August 2017 (3)
 
5.0%
 
8,819

 
56,686

Partner Synthetic Participations
Term
 
Various(4)
 
Various
 
6,861

 
1,199

 
 
 
 
 
 
 
380,112

 
387,928

Corporate Debt:
 
 
 
 
 
 
 
 
 
Square 1 Agreement
Revolving
 
October 2016
 
4.5%
 
2,700

 
12,000

 
 
 
 
 
 
 
$
382,812

 
$
399,928

 
(1)
The period during which remaining cash flow can be used to purchase additional loans expires April 30, 2016
(2)
Maturity dates range from January 2016 through August 2017
(3)
The period during which new borrowings may be made under this facility expires in August 2016
(4)
Maturity dates range from January 2016 through October 2017
As of December 31, 2015, future maturities of our borrowings were as follows (in thousands):
2016
$
69,046

2017
277,308

2018
36,458

2019

2020

Thereafter

Total
$
382,812

Redeemable Convertible Preferred Stock (Tables)
Summary of Redeemable Convertible Preferred Stock
The following table presents a summary of activity for the preferred stock issued and outstanding for the years ended December 31, 2015, 2014 and 2013 (in thousands):
 
 
 
Series A
 
Series B
 
Series C
 
Series C-1
 
Series D
 
Series E
 
Total
Amount
Balance, January 1, 2013
 
3,250

 
21,838

 
23,113

 
5,025

 

 

 
53,226

Redemption of preferred stock(1)
 
(835
)
 
(193
)
 

 

 

 

 
(1,028
)
Issuance of preferred stock(2)
 

 

 

 

 
58,675

 

 
58,675

Accretion of dividends on preferred stock
 
144

 
1,273

 
1,636

 
376

 
4,041

 

 
7,470

Balance, December 31, 2013
 
$
2,559

 
$
22,918

 
$
24,749

 
$
5,401

 
$
62,716

 
$

 
$
118,343

Issuance of preferred stock(2)
 

 

 

 

 

 
76,985

 
76,985

Exercise of preferred stock warrants
 

 
5,982

 

 
7,225

 

 
85

 
13,292

Accretion of dividends on preferred stock
 
124

 
1,240

 
1,570

 
413

 
4,619

 
4,918

 
12,884

Conversion of preferred stock to common stock in connection with initial public offering
 
(2,683
)
 
(30,140
)
 
(26,319
)
 
(13,039
)
 
(67,335
)
 
(81,988
)
 
(221,504
)
Balance, December 31, 2014
 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
_________________________
(1)
During 2013, we redeemed 1,514,698 shares of Series A and 91,460 shares of Series B stock held by investors. The differential between the redemption price and the carrying value of the shares of $5.3 million was charged to accumulated deficit in accordance with accounting for distinguishing liabilities from equity.
(2)
Includes the conversion of a convertible note.
Income Tax Income Tax (Tables)
reconciliation of the difference between the provision for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows for the years ended December 31:
 
 
2015
 
2014
 
2013
Federal statutory rate
34.0
 %
 
34.0
 %
 
34.0
 %
Effect of:
 
 
 
 
 
Change in valuation allowance
(28.0
)%
 
(35.7
)%
 
(40.3
)%
Federal effect of change in state and local tax valuation allowance
(6.0
)%
 
1.7
 %
 
6.3
 %
Income tax provision effective rate
 %
 
 %
 
 %

The significant components of our deferred tax asset were as follows as of December 31 (in thousands):
 
 
2015
 
2014
Deferred tax assets relating to:
 
 
 
Net operating loss carryforwards
$
19,183

 
$
12,271

Loan loss reserve
20,231

 
18,989

Imputed interest income
729

 
444

Loss on sublease
(20
)
 
145

Deferred rent
1,613

 
664

Miscellaneous items
5

 
4

Total gross deferred tax assets
41,741

 
32,517

Deferred tax liabilities:
 
 
 
Internally developed software
1,756

 
1,049

Property, equipment and software
4,613

 
214

Origination costs
3,394

 
5,164

Total gross deferred tax liabilities
9,763

 
6,427

Deferred assets less liabilities
31,978

 
26,090

Less: valuation allowance
(31,978
)
 
(26,090
)
Net deferred tax asset
$

 
$

Fair Value of Financial Instruments (Tables)
The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31 (in thousands):
 
 
2015
Description
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Servicing assets
$

 
$

 
$
3,489

 
$
3,489

Total assets
$

 
$

 
$
3,489

 
$
3,489

The following tables presents quantitative information about the significant unobservable inputs used for certain of our Level 3 fair value measurement at December 31, 2015.
 
December 31, 2015
 
Unobservable input
 
Weighted Average
Servicing assets
Discount rate
 
30.00
%
 
Cost of service(1)
 
0.09
%
 
Renewal rate
 
53.21
%
 
Default rate
 
10.00
%
(1) Estimated cost of servicing a loan as a percentage of unpaid principal balance.
The following table summarizes the effect adverse changes in estimate would have on the fair value of the servicing asset as of December 31, 2015 given a hypothetical changes in default rate and cost to service (in thousands):
 
Servicing Assets
Default rate assumption:
 
Default rate increase of 25%
$
(145
)
Default rate increase of 50%
$
(282
)
Cost to service assumption:
 
Cost to service increase by 25%
$
(79
)
Cost to service increase by 50%
$
(159
)
The following table presents the changes in the Level 3 instruments measured at fair value on a recurring basis for the years ended December 31 (in thousands):
 
 
2014
Warrant liability balance at January 1
$
4,446

Exercise of warrants
(10,766
)
Change in fair value
11,232

Conversion of preferred stock warrants to common stock warrants upon IPO
(4,912
)
Warrant liability balance at December 31
$

This determination requires significant judgments to be made.
 
