Deposits Reach $11.5 Billion Following Rebrand
Happen, formerly known as LendingClub, reported a 22% year-over-year increase in deposits to reach $11.5 billion during the third quarter, according to earnings results released on Wednesday (Oct. 28). The financial institution also saw the number of active borrowers with a deposit account triple over the same period. CEO Scott Sanborn stated during an investor call that offering market-leading rates on savings reinforces the value the institution provides on its lending products.
The mobile application acts as the central hub for these customer relationships. Most customer interactions now happen through the app, and loan issuance via the platform doubled compared to the previous year. LevelUp checking accounts connect the two business segments by offering 2% cash back on on-time loan payments made through the account. Sanborn noted that one in five accounts is opened by borrowers who subsequently build up $18,000 to $20,000 in savings, about as much as the credit card debt they originally consolidated.
Loan Originations Rise 26 Percent Amid Restrictive Underwriting
Chief Financial Officer Drew LaBenne reported that total loan originations rose 26% to $3.3 billion. Personal loans, major purchase financing, and auto refinancing all posted gains compared to both the previous quarter and the prior year. Home improvement financing generated more than $100 million during its first full quarter. Sanborn attributed this demand to homeowners choosing home renovations while keeping mortgages at rates lower than those available on new home purchases.
Management maintains restrictive underwriting standards relative to historical norms, implementing ongoing adjustments to pricing and lending criteria. The net charge-off ratio on loans held for investment improved to 3.1%, down from 3.4% in the prior period. Furthermore, management reported roughly 40% lower delinquencies compared to its competitive set.
Artificial Intelligence Reduces Operational Headcount
Automation and artificial intelligence are handling a larger share of customer service workflows. Penny, Happen’s AI service agent, resolves 30% more calls than the previous system. Automated quality assurance covers all member support calls, allowing the company to handle higher loan volumes with 20% fewer operations employees.
Higher interest rates are shifting the focus of loan products. LaBenne stated that the company will pull back on thinner-margin auto refinancing and raise borrower pricing where possible while preserving credit quality. Guidance for fourth-quarter originations sits at $3.1 billion to $3.2 billion, reflecting seasonality and this ongoing repricing. Company shares fell 3% in after-hours trading following the earnings release.
Frequently Asked Questions About Happen’s Financial Results
What is the average credit profile of Happen’s borrowers?
Borrowers have an average FICO score of roughly 720 and an annual income exceeding $120,000, according to CEO Scott Sanborn. These consumers are digitally comfortable and looking to reduce borrowing costs.
How much do members save on interest?
Loans save members an average of 7 percentage points in interest compared with their credit cards.
What are the expectations for fourth-quarter loan originations?
Management issued guidance for fourth-quarter originations between $3.1 billion and $3.2 billion, reflecting seasonality and this repricing.
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