LendingClub - 10-Q quarterly report FY2026 Q3

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

Commission File Number: 001-36771


Happen, Inc.
(Exact name of registrant as specified in its charter)


Delaware			51-0605731
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

88 Kearny Street, Suite 600,

San Francisco, CA 94108

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (415) 930-7440

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	HAPN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 16, 2026, there were 115,202,539 shares of the registrant’s common stock outstanding.

HAPPEN, INC.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Income	7
	Condensed Consolidated Statements of Comprehensive Income	8
	Condensed Consolidated Statements of Changes in Equity	9
	Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements	12
	Note 1. Summary of Significant Accounting Policies	12

	Note 2. Earnings Per Share	14
	Note 3. Securities Available for Sale	15
	Note 4. Loans	19
	Note 5. Fair Value Measurements	29
	Note 6. Structured Program Transactions and Variable Interest Entities	41
	Note 7. Derivative Instruments and Hedging Activities	42
	Note 8. Property, Equipment and Software, net	44
	Note 9. Goodwill and Intangible Assets	45
	Note 10. Other Assets	46
	Note 11. Deposits	46
	Note 12. Borrowings	47
	Note 13. Other Liabilities	47
	Note 14. Equity	47
	Note 15. Income Taxes	49
	Note 16. Leases	50
	Note 17. Commitments and Contingencies	52
	Note 18. Regulatory Requirements	53
	Note 19. Segment Reporting	55
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	59















Item 3.	Quantitative and Qualitative Disclosures About Market Risk	92
Item 4.	Controls and Procedures	92

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	92
Item 1A.	Risk Factors	92
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	93
Item 3.	Defaults Upon Senior Securities	94
Item 4.	Mine Safety Disclosures	94
Item 5.	Other Information	94
Item 6.	Exhibits	95
Signatures		96

Glossary

The following is a list of common acronyms and terms Happen, Inc. regularly uses in its financial reporting:



ACL			Allowance for Credit Losses (includes the allowance for loan and lease losses, allowance for securities available for sale and the reserve for unfunded lending commitments)
AFS			Available for Sale
ALLL			Allowance for Loan and Lease Losses
Annual Report			Annual Report on Form 10-K for the year ended December 31, 2025
ASU			Accounting Standards Update
AUM			Assets Under Management (outstanding balances of Loan Originations serviced on the Company’s platform including loans sold to investors as well as loans retained by the Company)
Balance Sheet			Condensed Consolidated Balance Sheets
CECL			Current Expected Credit Losses (Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1			Common Equity Tier 1
CET1 Capital Ratio			Common Equity Tier 1 capital divided by total risk-weighted assets as defined under the Basel III capital framework
DCF			Discounted Cash Flow

EPS			Earnings Per Share
Exchange Act			Securities Exchange Act of 1934, as amended
FRB or Federal Reserve			Board of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
GAAP			Accounting Principles Generally Accepted in the United States of America
Happen Bank			Happen Bank, National Association
Happen, Inc., the Company, we, us, or our			Happen, Inc. and its subsidiaries
HFI			Loans which are retained by the Company and held for investment
HFS			Held for sale loans expected to be sold to investors
Income Statement			Condensed Consolidated Statements of Income


Loan Originations			Unsecured consumer loans, secured consumer auto loans and small business loans originated by the Company or facilitated by third-party issuing banks


N/M			Not meaningful

Parent			Happen, Inc. (the Parent Company of Happen Bank, National Association and other subsidiaries)









SEC			United States Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended

Statement of Cash Flow			Condensed Consolidated Statements of Cash Flows

Structured Program transactions			Asset-backed securitization transactions where certain accredited investors and qualified institutional buyers have the opportunity to invest in securities backed by a pool of unsecured consumer loans

Tier 1 Capital Ratio			Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under the Basel III capital framework
Tier 1 Leverage Ratio			Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by quarterly adjusted average assets as defined under the Basel III capital framework


Total Capital Ratio			Total capital, which includes Common Equity Tier 1 capital, Tier 1 capital and allowance for credit losses and qualifying subordinated debt that qualifies as Tier 2 capital, divided by total risk-weighted assets as defined under the Basel III capital framework
Unsecured consumer loans			Unsecured consumer loans originated on the Company’s platforms, including an online direct to consumer platform (unsecured personal loans) and platforms connected with networks of education and patient finance providers and home improvement merchants and contractors (purchase finance loans)
VIE			Variable Interest Entity

HAPPEN, INC.

On June 22, 2026, we changed our corporate name from LendingClub Corporation to Happen, Inc. In connection with the corporate name change, we also changed the name of our wholly-owned banking subsidiary from LendingClub Bank, National Association to Happen Bank, National Association (Happen Bank). We do not distinguish between our prior and current names and refer to our current names throughout this Quarterly Report on Form 10-Q. As such, unless expressly indicated or as the context requires otherwise, as used herein, “Happen, Inc.,” “Company,” “we,” “us,” and “our,” refer to Happen, Inc., a Delaware corporation, and, where appropriate, its consolidated subsidiaries, including Happen Bank, and various entities established to facilitate loan sale transactions under Happen, Inc.’s Structured Program.

Forward-looking Statements

This Quarterly Report on Form 10-Q (Report) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Forward-looking statements in this Report include, without limitation, statements regarding borrowers, credit scoring, our strategy, future operations, expected losses, future financial position, future revenue, projected costs, prospects, plans, objectives of management, expected market growth and the impact on our business. You can identify these forward-looking statements by words such as “anticipate,” “appear,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or similar expressions.

These forward-looking statements include, among other things, statements about:

•our compliance, and that of third-party partners or providers, with applicable local, state and federal laws, regulations and regulatory developments or court decisions affecting our business;

•the impact of accounting standards, policies, elections or methodologies;

•the results of examinations of us by regulatory authorities and the possibility that any such regulatory authority may, among other things, require us to limit our business activities, increase our allowance for loan losses, increase our capital levels, or affect our ability to borrow funds or maintain or increase deposits;

•our ability to effectively manage capital or liquidity to support our evolving business or operational needs, while remaining compliant with regulatory or supervisory requirements and appropriate risk-management standards;

•the impact of changes to our deposit base;

•the impact of the continuation of, or changes in, the interest rate environment and economic climate;

•the ability and willingness of borrowers to repay loans;

•our belief that certain loans and leases in our commercial loan portfolio will be fully repaid in accordance with the contractual loan terms;

•our ability to maintain investor confidence in the operation of our platform;

•the performance of our loan products and expected rates of return for investors;

•the impact of, and our ability to resolve, pending litigation and governmental inquiries and investigations;

•our intention not to sell our available for sale (AFS) investment portfolio securities in loss positions;

•our financial condition and performance, including the impact that management’s estimates have on our financial performance and the relationship between interim period and full year results;

•the inputs used in the fair value measurement of our financial instruments;

•our estimate of our interest rate sensitivity;

•our calculation of expected credit losses for our collateral-dependent loans;

•our estimated maximum exposure to losses;

•our expectation of loan servicing fee revenue based on forecasted prepayments and estimated market rate of servicing at the time of loan sale;

•capital expenditures;

•our compliance with contractual obligations or restrictions;

•our ability to develop and maintain effective internal controls;

•our ability to continue to realize the financial and strategic benefits of our digital marketplace bank business model;

HAPPEN, INC.

•our tax profile;

•the effects of natural disasters, public health issues, acts of war or terrorism, geopolitical uncertainty and other external events on our customers and business;

•shares acquired under, and the impact of, our share repurchase and acquisition program; and

•other risk factors listed from time to time in reports we file with the SEC.

We caution you that the foregoing list may not contain all of the forward-looking statements in this Report. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. We have included important factors in the “Risk Factors” section of this Report and our Annual Report on Form 10-K for the year ended December 31, 2025, as well as in our condensed consolidated financial statements, related notes, and other information appearing elsewhere in this Report and our other filings with the SEC that could, among other things, cause actual results or events to differ materially from forward-looking statements contained in this Report. Forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Report carefully and completely and with the understanding that actual future results may be materially different from what we expect. We do not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, actual results, future events or otherwise, other than as required by law.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HAPPEN, INC.

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)


	September 30, 2026		December 31, 2025
Assets
Cash and due from banks	$	14,781	$	11,749
Interest-bearing deposits in banks	762,949		905,905
Total cash and cash equivalents	777,730		917,654
Restricted cash	15,326		12,783
Securities available for sale at fair value ($4,020,262 and $3,733,780 at amortized cost, respectively)	3,921,057		3,706,709
Loans held for sale at fair value	2,063,910		1,762,396
Loans held for investment at fair value	3,139,008		473,314
Loans and leases held for investment at amortized cost	2,746,928		4,272,812
Allowance for loan and lease losses	(151,896)		(275,743)
Loans and leases held for investment at amortized cost, net	2,595,032		3,997,069
Property, equipment and software, net	276,997		254,088
Goodwill	75,717		75,717
Other assets	422,037		368,086
Total assets	$	13,286,814	$	11,567,816
Liabilities and Equity
Deposits:
Interest-bearing	$	11,094,328	$	9,459,483
Noninterest-bearing	387,081		374,387
Total deposits	11,481,409		9,833,870


Other liabilities	212,332		233,518
Total liabilities	11,693,741		10,067,388
Equity

Common stock, $0.01 par value; 180,000,000 shares authorized; 115,395,673 and 115,368,987 shares issued and outstanding, respectively	1,154		1,154
Additional paid-in capital	1,695,854		1,719,233
Accumulated deficit	(32,772)		(201,799)

Accumulated other comprehensive loss	(71,163)		(18,160)


Total equity	1,593,073		1,500,428
Total liabilities and equity	$	13,286,814	$	11,567,816

See Notes to Condensed Consolidated Financial Statements.

HAPPEN, INC.

Condensed Consolidated Statements of Income

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Interest income:



Interest on loans(1)	$	216,027	$	179,158	$	622,321	$	519,976
Interest on securities available for sale	55,535		56,253		165,060		167,872
Other interest income	6,740		6,390		21,063		23,109
Total interest income	278,302		241,801		808,444		710,957

Interest expense:
Interest on deposits	95,226		83,221		270,113		248,166
Other interest expense	5		141		9		146
Total interest expense	95,231		83,362		270,122		248,312

Net interest income	183,071		158,439		538,322		462,645

Non-interest income:
Origination fees(1)	173,220		105,731		467,314		263,253
Servicing fees(1)	13,585		17,000		39,588		46,143
Gain on sales of loans(1)	19,608		17,799		57,338		43,541
Net fair value adjustments(1)	(131,409)		(38,375)		(341,479)		(95,495)
Other non-interest income	5,085		5,637		17,183		12,290
Total non-interest income	80,089		107,792		239,944		269,732

Total net revenue	263,160		266,231		778,266		732,377

Provision for credit losses	(15,930)		46,280		(26,457)		144,162

Non-interest expense:
Compensation and benefits	64,529		60,830		198,264		181,208
Marketing	72,763		40,712		190,758		103,531
Equipment and software	17,500		13,465		48,639		42,604
Depreciation and amortization	17,062		16,879		51,033		46,248
Professional services	10,889		10,922		34,645		30,986
Occupancy	3,644		5,245		15,017		14,377
Other non-interest expense	15,928		14,660		46,607		42,344
Total non-interest expense	202,315		162,713		584,963		461,298

Income before income tax expense	76,775		57,238		219,760		126,917
Income tax expense	(17,499)		(12,964)		(50,733)		(32,794)
Net income	$	59,276	$	44,274	$	169,027	$	94,123

Earnings per share:
Basic EPS	$	0.51	$	0.39	$	1.46	$	0.82
Diluted EPS	$	0.50	$	0.37	$	1.44	$	0.81
Weighted-average common shares – Basic	115,504,531		114,961,676		115,427,714		114,359,414
Weighted-average common shares – Diluted	117,582,278		118,188,124		117,397,188		116,690,642

(1) Prior period amounts have been reclassified to conform to the current period presentation. See “Note 1. Summary of Significant Accounting Policies” for additional information.

See Notes to Condensed Consolidated Financial Statements.

HAPPEN, INC.

Condensed Consolidated Statements of Comprehensive Income

(In Thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Net income	$	59,276	$	44,274	$	169,027	$	94,123

Other comprehensive gain (loss):
Net unrealized gain (loss) on securities available for sale	(42,414)		11,167		(70,086)		10,356

Income tax effect	10,249		(2,862)		17,083		(3,813)
Other comprehensive gain (loss), net of tax	(32,165)		8,305		(53,003)		6,543

Total comprehensive income	$	27,111	$	52,579	$	116,024	$	100,666

See Notes to Condensed Consolidated Financial Statements.

HAPPEN, INC.

Condensed Consolidated Statements of Changes in Equity

(In Thousands, Except Share Data)

(Unaudited)



	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Loss	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at June 30, 2026		115,407,464	$	1,154	$	1,697,357			$	(38,998)	$	(92,048)	$	1,567,465
Stock-based compensation		—	—		7,590				—		—		7,590
Net issuances under equity incentive plans		484,678	4		(918)				—		—		(914)
Share repurchases		(496,469)	(4)		(8,175)				—		—		(8,179)



Net unrealized loss on securities available for sale, net of tax		—	—		—				(32,165)		—		(32,165)

Net income		—	—		—				—		59,276		59,276
Balance at September 30, 2026		115,395,673	$	1,154	$	1,695,854			$	(71,163)	$	(32,772)	$	1,593,073

	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Loss	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at December 31, 2025		115,368,987	$	1,154	$	1,719,233			$	(18,160)	$	(201,799)	$	1,500,428
Stock-based compensation		—	—		24,090				—		—		24,090
Net issuances under equity incentive plans		1,745,093	17		(18,886)				—		—		(18,869)
Share repurchases		(1,718,407)	(17)		(28,583)				—		—		(28,600)



Net unrealized loss on securities available for sale, net of tax		—	—		—				(53,003)		—		(53,003)
Net income		—	—		—				—		169,027		169,027
Balance at September 30, 2026		115,395,673	$	1,154	$	1,695,854			$	(71,163)	$	(32,772)	$	1,593,073

	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Loss	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at June 30, 2025		114,740,147	$	1,147	$	1,718,520			$	(26,005)	$	(287,627)	$	1,406,035
Stock-based compensation		—	—		9,577				—		—		9,577
Net issuances under equity incentive plans		561,293	6		(5,984)				—		—		(5,978)



Net unrealized gain on securities available for sale, net of tax		—	—		—				8,305		—		8,305
Net income		—	—		—				—		44,274		44,274
Balance at September 30, 2025		115,301,440	$	1,153	$	1,722,113			$	(17,700)	$	(243,353)	$	1,462,213

	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Loss	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at December 31, 2024		113,383,917	$	1,134	$	1,702,316			$	(24,243)	$	(337,476)	$	1,341,731
Stock-based compensation		—	—		30,004				—		—		30,004
Net issuances under equity incentive plans		1,917,523	19		(10,207)				—		—		(10,188)



Net unrealized gain on securities available for sale, net of tax		—	—		—				6,543		—		6,543
Net income		—	—		—				—		94,123		94,123
Balance at September 30, 2025		115,301,440	$	1,153	$	1,722,113			$	(17,700)	$	(243,353)	$	1,462,213

See Notes to Condensed Consolidated Financial Statements.

HAPPEN, INC.