December 31, 2015
Description
Carrying Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
 
Loans held for investment
$
499,431

 
$
545,740

 
$

 
$

 
$
545,740

Loans held for sale
706

 
763

 

 

 
763

Total assets
$
500,137

 
$
546,503

 
$

 
$

 
$
546,503

 
 
 
 
 
 
 
 
 
 
Description
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Fixed-rate debt
$
194,624

 
$
190,411

 
$

 
$

 
$
190,411

Total fixed-rate debt
$
194,624

 
$
190,411

 
$

 
$

 
$
190,411

Stock-Based Compensation and Employee Benefit Plans (Tables)
The following table summarizes the assumptions used for estimating the fair value of stock options granted under our option plans for the years ended December 31:
 
 
2015
 
2014
 
2013
Risk-free interest rate
1.65-2.13%
 
1.02-2.08%
 
0.88-2.29%
Expected term (years)
5.5 - 6.0
 
3.2 - 6.1
 
5.8 - 8.5
Expected volatility
41 - 47%
 
35 - 59%
 
54 - 60%
Dividend yield
—%
 
—%
 
—%
Weighted-average grant date fair value per share
$5.70
 
$5.57
 
$0.65
The following is a summary of option activity for the year ended December 31, 2015:
 
 
Number of
Options
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value
(in thousands)
Outstanding at January 1, 2015
10,371,469

 
$
4.59

 

 

Granted
1,611,617

 
$
13.84

 

 

Exercised
(804,857
)
 
$
1.24

 

 

Forfeited
(430,878
)
 
$
7.42

 

 

Expired
(36,030
)
 
$
6.19

 

 

Outstanding at December 31, 2015
10,711,321

 
$
6.16

 
7.8

 
$
53,012

Exerciseable at December 31, 2015
5,146,604

 
$
3.18

 
7.1

 
$
37,857

Vested or expected to vest as of December 31, 2015
10,393,562

 
$
6.00

 
7.8

 
$
52,643

The following table summarizes our activities of RSUs during the year ended December 31, 2015:
 
Number of RSUs
 
Weighted-Average Grant Date Fair Value
Unvested at December 31, 2014

 

RSUs granted
1,939,462

 
$
12.99

RSUs vested

 

RSUs forfeited/expired
(86,010
)
 
$
16.06

Unvested at December 31, 2015
1,853,452

 
$
12.85

Expected to vest after December 31, 2015
1,384,650

 
$
12.98

The assumptions used to calculate our Black-Scholes-Merton Option Pricing Model for each stock purchase right granted under the ESPP were as follows or the year ended December 31:
 
2015
 
2014
Risk-free interest rate
0.27
%
 
0.17
%
Expected term (years)
0.50

 
0.75

Expected volatility
42
%
 
42
%
Dividend yield
%
 
%
Stock-based compensation expense related to stock options, RSUs and ESPP are included in the following line items in our accompanying consolidated statements of operations for the year ended December 31 (in thousands):
 
 
2015
 
2014
Sales and marketing
$
3,081

 
$
686

Technology and analytics
2,351

 
539

Processing and servicing
775

 
219

General and administrative
5,375

 
1,398

Total
$
11,582

 
$
2,842

Commitments and Contingencies Commitments and Contingencies (Tables)
At December 31, 2015, future minimum lease commitments under operating and capital leases, net of sublease income of $2.1 million, for the remaining terms of the operating leases were as follows (in thousands):
 
For the years ending December 31,
 
2016
$
5,465

2017
7,872

2018
8,142

2019
8,686

2020
8,951

Thereafter
51,410

Total
$
90,526

At December 31, 2015, future minimum lease commitments under operating and capital leases, net of sublease income of $2.1 million, for the remaining terms of the operating leases were as follows (in thousands):
 
For the years ending December 31,
 
2016
$
5,465

2017
7,872

2018
8,142

2019
8,686

2020
8,951

Thereafter
51,410

Total
$
90,526

Quarterly Financial Information (unaudited) (Tables)
Schedule of Quarterly Operating Results
The operating results for any quarter are not necessarily indicative of results for any future period.
 
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
 
March 31, 2014
Gross revenues
67,599

 
67,398

 
63,312

 
56,458

 
50,491

 
43,509

 
35,502

 
28,562

Net revenue
42,299

 
46,033

 
43,015

 
28,312

 
25,401

 
22,060

 
18,628

 
7,343

Net income (loss)
(5,144
)
 
3,507

 
4,748

 
(5,342
)
 
(4,291
)
 
354

 
(1,054
)
 
(13,717
)
Net loss attributable to common stockholders
(4,644
)
 
3,733

 
4,980

 
(5,342
)
 
(7,348
)
 
(3,273
)
 
(4,650
)
 
(16,321
)
Basic
(0.07
)
 
0.05

 
0.07

 
(0.08
)
 
(0.13
)
 
(0.51
)
 
(0.88
)
 
(3.47
)
Diluted
(0.07
)
 
0.05

 
0.07

 
(0.08
)
 
(0.13
)
 
(0.51
)
 
(0.88
)
 
(3.47
)
Summary of Significant Accounting Policies (Details) (USD $)
12 Months Ended
Dec. 31, 2015
segment
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2015
Stock options
Dec. 31, 2015
Stock options
Tranche one
Dec. 31, 2015
Stock options
Tranche two
Dec. 31, 2015
Stock options
Tranche three
Dec. 31, 2015
Stock options
Tranche four
Dec. 31, 2015
RSUs
Dec. 31, 2015
RSUs
Tranche one
Dec. 31, 2015
RSUs
Tranche two
Dec. 31, 2015
RSUs
Tranche three
Dec. 31, 2015
RSUs
Tranche four
Dec. 31, 2015
Reserve for Off-balance Sheet Activities
Dec. 31, 2014
Reserve for Off-balance Sheet Activities
Dec. 31, 2015
Undrawn lines of Credit
Dec. 31, 2014
Undrawn lines of Credit
Jun. 30, 2015
On Deck Australia
Sep. 30, 2015
Lancelot QBFOD LLC
Noncontrolling Interest [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ownership percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
55.00% 
67.00% 
Ownership percentage by non-affiliated parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45.00% 
33.00% 
Number of operating segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of reportable segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lines of credit amortization period
6 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Off-balance sheet credit exposure
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 89,100,000 
$ 28,700,000 
 
