Happen, Inc. Common Stock

Q1 2026 originations were $2.7 billion, up 31% year over year. Net interest income rose 18% to $176 million; noninterest income was $76 million, up 12%; total fair value adjustments were approximately double Q4 2025 levels; revenue less provision for credit losses grew 58% to $252 million. Provision for credit losses was less than $1 million. Diluted EPS was $0.44, more than quadruple the prior year, and pretax net income was $67 million, also more than quadruple a year ago. Pretax profit margin was 27%, ROCTE was 14.5%, and tangible book value per share was $12.49. For Q2 2026, management guided to originations of $3.0 billion to $3.1 billion and diluted EPS of $0.40 to $0.45. For full-year 2026, guidance was maintained for originations of $11.6 billion to $12.6 billion and diluted EPS of $1.65 to $1.80. Management said net interest margin expanded to 6.3% in Q1 but expects it to trend back toward around 6% as the year progresses if rates stay on hold.

Scott Sanborn framed the quarter as evidence that LendingClub is growing while staying profitable, highlighting the combination of 31% originations growth, record pretax earnings, and continued credit outperformance. He emphasized strategic progress in home improvement, AI-enabled efficiency, and the upcoming Happen Bank rebrand, saying the brand is meant to better reflect the company’s purpose and customer focus. His tone was upbeat and confident, but he repeatedly noted disciplined underwriting and sensitivity to the broader environment.

Drew LaBenne focused on the financial mechanics behind the quarter: NII of $176 million, noninterest income of $76 million, and pretax income of $67 million, with EPS of $0.44. He explained that fair value accounting changed the timing and mix of revenue and expenses, including higher fair value adjustments driven by the shift to fair value option, longer-duration major purchase finance loans, larger average balances, and higher benchmark rates. He also noted expenses of $185 million, up 28% year over year, deposits of $10.2 billion, total assets of $11.9 billion, and $38 million of the $100 million repurchase/acquisition program used to date. On capital, he said the company remains well capitalized, has room under its ratios, and could benefit from proposed capital rule changes that might free up $100 million plus of capital if adopted as proposed.

Analysts pressed on home improvement ramp timing, and management said the first deal is live, partner interest is strong, and additional integrations should take less than half the work of the initial build; meaningful contribution is more likely next year. Questions on marketing and the rebrand were met with the view that marketing should ramp roughly with volume, while rebrand costs are mostly operational and will be absorbed this year. On credit and the Iran/oil shock, management said it has not seen broad-based deterioration in customer behavior, though it is watching the environment closely. Management also said loan buyers remain steady, pricing could soften if benchmarks stay higher, and the sale/retention mix will continue to include more HFI and marketplace volume as issuance grows.