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


	Nine Months Ended September 30,
	2026		2025
Cash Flows from Operating Activities:
Net income	$	169,027	$	94,123
Adjustments to reconcile net income to net cash used for operating activities:
Net fair value adjustments	341,479		95,495
Change in fair value of loan servicing assets	48,683		42,635
Gain on sales of loans	(57,338)		(43,541)
Provision for credit losses	(26,457)		144,162
Accretion of deferred origination fees and marketing costs	(35,948)		(47,531)
Stock-based compensation, net	21,305		26,083


Depreciation and amortization	51,033		46,248

Other, net	424		7,642




Net change to loans held for sale	(2,381,922)		(2,219,285)






Net change in operating assets and liabilities:

Other assets	3,078		36,576

Other liabilities	(16,758)		(5,780)




Net cash used for operating activities	(1,883,394)		(1,823,173)
Cash Flows from Investing Activities:




Net change in loans and leases held for investment	(1,354,112)		249,344




Purchases of securities available for sale	(100,674)		(25,452)

Proceeds from maturities and paydowns of securities available for sale	1,684,055		1,288,127
Purchases of property, equipment and software, net	(71,954)		(124,763)

Other investing activities	(1,569)		(3,888)

Net cash provided by investing activities	155,746		1,383,368
Cash Flows from Financing Activities:
Net change in deposits	1,637,736		318,217




























Net issuances under equity incentive plans	(18,869)		(10,138)
Share repurchases	(28,600)		—
Net cash provided by financing activities	1,590,267		308,079
Net decrease in cash, cash equivalents and restricted cash	$	(137,381)	$	(131,726)
Cash, cash equivalents and restricted cash, beginning of period	$	930,437	$	977,396
Cash, cash equivalents and restricted cash, end of period	$	793,056	$	845,670

Supplemental cash flow information:
Cash paid for interest	$	269,371	$	258,835
Cash paid for income taxes	$	10,078	$	2,805
Cash paid for operating leases included in the measurement of lease liabilities	$	5,748	$	10,188


Supplemental non-cash investing activity:

Net securities retained from Structured Program transactions	$	1,866,888	$	1,536,647

HAPPEN, INC.

Condensed Consolidated Statements of Cash Flows (Continued)

(In Thousands)

(Unaudited)

The following presents cash, cash equivalents and restricted cash by category within the Condensed Consolidated Balance Sheets (Balance Sheet):


	September 30, 2026		September 30, 2025
Cash and cash equivalents	$	777,730	$	827,387
Restricted cash	15,326		18,283
Total cash, cash equivalents and restricted cash	$	793,056	$	845,670

See Notes to Condensed Consolidated Financial Statements.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

On June 22, 2026, LendingClub Corporation changed its corporate name to Happen, Inc., and changed the name of its wholly-owned banking subsidiary from LendingClub Bank, National Association to Happen Bank, National Association (Happen Bank). The Company was founded in 2006 and operates a leading, nationally chartered, digital marketplace bank that leverages data and technology to increase access to credit, reduce borrowing costs, and improve returns on savings for its members. Happen, Inc. is registered as a bank holding company and operates the vast majority of its business through its wholly-owned subsidiary, Happen Bank.

All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and, in the opinion of management, contain all adjustments, including normal recurring adjustments, necessary for the fair statement of the results and financial position for the periods presented. These accounting principles require management to make certain estimates and assumptions that affect the amounts in the accompanying financial statements. These estimates and assumptions are inherently subjective in nature and actual results may differ from these estimates and assumptions, and the differences could be material. Results reported in interim periods are not necessarily indicative of results for the full year or any other interim period.

The Company made the following presentation changes in the condensed consolidated financial statements and accompanying notes in the first quarter of 2026:

•The components previously aggregated under “Marketplace revenue” on the Condensed Consolidated Statements of Income (Income Statement), namely “Origination fees,” “Servicing fees,” “Gain on sales of loans,” and “Net fair value adjustments,” are now presented as separate line items on the Income Statement.

•“Interest on loans held for sale,” “Interest and fees on loans and leases held for investment,” and “Interest on loans held for investment at fair value,” which previously appeared as separate line items on the Income Statement, have been combined into a single line item titled “Interest on loans.”

In all instances, the respective prior period amounts have been reclassified to conform to the current period presentation.

The accompanying interim condensed consolidated financial statements and these related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (Annual Report) filed on February 12, 2026.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Election of Fair Value Option

Effective January 1, 2026, the Company elected the fair value option to account for held for investment (HFI) loans that were originated on or after that date. Prior to this election, loans that were originated as HFI were, and will continue to be, accounted for at amortized cost, which required the initial recognition of a CECL allowance for lifetime expected credit losses, recognized within “Provision for credit losses” on the Income Statement. The Company believes that applying the fair value option, rather than amortized cost accounting with the CECL methodology, to HFI loans more accurately reflects the in-period economic performance of the loans by better aligning the value of the loan to its then fair value. Under the fair value option, origination fee revenue and marketing costs are recognized at the time of loan origination within “Origination fees” and “Marketing expense,” respectively, on the Income Statement, rather than being deferred. Fair value adjustments on loans are also recognized in current period earnings within “Net fair value adjustments” and include the impact of credit losses that previously would have been recognized within “Provision for credit losses” under CECL. Further, by applying the fair value option to HFI loans, the Company is applying the same accounting methodology to all loans it originates on or after January 1, 2026, as both HFI and held for sale (HFS) loans will be measured at fair value.

Significant Accounting Policies

The Company’s significant accounting policies are discussed in “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report. There have been no changes to these significant accounting policies for the nine months ended September 30, 2026.

Adoption of New Accounting Standards

The Company did not adopt new accounting standards during the nine months ended September 30, 2026.

New Accounting Standards Not Yet Adopted

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which makes incremental improvements to GAAP. The updates cover a broad range of topics arising from technical corrections, unintended applications of the codification, and other minor improvements. The new standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. The standard can be applied prospectively or retrospectively on a topic by topic basis. Early adoption is also permitted on a topic by topic basis. The Company is evaluating the impact of this ASU but does not expect it to be material.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) – Narrow-Scope Improvements, which improves the navigability of the required interim disclosures and clarifies when the guidance is applicable. The amendments also provide guidance on what disclosures are required during the interim reporting periods. Additionally, the amendments also include a disclosure principle that requires entities to disclose events since the end of the last reporting period that have a material impact. The amendments of this standard are effective for interim reporting periods beginning after December 15, 2027. The amendments can be applied either prospectively or retrospectively. Early adoption is also permitted. The Company is evaluating the impact of this ASU but does not expect it to be material.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the guidance to reflect the software development approaches currently used. Specifically, the ASU eliminates accounting consideration of software project development stages and enhances the guidance around the “probable-to-complete” threshold. The new standard is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The amendments of this standard can be applied retrospectively, prospectively or on a modified prospective basis. Early adoption is also permitted. The Company is evaluating the impact of this ASU but does not expect it to be material.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220) – Reporting Comprehensive Income – Expense Disaggregation Disclosures, which improves income statement expense disclosure requirements, primarily through disaggregated disclosures of certain expense captions into specified categories within the footnotes to the financial statements. The new standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The amendments of this standard should be applied prospectively, with retrospective application permitted. Early adoption is also permitted. The Company is evaluating the impact of this ASU but does not expect it to be material.

2. Earnings Per Share

The following table details the computation of the Company’s basic and diluted earnings per share (EPS):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Basic EPS:
Net income	$	59,276	$	44,274	$	169,027	$	94,123
Weighted-average common shares – Basic	115,504,531		114,961,676		115,427,714		114,359,414
Basic EPS	$	0.51	$	0.39	$	1.46	$	0.82

Diluted EPS:
Net income	$	59,276	$	44,274	$	169,027	$	94,123
Weighted-average common shares – Diluted	117,582,278		118,188,124		117,397,188		116,690,642
Diluted EPS	$	0.50	$	0.37	$	1.44	$	0.81

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

3. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and fair value of available for sale (AFS) securities were as follows:


September 30, 2026	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Senior asset-backed securities related to Structured Program transactions	$	3,280,272	$	3,115	$	(19,385)	$	—	$	3,264,002
Other asset-backed securities related to Structured Program transactions(1)	268,468		60		(7,765)		(2,500)		258,263
U.S. agency residential mortgage-backed securities	304,076		—		(48,464)		—		255,612
U.S. agency securities	81,469		—		(15,345)		—		66,124
Mortgage-backed securities	58,468		—		(7,650)		—		50,818
Municipal securities	3,199		—		(846)		—		2,353
Other securities	24,310		19		(444)		—		23,885

Total securities available for sale	$	4,020,262	$	3,194	$	(99,899)	$	(2,500)	$	3,921,057


December 31, 2025	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Senior asset-backed securities related to Structured Program transactions(2)	$	3,065,885	$	26,525	$	—	$	—	$	3,092,410
Other asset-backed securities related to Structured Program transactions(1)	224,802		28		(1,367)		(4,093)		219,370
U.S. agency residential mortgage-backed securities	267,853		504		(32,296)		—		236,061
U.S. agency securities	84,464		—		(10,602)		—		73,862
Mortgage-backed securities	60,423		135		(4,961)		—		55,597
Municipal securities	3,215		—		(609)		—		2,606
Other securities	27,138		45		(380)		—		26,803






Total securities available for sale	$	3,733,780	$	27,237	$	(50,215)	$	(4,093)	$	3,706,709

(1) As of September 30, 2026 and December 31, 2025, $224.5 million and $200.0 million, respectively, of the other asset-backed securities related to Structured Program transactions at fair value are subject to restrictions on transfer pursuant to the Company’s obligations as a “sponsor” under the U.S. Risk Retention Rules.

(2) Excludes the basis adjustment for securities previously designated in fair value hedges under the portfolio layer method. See “Note 7. Derivative Instruments and Hedging Activities” for additional information.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

A summary of AFS securities with unrealized losses, aggregated by period of continuous unrealized loss, is as follows:


	Less than 12 months				12 months or longer				Total
September 30, 2026	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Senior asset-backed securities related to Structured Program transactions	$	2,558,993	$	(19,385)	$	—	$	—	$	2,558,993	$	(19,385)
U.S. agency residential mortgage-backed securities	84,736		(5,143)		170,642		(43,321)		255,378		(48,464)
Other asset-backed securities related to Structured Program transactions	173,795		(5,523)		48,236		(2,242)		222,031		(7,765)
U.S. agency securities	—		—		66,124		(15,345)		66,124		(15,345)
Mortgage-backed securities	20,273		(1,294)		28,537		(6,356)		48,810		(7,650)
Municipal securities	—		—		2,353		(846)		2,353		(846)
Other securities	1,234		(7)		7,799		(437)		9,033		(444)

Total securities with unrealized losses	$	2,839,031	$	(31,352)	$	323,691	$	(68,547)	$	3,162,722	$	(99,899)


	Less than 12 months				12 months or longer				Total
December 31, 2025	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

U.S. agency residential mortgage-backed securities	$	20,017	$	(266)	$	181,150	$	(32,030)	$	201,167	$	(32,296)
Other asset-backed securities related to Structured Program transactions	95,494		(1,034)		23,719		(333)		119,213		(1,367)
U.S. agency securities	—		—		73,862		(10,602)		73,862		(10,602)
Mortgage-backed securities	1,874		(5)		36,167		(4,956)		38,041		(4,961)
Municipal securities	—		—		2,606		(609)		2,606		(609)
Other securities	1,610		(10)		9,544		(370)		11,154		(380)
Total securities with unrealized losses	$	118,995	$	(1,315)	$	327,048	$	(48,900)	$	446,043	$	(50,215)

Securities in an unrealized loss position as of both September 30, 2026 and December 31, 2025 include U.S. agency-backed securities and mortgage-backed securities. Management considers these securities to be of the highest credit quality and rating given the guarantee of principal and interest by certain U.S. government agencies or government-sponsored agencies. As of September 30, 2026, securities in an unrealized loss position also included senior asset-backed securities related to Structured Program transactions. These securities represent the most senior tranche in their respective structures with payment priority over all subordinated and residual interests. Therefore, no allowance for credit losses was recorded on these during the first nine months of 2026 or 2025. Substantially all of the unrealized losses were caused by increases in interest rates. Additionally, the Company does not intend to sell the securities in loss positions, nor is it more likely than not that it will be required to sell the securities prior to recovery of the amortized cost basis. For a description of management’s quarterly evaluation of AFS securities in an unrealized loss position, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in our Annual Report.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following table presents the activity in the allowance for credit losses (ACL) for AFS securities, by security type:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Other asset-backed securities related to Structured Program transactions:
Allowance for credit losses, beginning of period	$	3,981	$	4,029	$	4,093	$	3,527
Credit loss (benefit) expense for securities available for sale	(1,481)		86		(1,593)		588



Allowance for credit losses, end of period	$	2,500	$	4,115	$	2,500	$	4,115

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The contractual maturities of AFS securities were as follows:


September 30, 2026	Amortized Cost		Fair Value		Weighted- average Yield(1)
Due within 1 year:

Senior asset-backed securities related to Structured Program transactions	$	5,739	$	5,765
U.S. agency securities	3,000		2,980
Mortgage-backed securities	724		711
Total due within 1 year	9,463		9,456		5.43	%
Due after 1 year through 5 years:
Senior asset-backed securities related to Structured Program transactions	3,274,533		3,258,237
Other asset-backed securities related to Structured Program transactions	268,468		258,263
U.S. agency securities	1,850		1,763
Mortgage-backed securities	1,726		1,579
U.S. agency residential mortgage-backed securities	497		479
Municipal securities	457		412
Other securities	10,576		10,576
Total due after 1 year through 5 years	3,558,107		3,531,309		5.94	%
Due after 5 years through 10 years:
U.S. agency securities	39,465		33,021

U.S. agency residential mortgage-backed securities	1,765		1,664
Mortgage-backed securities	854		730
Municipal securities	153		132
Other securities	7,297		7,299
Total due after 5 years through 10 years	49,534		42,846		3.36	%
Due after 10 years:
U.S. agency residential mortgage-backed securities	301,814		253,469
Mortgage-backed securities	55,164		47,798
U.S. agency securities	37,154		28,360
Municipal securities	2,589		1,809
Other securities	6,437		6,010
Total due after 10 years	403,158		337,446		3.19	%
Total securities available for sale	$	4,020,262	$	3,921,057	5.64	%

(1) The weighted-average yield is computed using the average month-end amortized cost during the nine months ended September 30, 2026.

There were no sales of AFS securities during the third quarters and first nine months of 2026 and 2025.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

4. Loans

The Company’s loan portfolios consist of the following:


	September 30, 2026		December 31, 2025
Loans held for sale at fair value	$	2,063,910	$	1,762,396





Loans held for investment at fair value	3,139,008		473,314












Total loans at fair value	5,202,918		2,235,710

Loans and leases held for investment at amortized cost, net	2,595,032		3,997,069




Total loans and leases	$	7,797,950	$	6,232,779

For loans held at fair value, see “Note 5. Fair Value Measurements” for the assumptions used in the Company’s fair value model.

Loans and Leases Held for Investment at Amortized Cost, Net

The Company defines its loans and leases HFI portfolio segments as (i) consumer and (ii) commercial. The following table presents the components of each portfolio segment by class of financing receivable:


	September 30, 2026		December 31, 2025
Unsecured consumer	$	1,813,859	$	3,191,430
Residential mortgages	144,063		151,073
Secured consumer	161,778		261,045

Total consumer loans held for investment at amortized cost	2,119,700		3,603,548
Equipment finance(1)	30,471		39,757
Commercial real estate(2)(3)	454,365		472,489
Commercial and industrial	142,392		157,018
Total commercial loans and leases held for investment at amortized cost	627,228		669,264
Total loans and leases held for investment at amortized cost(4)	2,746,928		4,272,812
Allowance for loan and lease losses	(151,896)		(275,743)
Loans and leases held for investment at amortized cost, net	$	2,595,032	$	3,997,069

(1) Comprised of sales-type leases for equipment. See “Note 16. Leases” for additional information.

(2) Includes $281.1 million and $286.8 million in loans originated through the Small Business Administration (SBA) as of September 30, 2026 and December 31, 2025, respectively.

(3) As of both September 30, 2026 and December 31, 2025, the Commercial Real Estate (CRE) office loan balance was under $35 million.

(4) Accrued interest receivable is excluded from the amortized cost basis of loans and leases HFI and is reported within “Other assets” on the Balance Sheet. Net accrued interest receivable related to loans and leases HFI at amortized cost was $11.5 million and $17.9 million as of September 30, 2026 and December 31, 2025, respectively.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following table presents the components of the allowance for loan and lease losses (ALLL):


	September 30, 2026		December 31, 2025
Gross allowance for loan and lease losses(1)	$	184,070	$	312,667
Recovery asset value(2)	(32,174)		(36,924)
Allowance for loan and lease losses	$	151,896	$	275,743

(1) Represents the allowance for future estimated net charge-offs on existing portfolio balances.