 
Related accrual for unfunded loan commitments
 
 
 
 
 
 
 
 
 
 
 
 
 
4,200,000 
1,300,000 
 
 
 
 
Threshold to consider a loan to be delinquent
1 day 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Delinquency threshold to make initial assessment of charge off
90 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vesting percentage
 
 
 
 
25.00% 
25.00% 
25.00% 
25.00% 
 
25.00% 
25.00% 
25.00% 
25.00% 
 
 
 
 
 
 
Vesting period
 
 
 
 
1 year 
 
 
 
4 years 
 
 
 
 
 
 
 
 
 
 
Additional monthly vesting period
 
 
 
3 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiration period
 
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period after employee's termination
 
 
 
90 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advertising costs
22,500,000 
14,400,000 
7,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation loss
(372,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss resulting from foreign exchange transactions
$ 1,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss Per Common Share (Basic and Diluted Net Loss per Common Share) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Earnings Per Share [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$ (5,144)
$ 3,507 
$ 4,748 
$ (5,342)
$ (4,291)
$ 354 
$ (1,054)
$ (13,717)
$ (2,231)
$ (18,708)
$ (24,356)
Series A and Series B preferred stock redemptions
 
 
 
 
 
 
 
 
(5,300)
Accretion of dividends on redeemable convertible preferred stock
 
 
 
 
 
 
 
 
(12,884)
(7,470)
Less: net loss attributable to noncontrolling interest
 
 
 
 
 
 
 
 
958 
Net loss attributable to On Deck Capital, Inc. common stockholders
$ (4,644)
$ 3,733 
$ 4,980 
$ (5,342)
$ (7,348)
$ (3,273)
$ (4,650)
$ (16,321)
$ (1,273)
$ (31,592)
$ (37,080)
Weighted-average common shares outstanding, basic and diluted (shares)
 
 
 
 
 
 
 
 
69,545,238 
52,556,998 
4,292,026 
Net loss per common share, basic and diluted (in dollars per share)
 
 
 
 
 
 
 
 
$ (0.02)
$ (0.60)
$ (8.64)
Net Loss Per Common Share (Anti-Dilutive Common Share Equivalents) (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
12,874,565 
10,769,679 
54,364,134 
Warrants to purchase
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
2,206,496 
2,206,496 
 
Stock options
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
10,711,321 
10,371,469 
7,814,970 
Series A
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
4,438,662 
Series B
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
10,755,262 
Series C
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
9,735,538 
Series C-1
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
1,701,112 
Series D
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
14,467,756 
Series E
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
Redeemable convertible preferred stock |
Warrants to purchase
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
1,393,768 
Common stock
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
2,516,288 
 
 
Common stock |
Warrants to purchase
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
309,792 
309,792 
4,057,066 
Restricted stock
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common share equivalents
1,853,452 
88,418 
Weighted Average
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Price of shares entitled to purchase (in dollars per share)
$ 9.51 
 
 
Interest Income (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Banking and Thrift, Interest [Abstract]
 
 
 
Interest on unpaid principal balance
$ 227,579 
$ 172,472 
$ 51,699 
Interest on deposits
408 
70 
Amortization of net deferred origination costs
(32,939)
(27,267)
11,235 
Total interest income
$ 195,048 
$ 145,275 
$ 62,941 
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale (Loans) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total unpaid principal balance
$ 543,790 
$ 490,563 
Net deferred origination costs
8,952 
13,544 
Total loans held for investment
552,742 
504,107 
Term loans
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total unpaid principal balance
482,596 
466,386 
Lines of credit
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total unpaid principal balance
$ 61,194 
$ 24,177 
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale (Allowance Roll Forward) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Roll Forward]
 
 
 
Balance - beginning of period
$ 49,804 
$ 19,443 
$ 9,288 
Provision for loan losses
74,863 
67,432 
26,570 
Loans charged off
(78,485)
(39,638)
(17,651)
Recoveries of loans previously charged off
7,129 
2,567 
1,236 
Allowance for loan losses - end of period
$ 53,311 
$ 49,804 
$ 19,443 
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Receivables [Abstract]
 
 
 
Originations of loans held for investment, modified
$ 231.7 
$ 180.8 
$ 73.5 
Proceeds from sale of previously charged-off loans
5.5 
1.7 
1.0 
Allowance for loan losses for non-delinquent loans
27.0 
20.5 
 
Allowance for loan losses for delinquent loans
$ 26.3 
$ 29.3 
 
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale (Non-delinquent, Paying and Non-paying Delinquent Loans) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Receivables [Abstract]
 
 
Non-delinquent loans
$ 486,729 
$ 430,689 
Delinquent: paying (accrual status)
28,192 
40,049 
Delinquent: non-paying (non-accrual status)
28,869 
19,825 
Total unpaid principal balance
$ 543,790 
$ 490,563 
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale (Aging Analysis of Term Loans) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
Non-delinquent loans
$ 486,729 
$ 430,689 
Total unpaid principal balance
543,790 
490,563 
1-14 calendar days past due
 
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
Past due loans
21,360 
23,954 
15-29 calendar days past due
 
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
Past due loans
8,703 
9,462 
30-59 calendar days past due
 
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
Past due loans
10,347 
10,707 
60-89 calendar days past due
 
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
Past due loans
7,443 
7,724 
90 calendar days past due
 
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
Past due loans
$ 9,208 
$ 8,027 
Loans Held for Investment, Allowance for Loan Losses and Loans Held for Sale (Loans Held for Sale) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Receivables [Abstract]
 
 
Loans held for sale
$ 696 
$ 1,483 
Net deferred origination costs
10 
40 
Loans held for sale, net
$ 706 
$ 1,523 
Servicing Rights (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Transfers and Servicing [Abstract]
 
