Happen, formerly known as LendingClub, reported that deposits grew 22% from a year earlier to $11.5 billion in the third quarter, according to earnings results released on Wednesday (Oct. 28). The number of active borrowers with a deposit account tripled.
“When you see that we’re delivering a market-leading rate on savings, we believe that reinforces the value we provide on lending as well,” CEO Scott Sanborn said during the call’s investor question session.
LevelUp checking helps connect the two businesses by offering 2% cash back on on-time loan payments made through the account. Sanborn said one in five accounts is being opened by borrowers who subsequently accumulate $18,000 to $20,000 in savings, about as much as the credit card debt they originally consolidated.
The mobile app is becoming central to those relationships. Most customer interactions now take place through it, and loan issuance through the app doubled year over year. Borrowers who have repaid their loans and use either a deposit account or Debt IQ, the bank’s debt monitoring and management tool, are two to three times more likely to return than customers who only had a loan, according to commentary on the Wednesday call.
Sanborn described customers as digitally comfortable consumers looking to reduce borrowing costs. Their average FICO score is roughly 720, and annual income exceeds $120,000. He said loans save members an average of 7 percentage points in interest compared with their credit cards.
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Asked by an analyst about consumer financial pressure, Sanborn said Happen was not seeing warning signs such as falling bank balances. Underwriting remains restrictive by historical standards, he added, with ongoing adjustments to pricing and lending criteria.
Lending Demand Meets Higher Rates
Chief Financial Officer Drew LaBenne said loan originations rose 26% to $3.3 billion. Personal loans, major purchase financing and auto refinancing each grew from both the previous quarter and a year earlier.
Home improvement financing generated more than $100 million in its first full quarter. Sanborn said demand reflects homeowners choosing to renovate while retaining mortgages with rates below those available on a new home purchase. He cautioned that the business still draws on a small number of partners.
Happen Connect, its embedded financing platform, is reducing partner onboarding time by 60%, management said. A new merchant portal and functionality allowing borrowers to draw funds in stages are intended to support additional partners and projects. A home equity product remains scheduled for the second half of 2027.
The net charge-off ratio on loans held for investment improved to 3.1% from 3.4% in the prior period. Management reported roughly 40% lower delinquencies than its competitive set.
AI is helping handle more business. Penny, Happen’s AI service agent, resolves 30% more calls than the previous system. Automated quality assurance covers all member support calls. The company supported higher loan volume with 20% fewer operations employees.
Higher rates are also changing which loans Happen pursues. LaBenne said it would pull back on thinner-margin auto refinancing and raise borrower pricing where possible while preserving credit quality. Fourth-quarter originations guidance of $3.1 billion to $3.2 billion reflects seasonality and that repricing. Shares were down 3% after hours.
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