(2) Represents the negative allowance for expected recoveries of amounts previously charged-off.


September 30, 2026	Consumer			Commercial			Total
Loans and leases held for investment at amortized cost	$	2,119,700		$	627,228		$	2,746,928

Allowance for loan and lease losses	$	136,172		$	15,724		$	151,896
Allowance ratio(1)	6.4		%	2.5		%	5.5		%

Gross allowance for loan and lease losses	$	168,346		$	15,724		$	184,070
Gross allowance ratio(1)	7.9		%	2.5		%	6.7		%


December 31, 2025	Consumer			Commercial			Total
Loans and leases held for investment at amortized cost	$	3,603,548		$	669,264		$	4,272,812

Allowance for loan and lease losses	$	258,811		$	16,932		$	275,743
Allowance ratio(1)	7.2		%	2.5		%	6.5		%

Gross allowance for loan and lease losses	$	295,735		$	16,932		$	312,667
Gross allowance ratio(1)	8.2		%	2.5		%	7.3		%

(1) Calculated as ALLL or gross ALLL, where applicable, to the corresponding portfolio segment balance of loans and leases HFI at amortized cost.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The activity in the ACL by portfolio segment was as follows:


	Three Months Ended September 30,
	2026						2025
	Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses:
Beginning of period	$	176,727	$	16,166	$	192,893	$	237,433	$	15,556	$	252,989
Credit loss (benefit) expense	(13,886)		(441)		(14,327)		46,390		(483)		45,907

Charge-offs	(38,650)		(350)		(39,000)		(47,886)		—		(47,886)
Recoveries	11,981		349		12,330		16,620		144		16,764
End of period	$	136,172	$	15,724	$	151,896	$	252,557	$	15,217	$	267,774

Reserve for unfunded lending commitments:
Beginning of period	$	—	$	633	$	633	$	—	$	1,585	$	1,585
Credit loss (benefit) expense	—		(122)		(122)		—		287		287
End of period(1)	$	—	$	511	$	511	$	—	$	1,872	$	1,872


	Nine Months Ended September 30,
	2026						2025
	Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses:
Beginning of period	$	258,811	$	16,932	$	275,743	$	212,598	$	24,136	$	236,734
Credit loss (benefit) expense	(22,971)		(1,395)		(24,366)		143,471		(586)		142,885

Charge-offs	(137,689)		(508)		(138,197)		(155,186)		(9,130)		(164,316)
Recoveries	38,021		695		38,716		51,674		797		52,471
End of period	$	136,172	$	15,724	$	151,896	$	252,557	$	15,217	$	267,774

Reserve for unfunded lending commitments:
Beginning of period	$	—	$	1,009	$	1,009	$	—	$	1,183	$	1,183
Credit loss (benefit) expense	—		(498)		(498)		—		689		689
End of period(1)	$	—	$	511	$	511	$	—	$	1,872	$	1,872

(1) Relates to $29.9 million and $114.4 million of unfunded commitments as of September 30, 2026 and 2025, respectively.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

As a result of the Company’s election of the fair value option, all loan originations in the first nine months of 2026 were accounted for at fair value. See “Note 1. Summary of Significant Accounting Policies” for additional information. Accordingly, no originations subsequent to 2025 are presented in the tables below.

The following table presents charge-offs by origination year for the first nine months of 2026:



	Gross Charge-Offs by Origination Year
	2025		2024		2023		2022		Prior		Total
Unsecured consumer(1)	$	59,408	$	38,507	$	18,247	$	16,694	$	2,833	$	135,689
Residential mortgages	—		—		—		—		—		—
Secured consumer	690		277		522		428		83		2,000






Total consumer loans held for investment at amortized cost	60,098		38,784		18,769		17,122		2,916		137,689
Equipment finance	—		—		—		—		—		—
Commercial real estate	—		—		—		—		—		—
Commercial and industrial	—		—		32		317		159		508
Total commercial loans and leases held for investment at amortized cost	—		—		32		317		159		508

Total loans and leases held for investment at amortized cost	$	60,098	$	38,784	$	18,801	$	17,439	$	3,075	$	138,197

(1) Unsecured consumer loans are generally charged-off when a borrower is contractually 120 days past due.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Consumer Lending Credit Quality Indicators

The Company evaluates the credit quality of its consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is based upon borrower payment activity relative to the contractual terms of the loan. The following tables present the classes of financing receivables within the consumer portfolio segment by credit quality indicator based on delinquency status and origination year:


September 30, 2026	Term Loans and Leases by Origination Year
	2025		2024		2023		2022		Prior		Total
Unsecured consumer
Current	$	1,081,822	$	407,229	$	159,161	$	115,792	$	4,682	$	1,768,686
30-59 days past due	8,492		4,402		2,164		1,904		219		17,181
60-89 days past due	7,494		3,521		1,515		1,301		174		14,005
90 or more days past due	7,220		3,597		1,619		1,387		164		13,987
Total unsecured consumer	1,105,028		418,749		164,459		120,384		5,239		1,813,859
Residential mortgages
Current	—		—		—		35,746		105,297		141,043
30-59 days past due	—		—		—		—		313		313
60-89 days past due	—		—		—		2,707		—		2,707
90 or more days past due	—		—		—		—		—		—
Total residential mortgages	—		—		—		38,453		105,610		144,063
Secured consumer
Current	89,782		28,184		23,857		12,829		3,354		158,006
30-59 days past due	1,145		396		499		571		94		2,705
60-89 days past due	475		48		97		156		13		789
90 or more days past due	125		95		38		20		—		278
Total secured consumer	91,527		28,723		24,491		13,576		3,461		161,778






Total consumer loans held for investment at amortized cost	$	1,196,555	$	447,472	$	188,950	$	172,413	$	114,310	$	2,119,700

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)


December 31, 2025	Term Loans and Leases by Origination Year
	2025		2024		2023		2022		2021		Prior		Total
Unsecured consumer
Current	$	1,741,108	$	740,483	$	326,147	$	283,513	$	39,605	$	—	$	3,130,856
30-59 days past due	9,084		5,680		3,533		3,591		603		—		22,491
60-89 days past due	6,500		5,447		2,887		3,051		665		—		18,550
90 or more days past due	4,862		6,049		3,105		3,223		697		—		17,936
Total unsecured consumer(1)	1,761,554		757,659		335,672		293,378		41,570		—		3,189,833
Residential mortgages
Current	—		—		—		40,931		50,129		59,039		150,099
30-59 days past due	—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		888		888
90 or more days past due	—		—		—		—		—		86		86
Total residential mortgages	—		—		—		40,931		50,129		60,013		151,073
Secured consumer
Current	134,255		47,453		42,332		26,961		3,769		2,278		257,048
30-59 days past due	778		261		816		941		210		—		3,006
60-89 days past due	131		128		109		177		51		—		596
90 or more days past due	78		31		133		153		—		—		395
Total secured consumer	135,242		47,873		43,390		28,232		4,030		2,278		261,045






Total consumer loans held for investment at amortized cost	$	1,896,796	$	805,532	$	379,062	$	362,541	$	95,729	$	62,291	$	3,601,951

(1) Excludes the basis adjustment for loans previously designated in fair value hedges under the portfolio layer method. See “Note 7. Derivative Instruments and Hedging Activities” for additional information.

Commercial Lending Credit Quality Indicators

The Company evaluates the credit quality of its commercial loan portfolio based on regulatory risk ratings. The Company categorizes loans and leases into risk ratings based on relevant information about the quality and realizable value of collateral, if any, and the ability of obligors to service their debts, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans and leases based on their associated credit risk and performs this analysis whenever credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans. Risk rating classifications consist of the following:

Pass – Loans and leases that the Company believes will fully repay in accordance with the contractual loan terms.

Special Mention – Loans and leases with a potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the Company’s credit position at some future date.

Substandard – Loans and leases that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans and leases so classified have a well-defined weakness or weaknesses that jeopardize the repayment and liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Normal payment from the borrower is in jeopardy, although loss of principal, while still possible, is not imminent.

Doubtful – Loans and leases that have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Loss – Loans and leases that are considered uncollectible and of little value.

The following tables present the classes of financing receivables within the commercial portfolio segment by risk rating and origination year:


September 30, 2026	Term Loans and Leases by Origination Year
	2025		2024		2023		2022		Prior		Total		Guaranteed Amount(1)
Equipment finance
Pass	$	—	$	—	$	—	$	17,588	$	7,953	$	25,541	$	—
Special mention	—		—		—		1,723		—		1,723		—
Substandard	—		—		—		—		2,513		2,513		—
Doubtful	—		—		—		694		—		694		—
Loss	—		—		—		—		—		—		—
Total equipment finance	—		—		—		20,005		10,466		30,471		—
Commercial real estate
Pass	100,970		35,480		61,261		90,714		144,388		432,813		28,257
Special mention	—		520		—		436		1,515		2,471		697
Substandard	—		—		1,764		419		15,556		17,739		4,782
Doubtful	—		—		—		—		60		60		—
Loss	—		—		—		701		581		1,282		1,045
Total commercial real estate	100,970		36,000		63,025		92,270		162,100		454,365		34,781
Commercial and industrial
Pass	22,959		23,886		9,930		11,718		23,601		92,094		62,918
Special mention	593		1,996		2,890		5,669		—		11,148		8,401
Substandard	—		2,557		8,943		11,028		5,320		27,848		18,994
Doubtful	—		—		—		2,542		1,440		3,982		3,335
Loss	—		751		1,736		3,635		1,198		7,320		7,320
Total commercial and industrial	23,552		29,190		23,499		34,592		31,559		142,392		100,968
Total commercial loans and leases held for investment at amortized cost	$	124,522	$	65,190	$	86,524	$	146,867	$	204,125	$	627,228	$	135,749

(1) Represents loan balances guaranteed by the SBA.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)


December 31, 2025	Term Loans and Leases by Origination Year
	2025		2024		2023		2022		2021		Prior		Total		Guaranteed Amount(1)
Equipment finance
Pass	$	—	$	—	$	—	$	21,283	$	1,990	$	9,762	$	33,035	$	—
Special mention	—		—		—		2,587		227		—		2,814		—
Substandard	—		—		—		—		3,212		—		3,212		—
Doubtful	—		—		—		696		—		—		696		—
Loss	—		—		—		—		—		—		—		—
Total equipment finance	—		—		—		24,566		5,429		9,762		39,757		—
Commercial real estate
Pass	95,736		36,356		63,750		94,771		32,452		121,231		444,296		30,959
Special mention	—		—		—		—		—		6,088		6,088		—
Substandard	—		—		—		428		8,433		11,370		20,231		7,005
Doubtful	—		—		—		—		—		61		61		—
Loss	—		—		—		1,121		271		421		1,813		1,543
Total commercial real estate	95,736		36,356		63,750		96,320		41,156		139,171		472,489		39,507
Commercial and industrial
Pass	21,987		28,942		16,580		18,108		19,441		7,879		112,937		75,216
Special mention	—		—		—		8,535		2,959		67		11,561		9,264
Substandard	—		1,438		8,275		5,153		3,126		3,010		21,002		13,790
Doubtful	—		—		—		3,456		1,348		511		5,315		4,353
Loss	—		751		1,766		3,686		—		—		6,203		6,203
Total commercial and industrial	21,987		31,131		26,621		38,938		26,874		11,467		157,018		108,826
Total commercial loans and leases held for investment at amortized cost	$	117,723	$	67,487	$	90,371	$	159,824	$	73,459	$	160,400	$	669,264	$	148,333

(1) Represents loan balances guaranteed by the SBA.

The following tables present loans and leases HFI at amortized cost within the commercial portfolio segment by delinquency status:


September 30, 2026	Current		30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	$	27,264	$	—	$	—	$	3,207	$	30,471
Commercial real estate	447,212		441		1,181		5,531		454,365
Commercial and industrial	109,800		4,661		351		27,580		142,392
Total commercial loans and leases held for investment at amortized cost	$	584,276	$	5,102	$	1,532	$	36,318	$	627,228


December 31, 2025	Current		30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	$	35,973	$	696	$	—	$	3,088	$	39,757
Commercial real estate	461,307		—		—		11,182		472,489
Commercial and industrial	133,526		1,540		1,878		20,074		157,018
Total commercial loans and leases held for investment at amortized cost	$	630,806	$	2,236	$	1,878	$	34,344	$	669,264

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Loan Modifications

The Company has loan modification programs to assist borrowers experiencing financial difficulty and to mitigate losses and maximize collections for loans serviced by the Company. The table below presents the amortized cost of loans that were modified during the periods presented, by modification type:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2026			2025			2026			2025





Short-term payment reduction	$	3,839		$	5,298		$	12,758		$	15,373
Permanent loan modification	1,605			2,187			4,204			4,872
Debt settlement	2,890			2,845			2,938			2,939
Total loan modifications – unsecured consumer loans	$	8,334		$	10,330		$	19,900		$	23,184

% of unsecured consumer loans at amortized cost as of period end	0.5		%	0.3		%	1.1		%	0.7		%

The Company expanded its digital channels to enable borrowers experiencing financial difficulty to qualify for a short-term payment reduction modification program. Under this program, borrowers may receive a temporary payment reduction for three months. If the borrower meets the temporary payment reduction requirements during the first three-month term, they may qualify for a payment reduction for an additional three months. Receiving an additional three months of payment reduction is considered an other-than-insignificant payment delay and becomes a short-term payment reduction modification. The short-term payment reduction modification results in a term extension of four to nine months compared to the original maturity date of the loan and does not include any principal or interest forgiveness. At the time of receiving a payment reduction, a delinquent loan resets to current status. However, if a borrower fails to comply with the modified terms, the delinquency status returns to the original contractual terms of the loan. Borrowers who were in their first three months of temporary payment reduction had a total of $9.0 million of loan balances at amortized cost outstanding as of September 30, 2026, and may subsequently be eligible for a short-term payment reduction modification.

Permanent loan modifications include both a reduction in contractual interest rates and an extension to the contractual maturity date of up to twelve months and do not include any principal forgiveness. To qualify for this modification, borrowers must meet the Company’s debt-to-income ratio requirements. During the third quarter and first nine months of 2026, the weighted-average interest rate reduction under this program was approximately 9.7% and 9.2%, respectively. During the third quarter and first nine months of 2025, the weighted-average interest rate reduction under this program was approximately 8.3% and 8.2%, respectively. The weighted-average maturity date extension was approximately twelve months for all periods.

Debt settlement modifications, which include engaging with debt settlement companies, reduce the principal and interest amounts owed by borrowers. The Company typically charges-off such loans within a few months following the modification, as payments under the modified agreement are less than the original contractual amounts.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following table presents the delinquency status of the amortized cost of loan modifications as of the periods presented below that were modified during the preceding twelve months:



	September 30, 2026						September 30, 2025
	Short-term Payment Reduction		Permanent Loan Modification		Debt Settlement		Short-term Payment Reduction		Permanent Loan Modification		Debt Settlement
Unsecured consumer loans
Current	$	12,223	$	4,813	$	4	$	15,252	$	5,605	$	40
30-59 days	1,214		198		—		1,376		174		37
60-89 days	979		115		322		1,313		88		164
90 or more days	1,019		114		2,612		1,096		205		2,698
Total loan modifications	$	15,435	$	5,240	$	2,938	$	19,037	$	6,072	$	2,939

A modified loan is generally charged-off in the event of a borrower defaulting at 120 days past due. The table below presents the total amount of charge-offs during the period for loan modifications that were entered into within the preceding twelve months of charge-off:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025





Short-term payment reduction	$	1,507	$	2,193	$	5,297	$	6,911
Permanent loan modification	234		367		901		1,270
Debt settlement	6,346		8,466		22,357		30,631
Total loan modifications – unsecured consumer loans	$	8,087	$	11,026	$	28,555	$	38,812

Nonaccrual Assets

Nonaccrual loans and leases are those for which accrual of interest has been suspended. Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual.