 
 
Serviced unpaid principal balance
$ 345.9 
$ 79.7 
 
Unpaid principal balance for loans sold during period
600.0 
139.1 
17.5 
Servicing revenue
$ 3.5 
$ 0.9 
 
Servicing Rights (Fair Value of Servicing Assets) (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Changes in fair value:
 
 
 
Changes in servicing rights, at fair value
$ 1,270,000 
$ 0 
$ 0 
Term Loan
 
 
 
Servicing Asset at Fair Value, Amount [Roll Forward]
 
 
 
Fair value at the beginning of period
 
 
Addition:
 
 
 
Servicing resulting from transfers of financial assets
3,708,000 
 
 
Changes in fair value:
 
 
 
Change in inputs or assumptions used in the valuation model
1,051,000 
 
 
Changes in servicing rights, at fair value
(1,270,000)
 
 
Fair value at the end of period (Level 3)
$ 3,489,000 
 
 
Property, Equipment and Software, net (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Property, Plant and Equipment [Line Items]
 
 
 
Property, equipment and software, at cost
$ 42,957,000 
$ 24,191,000 
 
Less accumulated depreciation and amortization
(16,770,000)
(10,262,000)
 
Property, equipment and software, net
26,187,000 
13,929,000 
 
Computer/office equipment
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, equipment and software, at cost
11,866,000 
7,249,000 
 
Computer/office equipment |
Minimum
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Estimated Useful Life
12 months 
12 months 
 
Computer/office equipment |
Maximum
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Estimated Useful Life
36 months 
36 months 
 
Capitalized internal-use software
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Estimated Useful Life
36 months 
36 months 
 
Property, equipment and software, at cost
15,674,000 
10,599,000 
 
Amortization expense
2,800,000 
1,800,000 
1,200,000 
Leasehold improvements
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, equipment and software, at cost
$ 15,417,000 
$ 6,343,000 
 
Debt (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Debt Instrument [Line Items]
 
 
Outstanding debt
$ 382,812 
$ 399,928 
Partner Synthetic Participations
 
 
Debt Instrument [Line Items]
 
 
Outstanding debt
6,861 
1,199 
Funding debt
 
 
Debt Instrument [Line Items]
 
 
Outstanding debt
380,112 
387,928 
ODAST Agreement Due May 2018 |
Secured Debt
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
3.40% 
 
Outstanding debt
174,980 
174,972 
PORT Agreement Due June 2017 |
Revolving Credit Facility
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
2.70% 
 
Outstanding debt
59,415 
RAOD Agreement Due May 2017 |
Revolving Credit Facility
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
3.30% 
 
Outstanding debt
47,465 
ODART Agreement Due September 2017 |
Revolving Credit Facility
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
2.60% 
 
Outstanding debt
42,090 
105,598 
ODAC Agreement Due May 2017 |
Revolving Credit Facility
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
8.60% 
 
Outstanding debt
27,699 
32,733 
SBAF Agreement Due January 2016 through August 2017 |
Revolving Credit Facility
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
6.90% 
 
Outstanding debt
12,783 
16,740 
ODAP Agreement Due August 2017 |
Revolving Credit Facility
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
5.00% 
 
Outstanding debt
8,819 
56,686 
Corporate Debt
 
 
Debt Instrument [Line Items]
 
 
Outstanding debt
2,700 
12,000 
Corporate Debt |
Revolving Credit Facility
 
 
Debt Instrument [Line Items]
 
 
Weighted Average Interest Rate
4.50% 
 
Outstanding debt
$ 2,700 
$ 12,000 
Debt (Narrative) (Details) (USD $)
0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Jan. 22, 2014
Senior Subordinated Notes
Jan. 2, 2014
ODAC Agreement
Revolving Credit Facility
ODAC
Oct. 31, 2013
ODAC Agreement
Revolving Credit Facility
ODAC
Jan. 2, 2014
ODAC Agreement
Revolving Credit Facility
ODAC
LIBOR
Feb. 27, 2014
SSL&SA Agreement
Aug. 31, 2013
SSL&SA Agreement
Senior Subordinated Notes
Jan. 22, 2014
SSL&SA Agreement
Senior Subordinated Notes
Secured Debt
Apr. 7, 2014
SBLP II Agreement
Revolving Credit Facility
Oct. 7, 2015
ODART Agreement
Revolving Credit Facility
Class A
Oct. 7, 2015
ODART Agreement
Revolving Credit Facility
Class B
Oct. 7, 2015
ODART Agreement
Revolving Credit Facility
Class B
Oct. 7, 2015
ODART Agreement
Revolving Credit Facility
Cost of funds
Class A
May 8, 2014
ODAST Agreement
Secured Debt
ODAST
Deutsche Bank
May 8, 2014
ODAST Agreement
Secured Debt
ODAST
Deutsche Bank
Class A
May 8, 2014
ODAST Agreement
Secured Debt
ODAST
Deutsche Bank
Class B
Aug. 13, 2015
ODAP Agreement
Revolving Credit Facility
ODAP
Jefferies Mortgage Funding, LLC
Aug. 31, 2014
ODAP Agreement
Revolving Credit Facility
ODAP
Jefferies Mortgage Funding, LLC
Aug. 13, 2015
ODAP Agreement
Revolving Credit Facility
ODAP
LIBOR
Jefferies Mortgage Funding, LLC
Maximum
Sep. 15, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
Sep. 14, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
Sep. 15, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
Class A
Sep. 14, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
Class A
Sep. 15, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
Class B
Sep. 14, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
Class B
Sep. 15, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
LIBOR
Class B
Sep. 15, 2014
ODART Agreement Due September 2016
Revolving Credit Facility
Cost of funds
Class A
May 22, 2015
RAOD Agreement
Revolving Credit Facility
Feb. 26, 2016
RAOD Agreement
Revolving Credit Facility
Subsequent Event
May 22, 2015
RAOD Agreement
Revolving Credit Facility
LIBOR
Jun. 12, 2015
PORT Agreement
Revolving Credit Facility
Jun. 12, 2015
PORT Agreement
Revolving Credit Facility
LIBOR
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held for investment that are pledged as collateral
$ 417,100,000 
$ 431,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securitization agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
175,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit
 
