(Adds details from analyst call)
Nov 6 (Reuters) - Online lender OnDeck Capital Inc reported an unexpected third-quarter loss on Monday after the effects of Hurricanes Harvey and Irma offset higher interest income and lower expenses, and its shares fell nearly 4 percent.
Chief Executive Officer Noah Breslow said on a call with analysts that the company had increased its loss reserves by $3.5 million after the hurricanes hit some its small-business clients in August and September.
Chief Financial Officer Howard Katzenberg said OnDeck expected gross revenue for the full year to be at the lower end of its forecast range of $342 million to $352 million because of the hurricanes.
However, OnDeck said it was on track to achieve profitability this quarter after strengthening its credit standards and cutting expenses.
Like other online lenders, the company has faced concerns from investors over the quality of its loans and its ability to grow at a fast pace.
"Our credit performance is benefiting from the adjustments we made earlier in the year," Breslow said. "Loan rates have recovered meaningfully since the beginning of the year."
Excluding special items, OnDeck incurred a loss of 1 cent per share for the quarter, while analysts on average had expected a profit of 2 cents, according to Thomson Reuters I/B/E/S.
The net loss attributable to shareholders narrowed to $4.07 million, or 6 cents per share, from $16.63 million, or 23 cents per share, a year earlier.
Operating expenses fell 24.6 percent to $37.25 million, while interest income rose 12.3 percent to $80.12 million.
Loan originations fell 13.3 percent to $530.9 million.
Net revenue rose 1.3 percent to $32.75 million.
OnDeck, which has been teaming up with established financial institutions to offer small-business loans, said in August that it had renewed a partnership with JPMorgan Chase & Co.
Breslow said the company would announce its second major bank partnership in the first half of 2018.
"Partnerships interest from banks continues to increase," he said.
The company's shares were down 3.7 percent at $4.98 in morning trading. (Reporting by Anna Irrera in New York and Diptendu Lahiri in Bengaluru; Editing by Maju Samuel and Lisa Von Ahn)