Certain loans on nonaccrual status may be considered collateral-dependent loans if the borrower is experiencing financial difficulty and repayment of the loan is expected to be substantially through sale of the collateral. Such loans are secured by various types of collateral, including real estate, auto and equipment, among others. Expected credit losses for the Company’s collateral-dependent loans are calculated as the difference between the amortized cost basis and the fair value of the underlying collateral less costs to sell, if applicable. The fair value of the underlying collateral is generally based on third-party appraisals, which are updated on a case-by-case basis.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following table presents nonaccrual loans and leases HFI at amortized cost:


	September 30, 2026				December 31, 2025
	Nonaccrual		Nonaccrual with no related ACL(1)		Nonaccrual		Nonaccrual with no related ACL(1)
Unsecured consumer	$	13,987	$	—	$	17,936	$	—
Residential mortgages	—		—		431		431
Secured consumer	278		—		395		—

Total nonaccrual consumer loans held for investment at amortized cost	14,265		—		18,762		431

Equipment finance	3,207		—		3,088		—
Commercial real estate	5,952		5,099		11,253		5,799
Commercial and industrial	34,414		11,193		27,329		10,137
Total nonaccrual commercial loans and leases held for investment at amortized cost(2)	43,573		16,292		41,670		15,936

Total nonaccrual loans and leases held for investment at amortized cost	$	57,838	$	16,292	$	60,432	$	16,367

(1) Subset of total nonaccrual loans and leases HFI at amortized cost.

(2) Includes $31.1 million and $29.7 million in loan balances guaranteed by the SBA as of September 30, 2026 and December 31, 2025, respectively.


	September 30, 2026				December 31, 2025
	Nonaccrual		Nonaccrual Ratios(1)		Nonaccrual		Nonaccrual Ratios(1)
Total nonaccrual consumer loans held for investment at amortized cost	$	14,265	0.7	%	$	18,762	0.5	%
Total nonaccrual commercial loans and leases held for investment at amortized cost	43,573		6.9	%	41,670		6.2	%
Total nonaccrual loans and leases held for investment at amortized cost	$	57,838	2.1	%	$	60,432	1.4	%

(1) Calculated as the ratio of nonaccrual loans and leases to loans and leases HFI at amortized cost.

5. Fair Value Measurements

For a description of the fair value hierarchy and the Company’s fair value methodologies, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report. The Company records certain assets and liabilities at fair value as listed in the following tables.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Recurring Fair Value Measurements

The following tables present, by level within the fair value hierarchy, the Company’s assets and liabilities measured at fair value on a recurring basis:


September 30, 2026	Level 1		Level 2		Level 3		Balance at Fair Value
Assets:
Loans held for sale at fair value	$	—	$	—	$	2,063,910	$	2,063,910


Loans held for investment at fair value	—		—		3,139,008		3,139,008
Securities available for sale:
Senior asset-backed securities related to Structured Program transactions	—		—		3,264,002		3,264,002
Other asset-backed securities related to Structured Program transactions	—		—		258,263		258,263
U.S. agency residential mortgage-backed securities	—		255,612		—		255,612
U.S. agency securities	—		66,124		—		66,124
Mortgage-backed securities	—		50,818		—		50,818
Municipal securities	—		2,353		—		2,353
Other securities	—		13,347		10,538		23,885

Total securities available for sale	—		388,254		3,532,803		3,921,057
Servicing assets	—		—		77,310		77,310
Other assets	—		26,507		—		26,507
Total assets	$	—	$	414,761	$	8,813,031	$	9,227,792

Liabilities:



Other liabilities	$	—	$	2,366	$	—	$	2,366
Total liabilities	$	—	$	2,366	$	—	$	2,366

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)


December 31, 2025	Level 1		Level 2		Level 3		Balance at Fair Value
Assets:
Loans held for sale at fair value	$	—	$	—	$	1,762,396	$	1,762,396


Loans held for investment at fair value	—		—		473,314		473,314
Securities available for sale:
Senior asset-backed securities related to Structured Program transactions	—		—		3,092,410		3,092,410
U.S. agency residential mortgage-backed securities	—		236,061		—		236,061
Other asset-backed securities related to Structured Program transactions	—		—		219,370		219,370
U.S. agency securities	—		73,862		—		73,862
Mortgage-backed securities	—		55,597		—		55,597
Municipal securities	—		2,606		—		2,606
Other securities	—		16,720		10,083		26,803

Total securities available for sale	—		384,846		3,321,863		3,706,709
Servicing assets	—		—		65,167		65,167
Other assets	—		2,099		—		2,099
Total assets	$	—	$	386,945	$	5,622,740	$	6,009,685

Liabilities:



Other liabilities	$	—	$	3,918	$	1,865	$	5,783
Total liabilities	$	—	$	3,918	$	1,865	$	5,783

Financial instruments are categorized in the valuation hierarchy based on the significance of observable or unobservable factors in the overall fair value measurement. For the financial instruments listed in the tables above that do not trade in an active market with readily observable prices, the Company uses significant unobservable inputs to measure the fair value of these assets and liabilities. The Company primarily uses a discounted cash flow (DCF) model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses inputs that inherently require judgment and reflect the Company’s best estimates of the assumptions a market participant would use to calculate fair value. The Company did not transfer any assets or liabilities in or out of Level 3 during the third quarters and first nine months of 2026 or 2025.

The following significant unobservable inputs, as applicable, were used in the fair value measurement of the Company’s Level 3 assets:

•Discount rate – The weighted-average rate at which the expected cash flows are discounted to arrive at the net present value of the loan. The discount rate is primarily determined based on the Company’s estimate of market participants’ return expectations.

•Annualized net charge-off rate – The annualized rate of lifetime charge-offs, net of recoveries, expressed as a percentage of the average lifetime principal balance of loan pools with similar risk characteristics.

•Annualized prepayment rate – The annualized rate of lifetime prepayments expressed as a percentage of the average lifetime principal balance of loan pools with similar risk characteristics.

An increase in each of the inputs above, in isolation, would result in a decrease in the fair value measurement.

The sensitivity calculations are hypothetical and should not be considered to be predictive of future performance. The effect on fair value of a variation in assumptions generally cannot be determined because the relationship of the

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

change in assumptions to the fair value may not be linear. Changes in one factor may lead to changes in other factors, which could impact the hypothetical results.

Loans Held for Sale at Fair Value

Significant Unobservable Inputs

The following significant unobservable inputs were used in the fair value measurement of HFS loans:


	September 30, 2026						December 31, 2025
	Minimum		Maximum		Weighted- Average(1)		Minimum		Maximum		Weighted- Average(1)
Discount rate	7.4	%	9.5	%	8.0	%	6.6	%	9.0	%	7.1	%
Annualized net charge-off rate	3.4	%	12.5	%	7.0	%	3.3	%	16.0	%	6.3	%
Annualized prepayment rate	21.0	%	27.9	%	26.2	%	20.5	%	26.0	%	25.5	%

(1) The weighted-average rate is calculated using the principal balance of each loan pool with similar risk characteristics.

Fair Value Sensitivity

The sensitivity of HFS loans at fair value to adverse changes in key assumptions was as follows:


	September 30, 2026		December 31, 2025
Loans held for sale at fair value	$	2,063,910	$	1,762,396
Expected remaining weighted-average life (in years)	1.2		1.4
Discount rate:
100 basis point increase	$	(23,201)	$	(21,458)
200 basis point increase	$	(45,939)	$	(42,471)
Annualized net charge-off rate:
10% increase	$	(28,376)	$	(20,970)
20% increase	$	(56,598)	$	(41,766)
Annualized prepayment rate:
10% increase	$	(9,729)	$	(5,703)
20% increase	$	(17,804)	$	(10,546)

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Reconciliation

The following table presents the activity for HFS loans at fair value:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Fair value at beginning of period	$	1,773,052	$	1,008,168	$	1,762,396	$	636,352
Originations	2,144,436		1,986,261		5,880,166		4,904,306
Sales	(1,537,053)		(1,627,461)		(4,736,769)		(3,941,556)
Principal payments	(229,902)		(113,826)		(630,857)		(283,488)

Realized charge-offs, net of recoveries, recorded in earnings	(23,059)		(6,445)		(53,619)		(17,812)
Fair value adjustments recorded in earnings(1)	(63,564)		(33,557)		(157,407)		(84,662)
Fair value at end of period	$	2,063,910	$	1,213,140	$	2,063,910	$	1,213,140

(1) Includes unrealized fair value adjustments related to HFS loans at fair value held at the end of the periods presented of $(20.2) million and $0.1 million for the third quarters of 2026 and 2025, respectively, and $(47.4) million and $(4.4) million for the first nine months of 2026 and 2025, respectively.

The following table summarizes the aggregate fair value of the Company’s HFS loans as of the periods presented, as well as the amount that was 90 days or more past due:


	September 30, 2026				December 31, 2025
	Total		90 or more days past due		Total		90 or more days past due
Aggregate unpaid principal balance	$	2,144,750	$	9,248	$	1,795,818	$	3,931
Cumulative fair value adjustments	(80,840)		(7,556)		(33,422)		(3,176)
Fair value of loans held for sale	$	2,063,910	$	1,692	$	1,762,396	$	755

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Loans Held for Investment at Fair Value

Effective January 1, 2026, the Company elected the fair value option for HFI loans originated on or after that date. As a result, the current period includes all newly originated loans across multiple products, including unsecured consumer loans (personal loans and purchase finance loans), auto loans, and small business loans. In periods prior to this election, the Company’s HFI loan portfolio measured at fair value consisted solely of purchased unsecured personal loans that it had previously originated and sold. Accordingly, the significant unobservable inputs presented in the table below reflect a different loan product mix in the current period compared to the prior period.

Significant Unobservable Inputs

The following significant unobservable inputs were used in the fair value measurement of HFI loans:


	September 30, 2026						December 31, 2025
	Minimum		Maximum		Weighted- Average(1)		Minimum		Maximum		Weighted- Average(1)
Discount rate	6.2	%	11.4	%	7.5	%	6.5	%	8.5	%	7.0	%
Annualized net charge-off rate	0.2	%	14.1	%	4.6	%	4.1	%	19.1	%	7.4	%
Annualized prepayment rate	18.2	%	47.3	%	25.8	%	19.6	%	21.1	%	20.0	%

(1) The weighted-average rate is calculated using the principal balance of each loan pool with similar risk characteristics.

Fair Value Sensitivity

The sensitivity of HFI loans at fair value to adverse changes in key assumptions was as follows:


	September 30, 2026		December 31, 2025
Loans held for investment at fair value	$	3,139,008	$	473,314
Expected remaining weighted-average life (in years)	1.7		0.7
Discount rate:
100 basis point increase	$	(44,515)	$	(2,832)
200 basis point increase	$	(87,673)	$	(5,633)
Annualized net charge-off rate:
10% increase	$	(28,680)	$	(5,738)
20% increase	$	(57,525)	$	(13,161)
Annualized prepayment rate:
10% increase	$	(9,613)	$	(2,490)
20% increase	$	(18,946)	$	(4,979)

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Reconciliation

The following table presents the activity for HFI loans at fair value:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Fair value at beginning of period	$	2,085,066	$	631,736	$	473,314	$	1,027,798
Originations	1,177,900		—		3,227,025		—

Purchases	280,130		—		366,365		12,744
Principal payments	(345,963)		(152,131)		(778,345)		(554,918)

Realized charge-offs, net of recoveries, recorded in earnings	(14,967)		(10,777)		(25,248)		(52,260)
Fair value adjustments recorded in earnings(1)	(43,158)		8,956		(124,103)		44,420


Fair value at end of period	$	3,139,008	$	477,784	$	3,139,008	$	477,784

(1) Represents unrealized fair value adjustments recorded in earnings related to HFI loans at fair value held at the end of the periods presented.

The following table summarizes the aggregate fair value of the Company’s HFI loans at fair value as of the periods presented, as well as the amount that was 90 days or more past due:


	September 30, 2026				December 31, 2025
	Total		90 or more days past due		Total		90 or more days past due
Aggregate unpaid principal balance	$	3,307,287	$	11,103	$	495,649	$	5,177
Cumulative fair value adjustments	(168,279)		(9,188)		(22,335)		(4,183)
Fair value of loans held for investment	$	3,139,008	$	1,915	$	473,314	$	994

Asset-Backed Securities Related to Structured Program Transactions

Senior Asset-Backed Securities Related to Structured Program Transactions

Significant Unobservable Inputs

The following significant unobservable input, which includes credit spreads, was used in the fair value measurement of senior asset-backed securities related to Structured Program transactions:


	September 30, 2026						December 31, 2025
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rate	5.7	%	7.4	%	6.1	%	5.0	%	5.4	%	5.2	%

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Sensitivity

The sensitivity in the fair value of senior asset-backed securities related to Structured Program transactions to adverse changes in key assumptions was as follows:


	September 30, 2026		December 31, 2025
Fair value of interests held	$	3,264,002	$	3,092,410
Expected remaining weighted-average life (in years)	1.1		1.1
Discount rate:
100 basis point increase	$	(34,696)	$	(32,467)
200 basis point increase	$	(69,392)	$	(64,934)

Fair Value Reconciliation

The following table presents the activity for senior asset-backed securities related to Structured Program transactions:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Fair value at beginning of period	$	3,394,054	$	2,962,475	$	3,092,410	$	2,899,824
Additions	440,958		605,040		1,754,218		1,424,927


Cash received	(551,343)		(435,499)		(1,539,831)		(1,185,450)
Change in unrealized (loss) gain recorded in other comprehensive income	(19,667)		6,802		(42,795)		(483)

Fair value at end of period	$	3,264,002	$	3,138,818	$	3,264,002	$	3,138,818

Other Asset-Backed Securities Related to Structured Program Transactions

Significant Unobservable Inputs

The following significant unobservable inputs were used in the fair value measurement of other asset-backed securities related to Structured Program transactions:


	September 30, 2026						December 31, 2025
	Minimum		Maximum		Weighted- Average(1)		Minimum		Maximum		Weighted- Average(1)
Discount rate	7.4	%	8.0	%	7.8	%	6.6	%	8.6	%	6.9	%
Annualized net charge-off rate	3.4	%	6.6	%	5.6	%	3.1	%	6.2	%	5.0	%
Annualized prepayment rate	21.2	%	28.6	%	27.0	%	22.8	%	27.4	%	25.8	%

(1) The weighted-average rate is calculated using the principal balance of each security.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Sensitivity

The sensitivity in the fair value of other asset-backed securities related to Structured Program transactions to adverse changes in key assumptions was as follows:


	September 30, 2026		December 31, 2025
Fair value of interests held	$	258,263	$	219,370
Expected remaining weighted-average life (in years)	1.1		1.2
Discount rate:
100 basis point increase	$	(2,664)	$	(2,285)
200 basis point increase	$	(5,278)	$	(4,529)
Annualized net charge-off rate:
10% increase	$	(2,820)	$	(2,077)
20% increase	$	(5,646)	$	(4,112)
Annualized prepayment rate:
10% increase	$	(1,179)	$	(674)
20% increase	$	(2,156)	$	(1,227)

Fair Value Reconciliation

The following table presents the activity for other asset-backed securities related to Structured Program transactions:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Fair value at beginning of period	$	257,820	$	184,032	$	219,370	$	169,948
Additions	44,098		51,096		157,086		111,720

Cash received	(41,724)		(27,612)		(113,418)		(73,537)
Credit loss benefit (expense) for securities available for sale	1,481		(86)		1,593		(588)
Change in unrealized loss recorded in other comprehensive income	(1,470)		(305)		(3,453)		(418)
Change in unrealized loss recorded in net fair value adjustments	(1,942)		—		(2,915)		—

Fair value at end of period	$	258,263	$	207,125	$	258,263	$	207,125

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Servicing Assets

Significant Unobservable Inputs

The following significant unobservable inputs were used in the fair value measurement for servicing assets related to loans sold to investors:


	September 30, 2026						December 31, 2025
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rate	9.0	%	16.2	%	10.3	%	8.9	%	16.2	%	10.4	%
Annualized net charge-off rate(1)	3.4	%	12.1	%	6.0	%	3.3	%	19.5	%	6.5	%
Annualized prepayment rate(1)	20.9	%	27.9	%	26.5	%	19.9	%	25.9	%	24.6	%
Market servicing rate(2)	0.51	%	0.51	%	0.51	%	0.58	%	0.58	%	0.58	%

(1) The weighted-average rate is calculated using the principal balance of each loan pool with similar risk characteristics.