 
 
50,000,000 
25,000,000 
 
 
8,000,000 
18,000,000 
 
150,000,000 
 
 
 
 
156,700,000.0 
18,300,000.0 
100,000,000 
75,000,000 
 
167,600,000.0 
111,800,000.0 
150,000,000 
100,000,000 
17,600,000.0 
11,800,000.0 
 
 
50,000,000 
100,000,000 
 
100,000,000 
 
Minimum aggregate principal balance required
 
 
 
 
 
 
 
 
 
 
 
 
 
 
183,200,000.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.15% 
5.68% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable interest spread
 
 
 
 
 
8.25% 
 
 
 
 
 
7.00% 
 
2.25% 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
1.00% 
3.00% 
 
 
3.00% 
 
2.25% 
Line of credit at 16 percent (borrowings up to)
 
 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit at 12 percent (borrowings in excess of)
 
 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of debt repaid
 
 
 
 
 
 
30,000,000 
 
 
63,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate floor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.00% 
 
 
 
 
 
 
7.25% 
 
 
 
 
 
 
 
 
Line of credit before election
 
 
 
 
 
 
 
 
 
 
 
 
17,600,000.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum capacity at election
 
 
 
 
 
 
 
 
 
 
 
 
$ 167,600,000.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowing base
 
 
 
 
 
 
 
 
 
 
 
 
95.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt (Schedule of Future Maturities) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Debt Disclosure [Abstract]
 
 
2016
$ 69,046 
 
2017
277,308 
 
2018
36,458 
 
2019
 
2020
 
Thereafter
 
Total
$ 382,812 
$ 399,928 
Warrant Liability (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Series E warrants
 
Class of Warrant or Right [Line Items]
 
Shares entitled to purchase
30,000 
Price of shares entitled to purchase (in dollars per share)
$ 14.71 
Vesting period after issuance
10 years 
Vesting period after closing IPO
2 years 
Common stock warrant
 
Class of Warrant or Right [Line Items]
 
Shares entitled to purchase
2,206,496 
Price of shares entitled to purchase (in dollars per share)
$ 10.66 
Vesting period after issuance
10 years 
Warrants to purchase common shares vested but not exercised (shares)
20,000 
Vesting period after termination of agreement
1 year 
Redeemable Convertible Preferred Stock (Summary of Activity) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance, Preferred stock issued and outstanding
$ 0 
$ 118,343 
$ 53,226 
Redemption of preferred stock
 
 
(1,028)
Issuance of preferred stock
 
76,985 
58,675 
Exercise of preferred stock warrants
 
13,292 
 
Accretion of dividends on preferred stock
12,884 
7,470 
Conversion of preferred stock to common stock in connection with initial public offering
 
(221,504)
 
Ending balance, Preferred stock issued and outstanding
 
118,343 
Number of shares redeemed (shares)
 
 
1,525,096 
Differential between redemption price and carrying value
5,300 
Series A
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance, Preferred stock issued and outstanding
 
2,559 
3,250 
Redemption of preferred stock
 
 
(835)
Issuance of preferred stock
 
Exercise of preferred stock warrants
 
 
Accretion of dividends on preferred stock
 
124 
144 
Conversion of preferred stock to common stock in connection with initial public offering
 
(2,683)
 
Ending balance, Preferred stock issued and outstanding
 
 
2,559 
Number of shares redeemed (shares)
 
 
1,514,698 
Series B
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance, Preferred stock issued and outstanding
 
22,918 
21,838 
Redemption of preferred stock
 
 
(193)
Issuance of preferred stock
 
Exercise of preferred stock warrants
 
5,982 
 
Accretion of dividends on preferred stock
 
1,240 
1,273 
Conversion of preferred stock to common stock in connection with initial public offering
 
(30,140)
 
Ending balance, Preferred stock issued and outstanding
 
 
22,918 
Number of shares redeemed (shares)
 
 
91,460 
Series C
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance, Preferred stock issued and outstanding
 
24,749 
23,113 
Redemption of preferred stock
 
 
Issuance of preferred stock
 
Exercise of preferred stock warrants
 
 
Accretion of dividends on preferred stock
 
1,570 
1,636 
Conversion of preferred stock to common stock in connection with initial public offering
 
(26,319)
 
Ending balance, Preferred stock issued and outstanding
 
 
24,749 
Series C-1
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance, Preferred stock issued and outstanding
 
5,401 
5,025 
Redemption of preferred stock
 
 
Issuance of preferred stock
 
Exercise of preferred stock warrants
 
7,225 
 
Accretion of dividends on preferred stock
 
413 
376 
Conversion of preferred stock to common stock in connection with initial public offering
 
(13,039)
 
Ending balance, Preferred stock issued and outstanding
 
 
5,401 
Series D
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance, Preferred stock issued and outstanding
 
62,716 
Redemption of preferred stock
 
 
Issuance of preferred stock
 
58,675 
Exercise of preferred stock warrants
 
 
Accretion of dividends on preferred stock
 
4,619 
4,041 
Conversion of preferred stock to common stock in connection with initial public offering
 
(67,335)
 
Ending balance, Preferred stock issued and outstanding
 
 
62,716 
Series E
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
Beginning balance, Preferred stock issued and outstanding
 
Redemption of preferred stock
 
 
Issuance of preferred stock
 
76,985 
Exercise of preferred stock warrants
 
85 
 
Accretion of dividends on preferred stock
 
4,918 
Conversion of preferred stock to common stock in connection with initial public offering
 
(81,988)
 
Ending balance, Preferred stock issued and outstanding
 
 
$ 0 
Redeemable Convertible Preferred Stock (Narrative) (Details)
0 Months Ended 12 Months Ended
Nov. 26, 2014
Dec. 31, 2015
Dec. 31, 2014
Equity [Abstract]
 
 
 
Preferred stock dividends declared (in dollars per share)
 
$ 0 
$ 0 
Cumulative dividend rate
 
8.00% 
 
Conversion ratio
 
Stockholders' Equity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
0 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended
Nov. 26, 2014
Dec. 31, 2015
Dec. 31, 2014
Nov. 26, 2014
Nov. 25, 2014
Dec. 31, 2014
Common Stock
Dec. 22, 2014
Common Stock
IPO [Member]
Dec. 22, 2014
Common Stock
IPO [Member]
Class of Stock [Line Items]
 
 
 
 
 
 
 
 
Shares of common stock sold (shares)
 
 
 
 
 
11,500,000 
11,500,000 
 
Common stock sold (in dollars per share)
 
 
 
 
 
 
 
$ 20 
Net proceeds from sale of stock
 
 
$ 209,990 
 
 
$ 57 
$ 210,000 
 
Stock split
 
 
 
 
 
 
Common stock par value (in dollars per share)
 
$ 0.005 
$ 0.005 
$ 0.005 
$ 0.01 
 
 
 
Preferred stock par value (in dollars per share)
 
 
 
$ 0.005 
$ 0.01 
 
 
 
Income Tax (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Operating Loss Carryforwards [Line Items]
 
 
 
Income tax expense
$ 0 
$ 0 
$ 0 
Net losses
2,231,000 
18,708,000 
24,356,000 
Estimated tax effect of claimed deductions
2,200,000 
 
 
Tax payable
 
 
Federal [Member]
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
Net operating loss carryforwards
50,600,000 
57,200,000 
53,400,000 
State [Member]
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
Net operating loss carryforwards
$ 49,800,000 
$ 56,400,000 
$ 53,200,000 
Income Tax (Effective Income Tax Reconciliation) (Details)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Effective Income Tax Rate Reconciliation, Percent [Abstract]
 
 
 
Federal statutory rate
34.00% 
34.00% 
34.00% 
Change in valuation allowance
(28.00%)
(35.70%)
(40.30%)
Federal effect of change in state and local tax valuation allowance
(6.00%)
1.70% 
6.30% 
Income tax provision effective rate
0.00% 
0.00% 
0.00% 
Income Tax (Components of Deferred Tax Asset) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Deferred tax assets relating to:
 
 
Net operating loss carryforwards
$ 19,183 
$ 12,271 
Loan loss reserve
20,231 
18,989 
Imputed interest income
729 
444 
Loss on sublease
(20)
145 
Deferred rent
1,613 
664 
Miscellaneous items
Total gross deferred tax assets
41,741 
32,517 
Deferred tax liabilities:
 
 
Internally developed software
1,756 
1,049 
Property, equipment and software
4,613 
214 
Origination costs
3,394 
5,164 
Total gross deferred tax liabilities
9,763 
6,427 
Deferred assets less liabilities
31,978 
26,090 
Less: valuation allowance
(31,978)
(26,090)
Net deferred tax asset
$ 0 
$ 0 
Fair Value of Financial Instruments (Assets and Liabilities Measured on Recurring Basis) (Details) (USD $)
Dec. 31, 2015
Dec. 31, 2014
Level 1
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total assets
$ 0 
 
Level 2
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total assets
 
Level 3
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total assets
546,503,000 
 
Recurring Basis
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Servicing assets
3,489,000 
Total assets
3,489,000 
 
Recurring Basis |
Level 1
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Servicing assets
 
Total assets
 
Recurring Basis |
Level 2
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Servicing assets
 
Total assets
 
Recurring Basis |
Level 3
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Servicing assets
3,489,000 
 
Total assets
$ 3,489,000 
 
Fair Value of Financial Instruments (Servicing Rights) (Details)
12 Months Ended
Dec. 31, 2015
Weighted Average
 
Servicing Assets at Fair Value [Line Items]
 
Discount rate
30.00% 
Cost of service
0.09% 
Renewal rate
53.21% 
Default rate
10.00% 
Minimum
 
Servicing Assets at Fair Value [Line Items]
 
Renewal rate
31.78% 
Default rate
6.43% 
Maximum
 
Servicing Assets at Fair Value [Line Items]
 
Renewal rate
53.21% 
Default rate
10.36% 
Fair Value of Financial Instruments (Servicing Assets) (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2015
Recurring Basis
Dec. 31, 2014
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Default rate assumption, Default rate increase of 25%
25.00% 
 
 
Default rate assumption, Default rate increase of 50%
50.00% 
 
 
Cost to service assumption, Cost to service increase by 25%
25.00% 
 
 
Cost to service assumption, Cost to service increase by 50%
50.00% 
 
 
Default rate increase
$ (145,000)
 
 
Default rate increase
(282,000)
 
 
Cost to service increase
(79,000)
 
 
Cost to service increase
(159,000)
 