(2) The fees a willing market participant would require for the servicing of loans with similar characteristics as those in the Company’s serviced portfolio.

Fair Value Sensitivity

The sensitivity of the fair value of servicing assets to adverse changes in key assumptions was as follows:


	September 30, 2026		December 31, 2025
Fair value of servicing assets	$	77,310	$	65,167
Expected remaining weighted-average life (in years)	1.2		1.2
Discount rate:
100 basis point increase	$	(687)	$	(567)
200 basis point increase	$	(1,374)	$	(1,134)
Annualized net charge-off rate:
10% increase	$	(638)	$	(536)
20% increase	$	(1,275)	$	(1,071)
Annualized prepayment rate:
10% increase	$	(2,394)	$	(1,892)
20% increase	$	(4,789)	$	(3,785)

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The Company’s selection of the most representative market servicing rates for servicing assets inherently require judgment. The Company reviews third-party servicing rates for its loans, loans in similar credit sectors, and market servicing benchmarking analyses provided by third-party valuation firms, when available. The table below shows the impact on the estimated fair value of servicing assets, calculated using different market servicing rate assumptions:


	September 30, 2026			December 31, 2025
Weighted-average market servicing rate assumptions	0.51		%	0.58		%
Change in fair value from:
Market servicing rate increase by 0.10%	$	(8,016)		$	(7,289)
Market servicing rate decrease by 0.10%	$	8,016		$	7,289

Fair Value Reconciliation

The following table presents activity for servicing assets:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Fair value at beginning of period	$	72,974	$	57,909	$	65,167	$	60,697
Issuances(1)	20,608		19,326		60,826		47,261
Change in fair value(2)	(16,272)		(11,912)		(48,683)		(42,635)

Fair value at end of period	$	77,310	$	65,323	$	77,310	$	65,323

(1) Represents the servicing assets recorded when the loans are sold. Included in “Gain on sales of loans” on the Income Statement.

(2) Included in “Servicing fees” on the Income Statement.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Financial Instruments Not Recorded at Fair Value

The following tables present the carrying amount and estimated fair values, by level within the fair value hierarchy, of the Company’s assets and liabilities that are not recorded at fair value on a recurring basis:


September 30, 2026	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets:
Loans and leases held for investment at amortized cost, net	$	2,595,032	$	—	$	—	$	2,724,244	$	2,724,244


Other assets	52,729		—		52,729		—		52,729
Total assets	$	2,647,761	$	—	$	52,729	$	2,724,244	$	2,776,973

Liabilities:
Deposits(1)	$	3,345,583	$	—	$	—	$	3,341,269	$	3,341,269








Other liabilities	33,195		—		15,395		17,800		33,195
Total liabilities	$	3,378,778	$	—	$	15,395	$	3,359,069	$	3,374,464


December 31, 2025	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets:

Loans and leases held for investment at amortized cost, net	$	3,997,069	$	—	$	—	$	4,251,852	$	4,251,852
Other assets	47,470		—		47,312		453		47,765

Total assets	$	4,044,539	$	—	$	47,312	$	4,252,305	$	4,299,617

Liabilities:
Deposits(1)	$	2,434,422	$	—	$	—	$	2,437,209	$	2,437,209


Other liabilities	40,931		—		11,926		29,005		40,931
Total liabilities	$	2,475,353	$	—	$	11,926	$	2,466,214	$	2,478,140

(1) Excludes deposit liabilities with no defined or contractual maturities.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

6. Structured Program Transactions and Variable Interest Entities

The Company’s VIEs relate to its Structured Program transactions. As of both September 30, 2026 and December 31, 2025, the Company did not consolidate any VIEs. Accordingly, holders of the related securities can look only to the assets of the VIEs that issued the securities and there is no direct recourse to the Company’s assets.

The following table presents the classifications of assets and liabilities on the Company’s Balance Sheet for its transactions with unconsolidated VIEs:


	September 30, 2026		December 31, 2025

Assets


Securities available for sale at fair value	$	3,522,265		$	3,311,780




Other assets	64,831			53,660
Total assets	3,587,096			3,365,440
Liabilities



Other liabilities	—			1,023
Total liabilities	—			1,023
Total net assets (maximum loss exposure)	$	3,587,096		$	3,364,417

Maximum loss exposure represents estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is extremely remote, such as where the value of interests declines to zero. Accordingly, this required disclosure is not an indication of expected losses.

The following table summarizes activity related to unconsolidated VIEs where the transfers were accounted for as a sale on the Company’s financial statements:


	Three Months Ended September 30,				Nine Months Ended September 30,

	2026		2025		2026		2025


Fair value of consideration received:
Cash	$	400,835	$	365,603	$	1,270,786	$	696,657
Net securities retained from Structured Program transactions	485,056		656,136		1,866,888		1,536,647
Other assets, net	11,521		12,090		38,711		28,746
Total consideration	897,412		1,033,829		3,176,385		2,262,050
Fair value of loans sold	(886,310)		(1,022,384)		(3,139,314)		(2,235,652)



Gain on sales of loans(1)	$	11,102	$	11,445	$	37,071	$	26,398

Cash proceeds from continuing involvement:
Servicing and other administrative fees	$	13,074	$	9,311	$	36,602	$	27,057


Interest received on securities retained from Structured Program transactions	$	51,621	$	51,058	$	153,364	$	152,339

(1) Consists primarily of servicing assets recognized at the time of loan sale, less any transaction costs, and excludes origination fees and fair value adjustments recognized prior to the sale.

As of September 30, 2026, the aggregate unpaid principal balance attributable to off-balance sheet loans held by unconsolidated VIEs was $5.3 billion, of which $84.7 million was 30 days or more past due. As of December 31, 2025, the aggregate unpaid principal balance attributable to off-balance sheet loans held by unconsolidated VIEs was $4.4 billion, of which $64.9 million was 30 days or more past due. For such loans, the Company would only

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

experience a loss if it was required to repurchase a loan due to a breach in representations and warranties associated with its loan sale or servicing contracts.

7. Derivative Instruments and Hedging Activities

The Company uses derivative instruments, including interest rate contracts such as caps and swaps, to manage exposure to interest rate risk associated with its fixed-rate assets. The Company’s interest rate contracts are indexed to the Secured Overnight Financing Rate (SOFR). Interest rate swaps involve the payment of fixed-rate amounts to a counterparty in exchange for the receipt of variable-rate payments. With interest rate caps, the Company receives payments from a counterparty when SOFR exceeds a specified strike rate.

Derivatives Not Designated as Accounting Hedges

During the first quarter of 2026, the Company voluntarily de-designated all of its interest rate swaps previously designated as fair value hedges. Following de-designation, changes in the fair value of these derivatives as well as the associated interest settlements are recorded in “Net fair value adjustments” on the Income Statement, and the remaining unamortized basis adjustments on the previously hedged items were amortized through interest income over the remaining life of the underlying instruments. As of September 30, 2026, the basis adjustments on the previously hedged items have been fully amortized.

The table below presents the notional and gross fair value amounts of the Company’s derivatives:


	September 30, 2026						December 31, 2025
	Notional		Derivative Asset(1)		Derivative Liability(1)		Notional		Derivative Asset(1)		Derivative Liability(1)

Credit derivatives	$	—	$	—	$	—	$	3,737	$	—	$	(1,327)

Interest rate contracts:
Interest rate caps	775,000		12,302		—		325,000		528		—
Interest rate swaps	1,675,000		12,116		(277)		125,000		—		(234)
Total interest rate contracts	$	2,450,000	$	24,418	$	(277)	$	450,000	$	528	$	(234)

Total	$	2,450,000	$	24,418	$	(277)	$	453,737	$	528	$	(1,561)

(1) Recorded in “Other assets” or “Other liabilities” on a net basis, as applicable, on the Balance Sheet and in “Operating activities” on the Statement of Cash Flows.

The table below presents the gains (losses) recognized on the Company’s derivatives:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Credit derivatives(1)	$	—	$	1,387	$	289	$	3,503
Interest rate contracts:
Fair value adjustments	15,115		(456)		21,379		(526)
Interest rate settlements(2)	207		—		30		—
Total interest rate contracts(3)	$	15,322	$	(456)	$	21,409	$	(526)


Total gains	$	15,322	$	931	$	21,698	$	2,977

(1) The initial fair value of the credit derivative liabilities is recorded in “Gain on sales of loans” with incremental changes in the fair value recorded in “Net fair value adjustments,” both on the Income Statement.

(2) Includes accrued interest receivable and payable.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

(3) Recorded in “Net fair value adjustments” on the Income Statement.

Derivatives Designated as Accounting Hedges

As of September 30, 2026, there were no derivatives designated as hedging instruments. Prior period amounts in the tables below reflect periods in which hedge accounting was applied.

The table below presents the notional and gross fair value amounts of the Company’s interest rate swaps that were designated as fair value hedges:


	December 31, 2025
		Notional		Derivative Asset(1)		Derivative Liability(1)

Unsecured consumer loans		$	575,000	$	81	$	(1,566)
Securities available for sale		475,000		146		(774)
Total interest rate swaps		$	1,050,000	$	227	$	(2,340)

(1) Recorded in “Other assets” or “Other liabilities,” as applicable, on the Balance Sheet and in “Operating activities” on the Statement of Cash Flows.

The following table summarizes the gain (loss) recognized on the Company’s fair value hedges:


	Three Months Ended September 30, 2025		Nine Months Ended September 30, 2025


Gains (losses) recognized on:
Unsecured consumer loans:
Hedged item	$	(39)	$	(192)
Derivatives	29		99
Interest settlement on derivative(1)	350		(38)
Total gain (loss) on hedged unsecured consumer loans(2)	340		(131)

Securities available for sale:
Hedged item	438		2,680
Derivatives	(426)		(2,772)
Interest settlement on derivative(1)	733		2,048
Total gain on hedged securities available for sale(3)	745		1,956

Total gain on fair value hedges	$	1,085	$	1,825

(1) Includes accrued interest receivable and payable.

(2) Recorded in “Interest on loans” on the Income Statement.

(3) Recorded in “Interest on securities available for sale” on the Income Statement.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following table presents the cumulative basis adjustments for fair value hedges:


	December 31, 2025
Balance Sheet Line Item		Carrying Amount of Closed Portfolio(1)		Cumulative Fair Value Adjustment Included in the Carrying Amount of the Hedged Items
Loans and leases held for investment at amortized cost		$	1,283,622	$	1,597
Securities available for sale		$	1,091,921	$	727

(1) Represents the total closed portfolio of assets (at amortized cost) designated in a portfolio method hedge relationship in which the hedged item is a stated layer that is expected to be remaining at the end of the hedging relationship. At December 31, 2025, the amortized cost of unsecured consumer loans and AFS securities, designated as the hedged items in the portfolio layer hedging relationship, was $575.0 million and $475.0 million, respectively.

8. Property, Equipment and Software, Net

Property, equipment and software, net, consist of the following:


	September 30, 2026		December 31, 2025
Software(1)	$	279,974	$	259,773
Land, building and building improvements(2)	97,942		81,601
Leasehold improvements	9,994		30,686
Computer equipment	8,170		5,829
Furniture and fixtures	4,483		5,554
Total property, equipment and software	400,563		383,443
Accumulated depreciation and amortization	(123,566)		(129,355)
Total property, equipment and software, net	$	276,997	$	254,088

(1) Includes $41.2 million and $28.3 million of development in progress for internally-developed software and $7.5 million and $6.8 million of development in progress to customize purchased software as of September 30, 2026 and December 31, 2025, respectively.

(2) Includes $7.7 million of building improvements in progress as of December 31, 2025.

Depreciation and amortization expense on property, equipment and software was $16.3 million and $46.8 million for the third quarter and first nine months of 2026, respectively. Depreciation and amortization expense on property, equipment and software was $16.0 million and $43.9 million for the third quarter and first nine months of 2025, respectively.

The Company recognized impairment expense of $2.1 million on its internally-developed software for the first nine months of 2026. This was recorded within “Depreciation and amortization” expense on the Income Statement. No impairment expense was recorded for the third quarter of 2026 or third quarter and first nine months of 2025.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

9. Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance was $75.7 million as of both September 30, 2026 and December 31, 2025. The Company did not record any goodwill impairment expense during the third quarters and first nine months of 2026 and 2025. Goodwill is not amortized, but is subject to annual impairment tests that are performed in the fourth quarter of each calendar year. For additional detail, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report.

Intangible Assets

Intangible assets consist primarily of customer relationships. These intangible assets are amortized on an accelerated basis from ten to fourteen years.

Intangible assets, net of accumulated amortization, are included in “Other assets” on the Balance Sheet. The gross and net carrying values and accumulated amortization were as follows:


	September 30, 2026		December 31, 2025
Gross carrying value	$	56,490	$	56,490
Accumulated amortization	(51,082)		(49,071)
Net carrying value	$	5,408	$	7,419

Amortization expense associated with intangible assets for the third quarter and first nine months of 2026 was $0.6 million and $2.0 million, respectively. Amortization expense associated with intangible assets for the third quarter and first nine months of 2025 was $0.9 million and $2.4 million, respectively. There was no impairment loss for the third quarters and first nine months of 2026 and 2025.

The expected future amortization expense for intangible assets as of September 30, 2026, is as follows:


2026	$	625
2027	1,943
2028	1,179
2029	729
2030	456
Thereafter	476
Total	$	5,408

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

10. Other Assets

Other assets consist of the following:


	September 30, 2026		December 31, 2025
Deferred tax assets, net(1)	$	99,835	$	96,159
Servicing assets(2)	77,357		65,326
Accrued interest receivable	52,729		43,918
Nonmarketable equity investments	49,950		48,462
Operating lease assets	8,461		12,942
Intangible assets, net(3)	5,408		7,419
Other	128,297		93,860
Total other assets	$	422,037	$	368,086

(1) See “Note 15. Income Taxes” for additional detail.

(2) Loans underlying servicing assets had a total outstanding principal balance of $8.2 billion and $7.6 billion as of September 30, 2026 and December 31, 2025, respectively.

(3) See “Note 9. Goodwill and Intangible Assets” for additional detail.

11. Deposits

Deposits consist of the following:


	September 30, 2026		December 31, 2025
Interest-bearing deposits:
Savings and money market accounts	$	7,338,616	$	6,599,737
Certificates of deposit	3,345,583		2,434,422
Checking accounts	410,129		425,324
Total	11,094,328		9,459,483
Noninterest-bearing deposits	387,081		374,387
Total deposits	$	11,481,409	$	9,833,870

Total certificates of deposit at September 30, 2026 are scheduled to mature as follows:


2026	$	832,428
2027	2,374,090
2028	126,532
2029	10,529
2030	1,270
Thereafter	734
Total certificates of deposit(1)	$	3,345,583

(1) Certificates of deposit in excess of the FDIC insurance limit of $250 thousand per account holder totaled $168.6 million at September 30, 2026.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

12. Borrowings

The Company did not have any debt outstanding as of September 30, 2026 or December 31, 2025.