 
Servicing assets
 
3,489,000 
Servicing liabilities
 
 
$ 0 
Fair Value of Financial Instruments (Warrant Liability) (Details) (Warrant Liability, USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Warrant Liability
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
Warrant liability balance - beginning of period
$ 4,446 
Exercise of warrants
(10,766)
Change in fair value
11,232 
Conversion of preferred stock warrants to common stock warrants upon IPO
4,912 
Warrant liability balance - end of period
$ 0 
Fair Value of Financial Instruments (Assets and Liabilities Measured at Fair Value) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Level 1
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Loans held for investment
$ 0 
Loans held for sale
Total assets
Fixed-rate debt
Total fixed-rate debt
Level 2
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Loans held for investment
Loans held for sale
Total assets
Fixed-rate debt
Total fixed-rate debt
Level 3
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Loans held for investment
545,740 
Loans held for sale
763 
Total assets
546,503 
Fixed-rate debt
190,411 
Total fixed-rate debt
190,411 
Reported Value Measurement
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Loans held for investment
499,431 
Loans held for sale
706 
Total assets
500,137 
Fixed-rate debt
194,624 
Total fixed-rate debt
194,624 
Estimate of Fair Value Measurement
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Loans held for investment
545,740 
Loans held for sale
763 
Total assets
546,503 
Fixed-rate debt
190,411 
Total fixed-rate debt
$ 190,411 
Stock-Based Compensation and Employee Benefit Plans (2014 Equity Incentive Plan) (Narrative) (Details) (2014 Equity Incentive Plan)
12 Months Ended
Dec. 31, 2015
2014 Equity Incentive Plan
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of shares authorized (shares)
7,200,000 
Annual increase of shares available for issuance, percentage of outstanding shares
4.00% 
Stock-Based Compensation and Employee Benefit Plans (2014 Employee Stock Purchase Plan) (Narrative) (Details) (2014 Employee Stock Purchase Plan)
12 Months Ended
Dec. 31, 2014
2014 Employee Stock Purchase Plan
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Discount to purchase shares, percentage of eligible compensation (up to)
15.00% 
Percentage of lower of fair market value on first or last trading day of offering period
85.00% 
Number of shares available (shares)
1,800,000 
Annual increase of shares available for issuance, percentage of outstanding shares
1.00% 
Stock-Based Compensation and Employee Benefit Plans (2007 Stock Option Plan) (Narrative) (Details) (Stock options, 2007 Stock Option Plan)
Dec. 31, 2014
Dec. 31, 2013
Stock options |
2007 Stock Option Plan
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of shares available (shares)
1,109,292 
Stock-Based Compensation and Employee Benefit Plans (Summary of Assumptions for Estimating Fair Value of Stock Options) (Details) (Employee Stock Option, USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Risk-free interest rate, Minimum
1.65% 
1.02% 
0.88% 
Risk-free interest rate, Maximum
2.13% 
2.08% 
2.29% 
Expected volatility, Minimum
41.00% 
35.00% 
54.00% 
Expected volatility, Maximum
47.00% 
59.00% 
60.00% 
Dividend yield
0.00% 
0.00% 
0.00% 
Weighted-average grant date fair value per option (in dollars per share)
$ 5.70 
$ 5.57 
$ 0.65 
Minimum
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected term (years)
5 years 6 months 
3 years 2 months 12 days 
5 years 9 months 18 days 
Maximum
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected term (years)
6 years 
6 years 1 month 6 days 
8 years 6 months 
Stock-Based Compensation and Employee Benefit Plans (Summary of Option Activity) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
Beginning Balance, Outstanding, Number of Options (shares)
10,371,469 
Granted, Number of Options (shares)
1,611,617 
Exercised, Number of Options (shares)
(804,857)
Forfeited, Number of Options (shares)
(430,878)
Expired, Number of Options (shares)
(36,030)
Ending Balance, Outstanding, Number of Options (shares)
10,711,321 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
 
Beginning Balance, Outstanding, Weighted-Average Exercise Price (in dollars per share)
$ 4.59 
Granted, Weighted-Average Exercise Price (in dollars per share)
$ 13.84 
Exercised, Weighted-Average Exercise Price (in dollars per share)
$ 1.24 
Forfeited, Weighted-Average Exercise Price (in dollars per share)
$ 7.42 
Expired, Weighted-Average Exercise Price (in dollars per share)
$ 6.19 
Ending Balance, Outstanding, Weighted-Average Exercise Price (in dollars per share)
$ 6.16 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
Outstanding, Weighted-Average Remaining Contractual Term
7 years 9 months 29 days 
Outstanding, Aggregate Intrinsic Value
$ 53,012 
Exercisable, Number of Options (shares)
5,146,604 
Exercisable, Weighted-Average Exercise Price (in dollars per share)
$ 3.18 
Exercisable, Weighted-Average Remaining Contractual Term
7 years 1 month 2 days 
Exercisable, Aggregate Intrinsic Value
37,857 
Vested or expected to vest, Number of Options (shares)
10,393,562 
Vested or expected to vest, Weighted-Average Exercise Price (in dollars per share)
$ 6.00 
Vested or expected to vest, Weighted-Average Remaining Contractual Term
7 years 9 months 29 days 
Vested or expected to vest, Aggregate Intrinsic Value
$ 52,643 
Stock-Based Compensation and Employee Benefit Plans (Options) (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
Compensation cost for nonvested option awards not yet recognized
$ 20.5 
 
 
Weighted-average recognition period
2 years 9 months 22 days 
 
 
Aggregate intrinsic value
$ 10.8 
$ 12.1 
$ 1.0 
Stock-Based Compensation and Employee Benefit Plans (Restricted Stock Unit Activity) (Details) (Restricted Stock Units (RSUs), USD $)
12 Months Ended
Dec. 31, 2015
Restricted Stock Units (RSUs)
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
Unvested, Number of RSUs, Beginning Balance (shares)
RSUs granted, Number of RSUs (shares)
1,939,462 
RSUs vested, Number of RSUs (shares)
RSUs forfeited/expired, Number of RSUs (shares)
(86,010)
Unvested, Number of RSUs, Ending Balance (shares)
1,853,452 
Expected to vest, Number of RSUs (shares)
1,384,650 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
Unvested, Weighted-Average Grant Date Fair Value, Beginning Balance (in dollars per share)
$ 0.00 
RSUs granted, Weighted-Average Grant Date Fair Value (in dollars per share)
$ 12.99 
RSUs vested, Weighted-Average Grant Date Fair Value (in dollars per share)
$ 0.00 
RSUs forfeited/expired, Weighted-Average Grant Date Fair Value (in dollars per share)
$ 16.06 
Unvested, Weighted-Average Grant Date Fair Value, Ending Balance (in dollars per share)
$ 12.85 
Expected to vest, Weighted-Average Grant Date Fair Value (in dollars per share)
$ 12.98 
Stock-Based Compensation and Employee Benefit Plans (Restricted Stock Units) (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Recognition period
2 years 9 months 22 days 
Restricted Stock Units (RSUs)
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unrecognized compensation cost
$ 21.5 
Recognition period
3 years 6 months 22 days 
Stock-Based Compensation and Employee Benefit Plans (ESPP Assumptions) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Compensation costs related to shares not yet recognized
$ 20.5 
 