Borrowing Capacity

The following table summarizes the Company’s available borrowing capacity and the related pledged collateral:


	September 30, 2026				December 31, 2025
	Available Borrowing Capacity		Pledged Collateral(1)		Available Borrowing Capacity		Pledged Collateral(2)
FRB Discount Window	$	3,507,526	$	4,607,077	$	3,294,827	$	4,245,845
FHLB of Des Moines	674,957		849,098		679,361		861,913
Total	$	4,182,483	$	5,456,175	$	3,974,188	$	5,107,758

(1) As of September 30, 2026, the Company had $4.6 billion in loans pledged under the Federal Reserve System (FRB) Discount Window, and $469.2 million in loans and $379.9 million in securities available for sale at fair value pledged to the Federal Home Loan Bank (FHLB) of Des Moines.

(2) As of December 31, 2025, the Company had $4.2 billion in loans pledged under the FRB Discount Window, and $486.2 million in loans and $375.7 million in securities available for sale at fair value pledged to the FHLB of Des Moines.

13. Other Liabilities

Other liabilities consist of the following:


	September 30, 2026		December 31, 2025
Accounts payable and accrued expenses	$	94,253	$	87,341
Due to borrowers(1)	22,908		60,254
Payable to investors(2)	15,395		11,926
Operating lease liabilities	10,341		15,826


Other	69,435		58,171
Total other liabilities	$	212,332	$	233,518

(1) Represents originated loans for which disbursement of funds is pending to borrowers.

(2) Represents principal and interest on loans collected by the Company and pending disbursement to investors.

14. Equity

Share Repurchases

On November 4, 2025, the Company’s Board of Directors approved a program to repurchase and acquire up to $100 million of the Company’s common stock through December 31, 2026. During the nine months ended September 30, 2026, the Company repurchased 1,718,407 shares of Happen, Inc. common stock on the open market at an average price of $16.61 per share and retired those shares upon repurchase.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Employee Incentive Plans

The Company’s equity incentive plans provide for granting awards, including restricted stock units (RSUs), performance-based restricted stock units (PBRSUs), cash awards and stock options to employees, officers and directors.

Stock-based Compensation

Stock-based compensation expense, included in “Compensation and benefits” expense on the Income Statement, was as follows for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
RSUs	$	6,571	$	8,473	$	20,808	$	26,783
PBRSUs	1,019		1,104		3,282		3,221

Stock-based compensation expense, gross	7,590		9,577		24,090		30,004
Less: Capitalized stock-based compensation expense	813		1,078		2,785		3,921
Stock-based compensation expense, net	$	6,777	$	8,499	$	21,305	$	26,083

Restricted Stock Units

The following table summarizes the Company’s RSU activity:


	Number of Units	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2025	4,278,687	$	10.73
Granted	2,078,328	$	15.67
Vested	(2,402,475)	$	9.91
Forfeited	(650,313)	$	12.96
Unvested at September 30, 2026	3,304,227	$	13.99

During the first nine months of 2026, the Company granted 2,078,328 RSUs with an aggregate fair value of $32.6 million.

As of September 30, 2026, there was $40.2 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.8 years, subject to any future forfeitures.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Performance-based Restricted Stock Units

The Company’s outstanding PBRSU awards consist of awards with a market-based metric and awards with an operating-based metric, all with a three-year performance period, following which any earned portion is immediately vested. With respect to PBRSU awards with a market-based metric, the compensation expense of the award is fixed at the time of grant (incorporating the probability of achieving the market-based metric) and expensed over the performance period. With respect to PBRSU awards with an operating-based metric, the compensation expense of the award is set at the time of grant (assuming a target level of achievement), subsequently adjusted for actual performance during the performance period and expensed over the performance/vesting period.

The following table summarizes the Company’s PBRSU activity:


	Number of Units	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2025	1,160,819	$	8.86
Granted	641,982	$	14.72
Vested	(485,134)	$	7.62
Forfeited	(59,877)	$	13.34
Unvested at September 30, 2026	1,257,790	$	12.11

During the first nine months of 2026, the Company granted 641,982 PBRSUs with an aggregate fair value of $9.4 million.

As of September 30, 2026, there was $8.4 million of unrecognized compensation cost related to unvested PBRSUs, which is expected to be recognized over a weighted-average period of approximately 1.6 years, subject to any future forfeitures.

15. Income Taxes

For the third quarter and first nine months of 2026, the Company recorded an income tax expense of $17.5 million and $50.7 million, respectively, representing an effective tax rate of 22.8% and 23.1%, respectively. For the third quarter and first nine months of 2025, the Company recorded an income tax expense of $13.0 million and $32.8 million, respectively, representing an effective tax rate of 22.6% and 25.8%, respectively. The effective tax rate differs from the federal statutory rate primarily due to state taxes, the favorable impact of recurring items such as tax credits, the unfavorable impact of the non-deductible portions of executive compensation, and the net discrete impact of stock-based compensation. The decrease in the effective tax rate for the first nine months of 2026 compared to the first nine months of 2025 was primarily driven by the discrete tax expense recognized in the second quarter of 2025 related to the revaluation of the Company’s deferred tax assets following the enactment of California Senate Bill 132 on June 27, 2025, and the reduction in the overall effective state tax rate resulting from the law’s requirement that banks and financial companies use a single-sales-factor apportionment formula, effective for tax years beginning in 2025.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following table summarizes the Company’s net deferred tax assets:


	September 30, 2026		December 31, 2025
Deferred tax assets, net of liabilities	$	147,882	$	144,206
Valuation allowance	(48,047)		(48,047)
Deferred tax assets, net of valuation allowance	$	99,835	$	96,159

16. Leases

Lessee Arrangements

Following the expiration of its prior headquarters’ lease, the Company relocated its headquarters in April 2026 to an office building in San Francisco, California that it purchased in the previous year.

The Company has various operating leases for office space in the Salt Lake City, Utah area, Boston, Massachusetts, and New York, New York, with remaining lease terms ranging from approximately one to three years as of September 30, 2026.

Balance sheet information related to leases was as follows:


ROU Assets and Lease Liabilities	Balance Sheet Classification	September 30, 2026		December 31, 2025
Operating lease assets	Other assets	$	8,461	$	12,942
Operating lease liabilities	Other liabilities	$	10,341	$	15,826

Net lease costs were $1.2 million and $5.6 million during the third quarter and first nine months of 2026, respectively. Such costs are recorded within “Occupancy” expense on the Income Statement. Net lease costs were $2.7 million and $8.2 million during the third quarter and first nine months of 2025, respectively.

The Company’s future minimum undiscounted lease payments under operating leases as of September 30, 2026 were as follows:


	Operating Lease Payments
2026	$	1,235
2027	5,010
2028	4,046
2029	909


Total lease payments	$	11,200
Discount effect	(859)
Present value of future minimum lease payments	$	10,341

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:


Lease Term and Discount Rate	September 30, 2026		December 31, 2025
Weighted-average remaining lease term (in years)	2.31		2.64
Weighted-average discount rate	4.33	%	4.56	%

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Lessor Arrangements

Operating Leases

The Company leases space in its office building to third-party tenants under operating lease agreements with initial term expiration dates extending until 2034. Some of the agreements include options to extend the lease term for an additional five years.

Rental income earned from such leases was as follows for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Rental income(1)	$	1,577	$	3,263	$	4,984	$	5,117

(1) Recorded in “Other non-interest income” on the Income Statement.

Future fixed lease payments to be received by the Company as of September 30, 2026, under non-cancelable operating leases, were as follows:


2026	$	1,123
2027	3,386
2028	2,491
2029	1,968
2030	1,990
Thereafter	6,215
Total lease payments	$	17,173

Sales-type Leases

The Company has sales-type leases for equipment (Equipment Finance). Such arrangements may include options to renew or to purchase the leased equipment at the end of the lease term.

Interest earned on Equipment Finance was as follows for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Interest earned(1)	$	412	$	644	$	1,393	$	2,200

(1) Recorded in “Interest on loans” on the Income Statement.

The components of Equipment Finance assets are as follows:


	September 30, 2026		December 31, 2025
Lease receivables	$	14,554	$	25,384
Unguaranteed residual asset values	18,411		17,907
Unearned income	(2,590)		(3,690)
Deferred costs	96		156
Total	$	30,471	$	39,757

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Future minimum lease payments based on maturity of the Company’s sales-type leases as of September 30, 2026 were as follows:


2026	$	2,590
2027	7,382
2028	3,685
2029	1,344


Total lease payments	$	15,001
Discount effect	(447)
Present value of future minimum lease payments	$	14,554

17. Commitments and Contingencies

Operating Lease Commitments

For discussion regarding the Company’s operating lease commitments, see “Note 16. Leases.”

Loan Repurchase Obligations

The Company is generally required to repurchase loans or interests therein from marketplace investors in cases of (i) confirmed identity theft or certain other types of fraud on the part of the borrower or a service provider; (ii) certain failures of loans to comply with the investor’s purchase order or as an investor accommodation; or (iii) confirmed material breach of representations made with respect to such loans that result in a material adverse effect on such loan. The Company believes such provisions are customary and consistent with institutional loan and securitization market standards.

Unfunded Lending Commitments

As of September 30, 2026 and December 31, 2025, the contractual amount of unfunded lending commitments totaled $136.8 million and $98.2 million, respectively, of which $29.9 million and $52.0 million, respectively, are commitments for loans (at amortized cost) to be funded. See “Note 4. Loans” for additional detail related to the reserve for unfunded lending commitments.

Legal

The Company is subject to various claims brought in a litigation or regulatory context. These include lawsuits and regulatory exams, investigations, inquiries and enforcement actions. In the past, the Company has successfully resolved such matters in a manner that was not material to its results of financial operations in any period and that did not materially limit the Company’s ability to conduct its business. However, no assurances can be given as to the timing, outcome or consequences of these matters or other similar matters if, or as, they arise.

In accordance with applicable accounting standards, the Company accrues for costs related to contingencies when a loss from such claims is probable and the amount of loss can be reasonably estimated. In determining whether a loss from a claim is probable and the loss can be reasonably estimated, the Company reviews and evaluates its litigation and regulatory matters on at least a quarterly basis in light of potentially relevant factual and legal developments. If the Company determines an unfavorable outcome is not probable or the amount of loss cannot be reasonably estimated, the Company does not accrue for a potential litigation loss. In those situations, the Company discloses an estimate or range of the reasonably possible losses, if such estimates can be made. At this time, the Company does

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

not believe that it is possible to estimate the reasonably possible losses or a range of reasonably possible losses related to the matter described below.

Putative Class Action

In August 2026, a putative class action lawsuit was filed against the Company in the U.S. District Court for the Northern District of California (Mammini v. Happen, Inc. (f/k/a LendingClub Corporation), Microsoft Corporation, and The Trade Desk, Inc., No. 3:26-cv-08979-RFL) alleging that the Company’s website improperly collected and shared certain customer information for advertising purposes. The plaintiff seeks to certify a class of similarly situated persons and requests declaratory, monetary and injunctive relief. The Company has not yet filed a formal response to plaintiff’s complaint, but will vigorously defend against the allegations. No assurances can be given as to the timing, outcome or consequences of this matter.

18. Regulatory Requirements

Happen, Inc. and Happen Bank are subject to comprehensive supervision, examination and enforcement, and regulation by the FRB and the Office of the Comptroller of the Currency (OCC), respectively, including generally similar capital adequacy requirements adopted by both agencies.

These requirements establish required minimum ratios for Common Equity Tier 1 (CET1) risk-based capital, Tier 1 risk-based capital, total risk-based capital and a Tier 1 leverage ratio; set risk-weighting for assets and certain other items for purposes of the risk-based capital ratios; and define what qualifies as capital for purposes of meeting the capital requirements. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company. The minimum capital requirements under the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (Basel III) capital framework are: a CET1 risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a Tier 1 leverage ratio of 4.0%. Additionally, a capital conservation buffer of 2.5% must be maintained above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases, and certain discretionary bonus payments. In addition to these guidelines, the regulators assess any particular institution’s capital adequacy based on numerous factors and may require a particular banking organization to maintain capital at levels higher than the generally applicable minimums prescribed under the Basel III capital framework. The Federal Deposit Insurance Act provides for a system of “prompt corrective action” (PCA). The PCA framework provides for capitalization categories ranging from “well-capitalized” to “critically undercapitalized.” An institution’s PCA category is determined primarily by its regulatory capital ratios. The PCA requires remedial actions and imposes limitations that become increasingly stringent as its PCA capitalization category declines, including the ability to accept and/or rollover brokered deposits. At September 30, 2026 and December 31, 2025, the Company’s and Happen Bank’s regulatory capital ratios exceeded the thresholds required to be regarded as “well-capitalized” institutions and met all capital adequacy requirements to which they are subject. There have been no events or conditions since September 30, 2026 that management believes would change the Company’s categorization.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following table presents the actual capital amounts and ratios of the Company and Happen Bank as well as the regulatory minimum and “well capitalized” requirements (dollars in millions):


	September 30, 2026				December 31, 2025				Required Minimum(1)		Well-Capitalized Minimum
	Amount		Ratio		Amount		Ratio
Happen, Inc.:
CET1 capital(2)	$	1,498.1	15.7	%	$	1,342.6	17.4	%	7.0	%	N/A
Tier 1 capital	$	1,498.1	15.7	%	$	1,342.6	17.4	%	8.5	%	6.0	%
Total capital	$	1,617.4	17.0	%	$	1,441.0	18.7	%	10.5	%	10.0	%
Tier 1 leverage	$	1,498.1	12.0	%	$	1,342.6	12.0	%	4.0	%	N/A
Risk-weighted assets	$	9,513.9	N/A		$	7,696.1	N/A		N/A		N/A
Quarterly adjusted average assets	$	12,527.1	N/A		$	11,174.0	N/A		N/A		N/A

Happen Bank:
CET1 capital(2)	$	1,390.6	14.7	%	$	1,183.9	15.5	%	7.0	%	6.5	%
Tier 1 capital	$	1,390.6	14.7	%	$	1,183.9	15.5	%	8.5	%	8.0	%
Total capital	$	1,509.2	16.0	%	$	1,281.8	16.8	%	10.5	%	10.0	%
Tier 1 leverage	$	1,390.6	11.1	%	$	1,183.9	10.7	%	4.0	%	5.0	%
Risk-weighted assets	$	9,449.4	N/A		$	7,652.0	N/A		N/A		N/A
Quarterly adjusted average assets	$	12,475.1	N/A		$	11,090.4	N/A		N/A		N/A

N/A – Not applicable

(1) Required minimums presented for risk-based capital ratios include the required capital conservation buffer of 2.5%.

(2) CET1 capital consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including deductions for goodwill and other intangible assets.

Federal laws and regulations limit the ability of national banks, such as Happen Bank, to pay dividends based upon, among other things, maintaining required levels of regulatory capital and retained net profits for the preceding two calendar years plus retained net profits up to the date of any dividend declaration in the current calendar year. Retained net profits, as defined by the OCC, consist of net income less dividends declared during the period. During the first quarter of 2025, Happen Bank paid a $50 million cash dividend to Happen, Inc. to return a capital contribution made by Happen, Inc. to Happen Bank in the second half of 2024. Happen Bank has not otherwise declared any dividends.

Federal law restricts the amount and the terms of both credit and non-credit transactions between a bank and its nonbank affiliates. These covered transactions may not exceed 10% of the bank’s capital and surplus (which for this purpose represents tier 1 and tier 2 capital, as calculated under the risk-based capital rules, plus the balance of the ACL excluded from tier 2 capital) with any single nonbank affiliate and 20% of the bank’s capital and surplus with all its nonbank affiliates. Covered transactions that are extensions of credit may require collateral to be pledged to provide added security to the bank.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

19. Segment Reporting

Reportable Segments

The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Chief Operating Decision Maker (CODM) to allocate resources and evaluate financial performance. The measure of segment profit used by the CODM in this evaluation is net income. The CODM consists of the Company’s Chief Executive Officer and Chief Financial Officer. This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, Happen Bank, which are both considered reportable segments. Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return.

Happen Bank

The Happen Bank operating segment represents the national bank legal entity and reflects operating activities after its formation. This segment provides a full complement of financial products and solutions, including loans and deposits. It originates loans to individuals and businesses, retains loans for investment, sells loans to marketplace investors and manages relationships with deposit holders.