Employee Stock
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Risk-free interest rate
0.27% 
0.17% 
Expected term (years)
6 months 
9 months 
Expected volatility
42.00% 
42.00% 
Dividend yield
0.00% 
0.00% 
2014 Employee Stock Purchase Plan |
Employee Stock
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Compensation costs related to shares not yet recognized
$ 0.3 
 
Stock-Based Compensation and Employee Benefit Plans (Stock-based Compensation Expense) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation
$ 11,582 
$ 2,842 
Sales and marketing
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation
3,081 
686 
Technology and analytics
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation
2,351 
539 
Processing and servicing
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation
775 
219 
General and administrative
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation
$ 5,375 
$ 1,398 
Stock-Based Compensation and Employee Benefit Plans (401(k) Plan) (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
Employer related match expense
$ 1,000,000 
$ 300,000 
$ 0 
Commitments and Contingencies (Operating Leases) (Narrative) (Details) (USD $)
1 Months Ended 12 Months Ended 1 Months Ended
Jun. 30, 2015
Jan. 31, 2013
Virginia Lease
Dec. 31, 2015
New York Lease
Apr. 30, 2015
Denver Lease
office
Jun. 30, 2015
New Denver Lease
Operating Leased Assets [Line Items]
 
 
 
 
 
Monthly rental payments included in agreement
 
$ 65,000 
$ 400,000 
 
 
Term for rent holiday
4 months 
6 years 
 
 
 
Tenant incentive/allowance
 
1,000,000 
5,800,000 
 
2,600,000 
Number of offices that received notice of termination
 
 
 
 
Rent credits
 
 
3,800,000 
 
 
Tenant improvement allowance
 
 
 
400,000 
 
Average monthly fixed rent payment
 
 
 
 
$ 144,000 
Commitments and Contingencies (Capital Leases) (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2015
Data Warehouse Lease Through January 2017
Jan. 31, 2014
Data Warehouse Lease Through January 2017
Capital Leased Assets [Line Items]
 
 
 
 
Monthly principal and interest payments
 
 
 
$ 18,000 
Future minimum payments
 
 
212,000 
 
Depreciation expense for fixed assets under capital leases
$ 200,000 
$ 300,000 
 
 
Commitments and Contingencies (Future Minimum Lease Commitments) (Details) (USD $)
Dec. 31, 2015
Operating and Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] [Abstract]
 
Sublease income netted with future minimum lease commitments
$ 2,100,000 
2016
5,465,000 
2017
7,872,000 
2018
8,142,000 
2019
8,686,000 
2020
8,951,000 
Thereafter
51,410,000 
Total
$ 90,526,000 
Commitments and Contingencies (Concentrations of Credit Risk) (Narrative) (Details) (Customer Concentration Risk [Member], Gains (Losses) on Sale of Loans, Net [Member])
12 Months Ended
Dec. 31, 2015
group
Customer Concentration Risk [Member] |
Gains (Losses) on Sale of Loans, Net [Member]
 
Product Information [Line Items]
 
Number of groups of customers
Percentage of total revenue, gain on sales of loans
13.00% 
Commitments and Contingencies (Contingencies) (Narrative) (Details) (Pending Litigation)
0 Months Ended
Aug. 31, 2015
lawsuit
Feb. 18, 2016
Subsequent Event
Feb. 18, 2016
Subsequent Event
lawsuit
Loss Contingencies [Line Items]
 
 
 
Number of putative class actions filed
 
Maximum period for filing motion to dismiss
 
30 days 
 
Quarterly Financial Information (unaudited) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Gross revenues
$ 67,599 
$ 67,398 
$ 63,312 
$ 56,458 
$ 50,491 
$ 43,509 
$ 35,502 
$ 28,562 
$ 254,767 
$ 158,064 
$ 65,249 
Net revenue
42,299 
46,033 
43,015 
28,312 
25,401 
22,060 
18,628 
7,343 
159,660 
73,432 
25,260 
Net income (loss)
(5,144)
3,507 
4,748 
(5,342)
(4,291)
354 
(1,054)
(13,717)
(2,231)
(18,708)
(24,356)
Net loss attributable to common stockholders
$ (4,644)
$ 3,733 
$ 4,980 
$ (5,342)
$ (7,348)
$ (3,273)
$ (4,650)
$ (16,321)
$ (1,273)
$ (31,592)
$ (37,080)
Basic (in dollars per share)
$ (0.07)
$ 0.05 
$ 0.07 
$ (0.08)
$ (0.13)
$ (0.51)
$ (0.88)
$ (3.47)
 
 
 
Diluted (in dollars per share)
$ (0.07)
$ 0.05 
$ 0.07 
$ (0.08)
$ (0.13)
$ (0.51)
$ (0.88)
$ (3.47)
 
 
 
Schedule II - Valuation and Qualifying Accounts (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Allowance for Loan Losses
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
$ 49,804 
$ 19,443 
$ 9,288 
Charged to Cost and Expenses
74,863 
67,432 
26,570 
Charged to Other Accounts
7,129 
2,567 
1,236 
Deductions— Write offs
(78,485)
(39,638)
(17,651)
Balance at End of Period
53,311 
49,804 
19,443 
Deferred tax asset valuation allowance
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
26,090 
26,199 
17,266 
Charged to Cost and Expenses
(2,514)
(5,826)
Charged to Other Accounts
8,402 
5,717 
8,933 
Deductions— Write offs
Balance at End of Period
$ 31,978 
$ 26,090 
$ 26,199