Happen, Inc. (Parent Only)

The Happen, Inc. (Parent only) operating segment represents the holding company legal entity and predominately reflects the operations of the Company prior to the formation of Happen Bank. This activity includes, but is not limited to, servicing fee revenue on purchased servicing assets, and interest income and interest expense related to transactions entered into prior to Happen Bank’s formation.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Financial information for the segments is presented in the following tables:


	Happen Bank				Happen, Inc. (Parent only)				Total Reportable Segments

Three Months Ended September 30,	2026		2025		2026		2025		2026		2025
Interest income:
Interest income	$	278,062	$	241,616	$	240	$	185	$	278,302	$	241,801
Interest expense	(95,231)		(83,362)		—		—		(95,231)		(83,362)
Net interest income	182,831		158,254		240		185		183,071		158,439

Non-interest income:

Origination fees(1)	173,226		105,762		(6)		(31)		173,220		105,731
Servicing fees(1)	7,837		5,350		4,313		6,764		12,150		12,114
Gain on sales of loans(1)	19,608		17,799		—		—		19,608		17,799
Net fair value adjustments(1)	(131,664)		(39,071)		255		696		(131,409)		(38,375)
Other non-interest income	9,540		13,601		488		1,762		10,028		15,363
Total non-interest income	78,547		103,441		5,050		9,191		83,597		112,632

Total net revenue	261,378		261,695		5,290		9,376		266,668		271,071

Provision for credit losses	15,930		(46,280)		—		—		15,930		(46,280)

Non-interest expense:
Compensation and benefits	(63,190)		(59,194)		(1,339)		(1,636)		(64,529)		(60,830)
Marketing	(72,763)		(40,712)		—		—		(72,763)		(40,712)
Equipment and software	(17,381)		(13,460)		(119)		(5)		(17,500)		(13,465)
Depreciation and amortization	(16,740)		(15,828)		(322)		(1,051)		(17,062)		(16,879)
Professional services	(10,821)		(10,797)		(68)		(125)		(10,889)		(10,922)
Occupancy	(3,044)		(3,304)		(600)		(1,941)		(3,644)		(5,245)
Other non-interest expense	(16,240)		(16,071)		(3,196)		(3,429)		(19,436)		(19,500)
Total non-interest expense	(200,179)		(159,366)		(5,644)		(8,187)		(205,823)		(167,553)

Income tax expense	(17,400)		(12,667)		(99)		(297)		(17,499)		(12,964)
Net income (loss)(2)	$	59,729	$	43,382	$	(453)	$	892	$	59,276	$	44,274
Capital expenditures	$	18,203	$	21,003	$	—	$	—	$	18,203	$	21,003

(1) Prior period amounts have been reclassified to conform to the current period presentation. See “Note 1. Summary of Significant Accounting Policies” for additional information.

(2) Total net income from reportable segments reflects net income on a consolidated basis.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)


	Happen Bank				Happen, Inc. (Parent only)				Total Reportable Segments

Nine Months Ended September 30,	2026		2025		2026		2025		2026		2025
Interest income:
Interest income	$	807,716	$	710,329	$	728	$	628	$	808,444	$	710,957
Interest expense	(270,122)		(248,312)		—		—		(270,122)		(248,312)
Net interest income	537,594		462,017		728		628		538,322		462,645

Non-interest income:

Origination fees(1)	466,870		263,269		444		(16)		467,314		263,253
Servicing fees(1)	18,817		8,060		14,451		19,328		33,268		27,388
Gain on sales of loans(1)	57,338		43,541		—		—		57,338		43,541
Net fair value adjustments(1)	(342,924)		(99,396)		1,445		3,901		(341,479)		(95,495)
Other non-interest income	31,987		40,637		4,293		5,542		36,280		46,179
Total non-interest income	232,088		256,111		20,633		28,755		252,721		284,866

Total net revenue	769,682		718,128		21,361		29,383		791,043		747,511

Provision for credit losses	26,457		(144,162)		—		—		26,457		(144,162)

Non-interest expense:
Compensation and benefits	(194,013)		(176,264)		(4,251)		(4,944)		(198,264)		(181,208)
Marketing	(190,758)		(103,531)		—		—		(190,758)		(103,531)
Equipment and software	(48,488)		(42,553)		(151)		(51)		(48,639)		(42,604)
Depreciation and amortization	(49,474)		(42,622)		(1,559)		(3,626)		(51,033)		(46,248)
Professional services	(34,267)		(30,453)		(378)		(533)		(34,645)		(30,986)
Occupancy	(10,654)		(8,550)		(4,363)		(5,827)		(15,017)		(14,377)
Other non-interest expense	(50,464)		(46,075)		(8,920)		(11,403)		(59,384)		(57,478)
Total non-interest expense	(578,118)		(450,048)		(19,622)		(26,384)		(597,740)		(476,432)

Income tax expense	(49,469)		(31,073)		(1,264)		(1,721)		(50,733)		(32,794)
Net income(2)	$	168,552	$	92,845	$	475	$	1,278	$	169,027	$	94,123
Capital expenditures	$	71,954	$	124,763	$	—	$	—	$	71,954	$	124,763

(1) Prior period amounts have been reclassified to conform to the current period presentation. See “Note 1. Summary of Significant Accounting Policies” for additional information.

(2) Total net income from reportable segments reflects net income on a consolidated basis.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Total net revenue – reportable segments	$	266,668	$	271,071	$	791,043	$	747,511
Intercompany eliminations	(3,508)		(4,840)		(12,777)		(15,134)
Total net revenue – consolidated	$	263,160	$	266,231	$	778,266	$	732,377

Each expense item reported above represents the Company’s “significant segment expenses” as they are separately evaluated by the CODM, with the exception of “Other non-interest expense” which represents “other segment items” and encompasses various miscellaneous operating expenses.

HAPPEN, INC.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)


	Happen Bank				Happen, Inc. (Parent only)				Total Reportable Segments
	September 30, 2026		December 31, 2025		September 30, 2026		December 31, 2025		September 30, 2026		December 31, 2025
Assets
Total cash and cash equivalents	$	769,343	$	901,246	$	92,705	$	127,087	$	862,048	$	1,028,333
Restricted cash	—		—		15,326		16,659		15,326		16,659
Securities available for sale at fair value	3,910,519		3,696,626		10,538		10,083		3,921,057		3,706,709
Loans held for sale at fair value	2,063,910		1,762,396		—		—		2,063,910		1,762,396
Loans held for investment at fair value	3,138,599		472,301		409		1,013		3,139,008		473,314
Loans and leases held for investment at amortized cost, net	2,595,032		3,997,069		—		—		2,595,032		3,997,069


Property, equipment and software, net	274,451		250,168		2,546		3,920		276,997		254,088
Investment in subsidiary	—		—		959,721		903,339		959,721		903,339
Goodwill	75,717		75,717		—		—		75,717		75,717
Other assets	397,745		316,488		25,125		72,323		422,870		388,811
Total assets	13,225,316		11,472,011		1,106,370		1,134,424		14,331,686		12,606,435
Liabilities and Equity
Total deposits	11,565,727		9,948,426		—		—		11,565,727		9,948,426




Other liabilities	182,002		217,930		31,163		36,313		213,165		254,243
Total liabilities	11,747,729		10,166,356		31,163		36,313		11,778,892		10,202,669
Total equity	1,477,587		1,305,655		1,075,207		1,098,111		2,552,794		2,403,766
Total liabilities and equity	$	13,225,316	$	11,472,011	$	1,106,370	$	1,134,424	$	14,331,686	$	12,606,435


	September 30, 2026		December 31, 2025
Total assets – reportable segments	$	14,331,686	$	12,606,435
Intercompany eliminations	(1,044,872)		(1,038,619)
Total assets – consolidated	$	13,286,814	$	11,567,816


	September 30, 2026		December 31, 2025
Total liabilities and equity – reportable segments	$	14,331,686	$	12,606,435
Intercompany eliminations – liabilities	(85,151)		(135,281)
Intercompany eliminations – equity	(959,721)		(903,338)
Total liabilities and equity – consolidated	$	13,286,814	$	11,567,816

Concentration and Geographic Information

No individual borrower or marketplace investor accounted for 10% or more of total net revenue for any of the periods presented. All of the Company’s revenue is generated in the United States, and all of the long-lived assets are based in the United States.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes that appear in this Quarterly Report on Form 10-Q (Report). In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in “Part I – Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (Annual Report) and, if applicable, as modified by “Part II – Item 1A. Risk Factors” in this Report. The forward-looking statements included in this Report are made only as of the date hereof and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Overview

On June 22, 2026, we changed our corporate name from LendingClub Corporation to Happen, Inc., and the name of our wholly-owned banking subsidiary from LendingClub Bank, National Association to Happen Bank, National Association (Happen Bank). Happen, Inc. operates a leading, nationally chartered, digital marketplace bank that leverages data and technology to increase access to credit, reduce borrowing costs, and improve returns on savings for our members. Happen, Inc. is registered as a bank holding company and operates the vast majority of its business through its wholly-owned subsidiary, Happen Bank.

Election of Fair Value Option

Effective January 1, 2026, we elected the fair value option to account for held for investment (HFI) loans that were originated on or after that date (fair value option election). Prior to this election, loans that were originated as HFI were, and will continue to be, accounted for at amortized cost, which required the initial recognition of a CECL allowance for lifetime expected credit losses. We believe that applying the fair value option, rather than amortized cost accounting with the CECL methodology, to HFI loans more accurately reflects the in-period economic performance of the loans by better aligning the value of the loan to its then fair value. Under the fair value option, origination fee revenue and marketing costs are recognized in earnings at the time of loan origination, rather than being deferred. Fair value adjustments on loans are recognized in current period earnings within “Net fair value adjustments” and include the impact of credit losses that previously would have been recorded as a provision expense under CECL. Further, by applying the fair value option to HFI loans, we are applying the same accounting methodology to all loans we originate on or after January 1, 2026, as both HFI and held for sale (HFS) loans are now measured at fair value.

Financial Highlights

We delivered several financial achievements in the third quarter of 2026, including record pre-tax income. This growth was primarily driven by an increase in loan origination volume, higher net interest income due to an increase in total interest-earning assets, as well as strong credit performance. Net income grew to $59.3 million, with diluted EPS of $0.50, compared to $44.3 million, with diluted EPS of $0.37, in the prior year.

The following tables summarize our selected financial data:


	As of and for the three months ended						As of and for the nine months ended September 30,
	September 30, 2026		June 30, 2026		September 30, 2025		2026		2025
Net interest income	$	183,071	$	179,017	$	158,439	$	538,322	$	462,645
Non-interest income	80,089		83,838		107,792		239,944		269,732
Total net revenue	263,160		262,855		266,231		778,266		732,377
Provision for credit losses	(15,930)		(10,917)		46,280		(26,457)		144,162
Non-interest expense	202,315		198,115		162,713		584,963		461,298

Income before income tax expense	76,775		75,657		57,238		219,760		126,917
Income tax expense	(17,499)		(17,509)		(12,964)		(50,733)		(32,794)
Net income	$	59,276	$	58,148	$	44,274	$	169,027	$	94,123


Diluted EPS	$	0.50	$	0.50	$	0.37	$	1.44	$	0.81














Total loan originations (in millions)(1)	$	3,336	$	3,145	$	2,656	$	9,151	$	7,121
Current period originations sold or held for sale	$	2,145	$	2,039	$	2,027	$	5,900	$	5,044
Current period originations held for investment	$	1,192	$	1,107	$	629	$	3,250	$	2,077



Total servicing portfolio (in millions)(2)	$	15,469	$	14,596	$	12,986
Loans serviced for others	$	8,133	$	8,231	$	7,612

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	As of and for the three months ended									As of and for the nine months ended September 30,
	September 30, 2026			June 30, 2026			September 30, 2025			2026			2025
Performance Metrics:
Net interest margin	6.05		%	6.14		%	6.18		%	6.15		%	6.10		%

Profit margin(3)	29.2		%	28.8		%	21.5		%	28.2		%	17.3		%
Return on average equity (ROE)(4)	15.0		%	15.1		%	12.4		%	14.6		%	9.1		%
Return on tangible common equity (ROTCE)(5)(6)	15.8		%	15.9		%	13.2		%	15.4		%	9.6		%
Return on average total assets (ROA)(7)	1.9		%	1.9		%	1.7		%	1.9		%	1.2		%

Marketing expense as a % of loan originations(1)	2.18		%	1.99		%	1.53		%	2.08		%	1.45		%


Average balance - total loans and leases held for investment	$	5,449,330		$	5,108,678		$	4,890,619		$	5,120,936		$	4,939,852
Net charge-offs - total loans and leases held for investment	$	41,637		$	40,599		$	41,899		$	124,729		$	164,105
Net charge-off ratio - total loans and leases held for investment(8)	3.1		%	3.2		%	3.4		%	3.2		%	4.4		%

Capital Metrics:
Common equity tier 1 capital ratio	15.7		%	16.9		%	18.0		%
Tier 1 leverage ratio	12.0		%	11.9		%	12.3		%
Book value per common share	$	13.81		$	13.58		$	12.68
Tangible book value per common share(6)	$	13.11		$	12.89		$	11.95

(1) Beginning in the first quarter of 2026, includes all loans originated during the respective periods (unsecured consumer loans, auto loans and small business loans). Previously this included unsecured consumer loans and auto loans only. Prior periods have been reclassified to conform to the current period presentation. See “Non-Interest Income” for additional information.

(2) Reflects loans serviced on our platform, which includes unsecured consumer loans and auto loans serviced for others for which servicing rights are retained by the Company.

(3) Calculated as the ratio of income before income tax expense to total net revenue.

(4) Calculated as annualized net income divided by average equity for the period presented.

(5) Calculated as annualized net income divided by average tangible common equity for the period presented.

(6) Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information.

(7) Calculated as annualized net income divided by average total assets for the period presented.

(8) Beginning in the first quarter of 2026, the net charge-off ratio is calculated as annualized net charge-offs for total loans and leases held for investment (at amortized cost and fair value) divided by average total outstanding loans and leases held for investment during the period. Prior to the first quarter of 2026, this was calculated based on loans and leases held for investment at amortized cost only. Prior period amounts have been reclassified to conform to the current period presentation.


	As of the period ended
	September 30, 2026		June 30, 2026		September 30, 2025


















Balance Sheet Data:


Securities available for sale	$	3,921,057	$	4,046,761	$	3,742,304
Loans held for sale	$	2,063,910	$	1,773,052	$	1,213,140






Loans and leases held for investment	$	5,734,040	$	5,078,318	$	4,573,425
Total loans and leases	$	7,797,950	$	6,851,370	$	5,786,565
Total assets	$	13,286,814	$	12,549,040	$	11,072,515
Total deposits(1)	$	11,481,409	$	10,765,267	$	9,388,233
Total liabilities	$	11,693,741	$	10,981,575	$	9,610,302
Total equity	$	1,593,073	$	1,567,465	$	1,462,213

(1) As of September 30, 2026, Federal Deposit Insurance Corporation (FDIC)-insured deposits represent approximately 89% of total deposits.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Credit Quality Indicators

We evaluate the credit quality of our loan and leases held for investment based on delinquency status and payment activity. The following tables present loans and leases held for investment (at amortized cost and fair value) by delinquency status:


September 30, 2026	Current		30-59 Days		60-89 Days		90 or More Days		Total		Guaranteed Amount(1)
Unsecured consumer	$	4,465,668	$	22,577	$	17,734	$	15,884	$	4,521,863	$	—
Residential mortgages	141,043		313		2,707		—		144,063		—
Secured consumer	498,492		3,047		874		296		502,709		—
Total consumer loans held for investment	5,105,203		25,937		21,315		16,180		5,168,635		—

Equipment finance(2)	27,264		—		—		3,207		30,471		—
Commercial real estate(3)	507,133		441		1,181		5,531		514,286		49,354
Commercial and industrial	139,952		4,661		351		27,580		172,544		123,740
Total commercial loans and leases held for investment	674,349		5,102		1,532		36,318		717,301		173,094
Total loans and leases held for investment	$	5,779,552	$	31,039	$	22,847	$	52,498	$	5,885,936	$	173,094


December 31, 2025	Current		30-59 Days		60-89 Days		90 or More Days		Total		Guaranteed Amount(1)
Unsecured consumer(4)	$	3,600,434	$	24,075	$	19,685	$	18,929	$	3,663,123	$	—
Residential mortgages	150,099		—		888		86		151,073		—
Secured consumer	257,063		3,015		596		395		261,069		—
Total consumer loans held for investment	4,007,596		27,090		21,169		19,410		4,075,265		—

Equipment finance(2)	35,973		696		—		3,088		39,757		—
Commercial real estate(3)	461,307		—		—		11,182		472,489		39,507
Commercial and industrial	133,526		1,540		1,878		20,074		157,018		108,826
Total commercial loans and leases held for investment	630,806		2,236		1,878		34,344		669,264		148,333
Total loans and leases held for investment	$	4,638,402	$	29,326	$	23,047	$	53,754	$	4,744,529	$	148,333

(1) Represents loan balances guaranteed by the Small Business Administration (SBA).

(2) Comprised of sales-type leases for equipment.

(3) Includes $332.2 million and $286.8 million in loans originated through the SBA as of September 30, 2026 and December 31, 2025, respectively.

(4) Excludes basis adjustment for loans previously designated in fair value hedges under the portfolio layer method of $1.6 million as of December 31, 2025.

The above summary should be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations in its entirety. For additional discussion related to our operating segments, see “Segment Information.”

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Results of Operations

The following tables set forth the Income Statement data for each of the periods presented:


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025(1)		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Interest income:



Interest on loans	$	216,027	$	206,397	$	179,158	5	%	21	%
Interest on securities available for sale	55,535		55,114		56,253		1	%	(1)	%
Other interest income	6,740		7,424		6,390		(9)	%	5	%
Total interest income	278,302		268,935		241,801		3	%	15	%

Interest expense:
Interest on deposits	95,226		89,916		83,221		6	%	14	%
Other interest expense	5		2		141		150	%	(96)	%
Total interest expense	95,231		89,918		83,362		6	%	14	%

Net interest income	183,071		179,017		158,439		2	%	16	%

Non-interest income:
Origination fees	173,220		164,006		105,731		6	%	64	%
Servicing fees	13,585		12,890		17,000		5	%	(20)	%
Gain on sales of loans	19,608		21,461		17,799		(9)	%	10	%
Net fair value adjustments	(131,409)		(121,145)		(38,375)		(8)	%	(242)	%
Other non-interest income	5,085		6,626		5,637		(23)	%	(10)	%
Total non-interest income	80,089		83,838		107,792		(4)	%	(26)	%

Total net revenue	263,160		262,855		266,231		—	%	(1)	%

Provision for credit losses	(15,930)		(10,917)		46,280		46	%	N/M

Non-interest expense:
Compensation and benefits	64,529		68,221		60,830		(5)	%	6	%
Marketing	72,763		62,580		40,712		16	%	79	%
Equipment and software	17,500		15,846		13,465		10	%	30	%
Depreciation and amortization	17,062		18,152		16,879		(6)	%	1	%
Professional services	10,889		11,989		10,922		(9)	%	—	%
Occupancy	3,644		4,982		5,245		(27)	%	(31)	%
Other non-interest expense	15,928		16,345		14,660		(3)	%	9	%
Total non-interest expense	202,315		198,115		162,713		2	%	24	%

Income before income tax expense	76,775		75,657		57,238		1	%	34	%
Income tax expense	(17,499)		(17,509)		(12,964)		—	%	35	%
Net income	$	59,276	$	58,148	$	44,274	2	%	34	%

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	Nine Months Ended September 30,
	2026		2025(1)		Change (%)
Interest income:



Interest on loans	$	622,321	$	519,976	20	%
Interest on securities available for sale	165,060		167,872		(2)	%
Other interest income	21,063		23,109		(9)	%
Total interest income	808,444		710,957		14	%

Interest expense:
Interest on deposits	270,113		248,166		9	%
Other interest expense	9		146		(94)	%
Total interest expense	270,122		248,312		9	%

Net interest income	538,322		462,645		16	%

Non-interest income:
Origination fees	467,314		263,253		78	%
Servicing fees	39,588		46,143		(14)	%
Gain on sales of loans	57,338		43,541		32	%
Net fair value adjustments	(341,479)		(95,495)		(258)	%
Other non-interest income	17,183		12,290		40	%
Total non-interest income	239,944		269,732		(11)	%

Total net revenue	778,266		732,377		6	%

Provision for credit losses	(26,457)		144,162		N/M

Non-interest expense:
Compensation and benefits	198,264		181,208		9	%
Marketing	190,758		103,531		84	%
Equipment and software	48,639		42,604		14	%
Depreciation and amortization	51,033		46,248		10	%
Professional services	34,645		30,986		12	%
Occupancy	15,017		14,377		4	%
Other non-interest expense	46,607		42,344		10	%
Total non-interest expense	584,963		461,298		27	%

Income before income tax expense	219,760		126,917		73	%
Income tax expense	(50,733)		(32,794)		55	%
Net income	$	169,027	$	94,123	80	%

(1) Prior period amounts have been reclassified to conform to the current period presentation. See “Notes to Condensed Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies” for additional information.

The analysis below is presented for the following periods: Third quarter of 2026 compared to the second quarter of 2026 (sequential), third quarter of 2026 compared to the third quarter of 2025 (year over year) and first nine months of 2026 compared to the first nine months of 2025 (nine months over nine months).

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Net Interest Income

The following tables present net interest income information for interest-earning assets and interest-bearing funding sources for the periods presented, as well as an analysis of changes in interest income and interest expense resulting from changes in volume and rate. The average yield/rate is calculated by dividing the annualized period-end interest income/expense by the average balance.


	Three Months Ended September 30, 2026						Three Months Ended June 30, 2026						Three Months Ended September 30, 2025
	Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Interest-earning assets(1)
Cash, cash equivalents, restricted cash and other	$	737,780	$	6,740	3.65	%	$	825,029	$	7,424	3.60	%	$	603,777	$	6,390	4.23	%
Securities available for sale at fair value	3,921,959		55,535		5.66	%	3,880,678		55,114		5.68	%	3,564,732		56,253		6.31	%
Loans held for sale at fair value	1,997,284		70,840		14.19	%	1,850,763		64,039		13.84	%	1,198,581		37,628		12.56	%








Loans held for investment at fair value	2,483,948		65,642		10.57	%	1,667,694		46,540		11.16	%	552,848		15,319		11.08	%
Loans and leases held for investment at amortized cost:
Unsecured consumer loans	2,012,504		65,449		13.01	%	2,438,480		80,830		13.26	%	3,268,142		110,151		13.48	%
Commercial and secured consumer loans	952,878		14,096		5.92	%	1,002,504		14,988		5.98	%	1,069,629		16,060		6.01	%
Loans and leases held for investment at amortized cost	2,965,382		79,545		10.73	%	3,440,984		95,818		11.14	%	4,337,771		126,211		11.64	%
Total loans and leases held for investment	5,449,330		145,187		10.66	%	5,108,678		142,358		11.15	%	4,890,619		141,530		11.58	%
Total interest-earning assets	12,106,353		278,302		9.20	%	11,665,148		268,935		9.22	%	10,257,709		241,801		9.43	%

Cash and due from banks and restricted cash	29,847						25,687						29,655
Allowance for loan and lease losses	(176,759)						(218,977)						(260,744)
Other non-interest earning assets	677,799						695,671						638,821
Total assets	$	12,637,240					$	12,167,529					$	10,665,441

Interest-bearing liabilities
Interest-bearing deposits:
Savings and money market accounts	$	7,151,790	$	65,027	3.61	%	$	6,897,169	$	61,372	3.57	%	$	6,442,649	$	61,782	3.80	%
Certificates of deposit	2,894,338		29,042		3.98	%	2,736,658		27,381		4.01	%	1,851,320		19,990		4.28	%
Checking accounts	384,163		1,157		1.19	%	389,934		1,163		1.20	%	406,494		1,449		1.41	%
Interest-bearing deposits	10,430,291		95,226		3.62	%	10,023,761		89,916		3.60	%	8,700,463		83,221		3.79	%

Other interest-bearing liabilities	435		5		3.87	%	220		2		3.81	%	12,174		141		4.61	%
Total interest-bearing liabilities	10,430,726		95,231		3.62	%	10,023,981		89,918		3.60	%	8,712,637		83,362		3.80	%

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	Three Months Ended September 30, 2026						Three Months Ended June 30, 2026						Three Months Ended September 30, 2025
	Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Noninterest-bearing deposits	331,612						343,281						291,231
Other liabilities	291,797						256,029						237,035
Total liabilities	$	11,054,135					$	10,623,291					$	9,240,903

Total equity	$	1,583,105					$	1,544,238					$	1,424,538
Total liabilities and equity	$	12,637,240					$	12,167,529					$	10,665,441

Interest rate spread					5.58	%					5.62	%					5.63	%

Net interest income and net interest margin			$	183,071	6.05	%			$	179,017	6.14	%			$	158,439	6.18	%

(1) Nonaccrual loans and any related income are included in their respective loan categories.


	Three Months Ended September 30, 2026 Compared to Three Months Ended June 30, 2026
	Increase (Decrease) Due to Change in:
	Average Volume(1)		Average Yield/Rate(1)		Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other	$	(794)	$	110	$	(684)
Securities available for sale at fair value	584		(163)		421
Loans held for sale at fair value	5,167		1,634		6,801

Loans held for investment at fair value	21,688		(2,586)		19,102
Loans and leases held for investment at amortized cost	(12,859)		(3,414)		(16,273)
Total increase (decrease) in interest income on interest-earning assets	$	13,786	$	(4,419)	$	9,367
Interest-bearing liabilities
Savings and money market accounts	$	2,830	$	825	$	3,655
Certificates of deposit	1,845		(184)		1,661
Checking accounts	(5)		(1)		(6)
Interest-bearing deposits	4,670		640		5,310
Other interest-bearing liabilities	3		—		3
Total increase in interest expense on interest-bearing liabilities	$	4,673	$	640	$	5,313

Increase (decrease) in net interest income	$	9,113	$	(5,059)	$	4,054

(1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
	Increase (Decrease) Due to Change in:
	Average Volume(1)		Average Yield/Rate(1)		Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other	$	1,298	$	(948)	$	350
Securities available for sale at fair value	5,350		(6,068)		(718)
Loans held for sale at fair value	27,798		5,414		33,212

Loans held for investment at fair value	51,065		(742)		50,323
Loans and leases held for investment at amortized cost	(37,430)		(9,236)		(46,666)
Total increase (decrease) in interest income on interest-earning assets	$	48,081	$	(11,580)	$	36,501
Interest-bearing liabilities
Savings and money market accounts	$	6,525	$	(3,280)	$	3,245
Certificates of deposit	10,534		(1,482)		9,052
Checking accounts	(76)		(216)		(292)
Interest-bearing deposits	16,983		(4,978)		12,005
Other interest-bearing liabilities	(117)		(19)		(136)
Total increase (decrease) in interest expense on interest-bearing liabilities	$	16,866	$	(4,997)	$	11,869

Increase (decrease) in net interest income	$	31,215	$	(6,583)	$	24,632

(1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	Nine Months Ended September 30, 2026						Nine Months Ended September 30, 2025
	Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Interest-earning assets(1)
Cash, cash equivalents, restricted cash and other	$	779,260	$	21,063	3.60	%	$	725,035	$	23,109	4.25	%
Securities available for sale at fair value	3,847,289		165,060		5.72	%	3,458,214		167,872		6.47	%
Loans held for sale at fair value	1,919,674		199,410		13.85	%	995,543		91,931		12.31	%
Loans held for investment at fair value	1,659,183		137,649		11.06	%	731,526		60,490		11.03	%
Loans and leases held for investment at amortized cost:
Unsecured consumer loans	2,458,479		241,042		13.07	%	3,181,224		322,703		13.53	%

Commercial and secured consumer loans	1,003,274		44,220		5.88	%	1,027,102		44,852		5.82	%
Loans and leases held for investment at amortized cost	3,461,753		285,262		10.99	%	4,208,326		367,555		11.65	%
Total loans and leases held for investment	5,120,936		422,911		11.01	%	4,939,852		428,045		11.55	%
Total interest-earning assets	11,667,159		808,444		9.24	%	10,118,644		710,957		9.37	%

Cash and due from banks and restricted cash	27,305						32,817
Allowance for loan and lease losses	(219,087)						(249,204)
Other non-interest earning assets	680,687						622,152
Total assets	$	12,156,064					$	10,524,409

Interest-bearing liabilities
Interest-bearing deposits:
Savings and money market accounts	$	6,916,254	$	185,112	3.58	%	$	6,172,137	$	176,597	3.81	%
Certificates of deposit	2,707,826		81,597		4.03	%	2,006,612		67,325		4.47	%
Checking accounts	389,317		3,404		1.17	%	420,964		4,244		1.34	%
Interest-bearing deposits	10,013,397		270,113		3.61	%	8,599,713		248,166		3.84	%


Other interest-bearing liabilities	293		9		3.83	%	4,234		146		4.57	%
Total interest-bearing liabilities	10,013,690		270,122		3.61	%	8,603,947		248,312		3.84	%

Noninterest-bearing deposits	336,334						298,348
Other liabilities	260,746						236,900
Total liabilities	$	10,610,770					$	9,139,195

Total equity	$	1,545,294					$	1,385,214
Total liabilities and equity	$	12,156,064					$	10,524,409

Interest rate spread					5.63	%					5.53	%

Net interest income and net interest margin			$	538,322	6.15	%			$	462,645	6.10	%

(1) Nonaccrual loans and any related income are included in their respective loan categories.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
	Increase (Decrease) Due to Change in:
	Average Volume(1)		Average Yield/Rate(1)		Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other	$	1,660	$	(3,706)	$	(2,046)
Securities available for sale at fair value	17,796		(20,608)		(2,812)
Loans held for sale at fair value	94,607		12,872		107,479

Loans held for investment at fair value	77,018		141		77,159
Loans and leases held for investment at amortized cost	(62,438)		(19,855)		(82,293)
Total increase (decrease) in interest income on interest-earning assets	$	128,643	$	(31,156)	$	97,487
Interest-bearing liabilities
Savings and money market accounts	$	20,410	$	(11,895)	$	8,515
Certificates of deposit	21,721		(7,449)		14,272
Checking accounts	(303)		(537)		(840)
Interest-bearing deposits	41,828		(19,881)		21,947
Other interest-bearing liabilities	(117)		(20)		(137)
Total increase (decrease) in interest expense on interest-bearing liabilities	$	41,711	$	(19,901)	$	21,810

Increase (decrease) in net interest income	$	86,932	$	(11,255)	$	75,677

(1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Non-Interest Income

Non-interest income consists of the following:


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Origination fees	$	173,220	$	164,006	$	105,731	6	%	64	%
Servicing fees	13,585		12,890		17,000		5	%	(20)	%
Gain on sales of loans	19,608		21,461		17,799		(9)	%	10	%
Net fair value adjustments	(131,409)		(121,145)		(38,375)		(8)	%	(242)	%





Other non-interest income	5,085		6,626		5,637		(23)	%	(10)	%
Total non-interest income	$	80,089	$	83,838	$	107,792	(4)	%	(26)	%


	Nine Months Ended September 30,
	2026		2025		Change (%)
Origination fees	$	467,314	$	263,253	78	%
Servicing fees	39,588		46,143		(14)	%
Gain on sales of loans	57,338		43,541		32	%
Net fair value adjustments	(341,479)		(95,495)		(258)	%





Other non-interest income	17,183		12,290		40	%
Total non-interest income	$	239,944	$	269,732	(11)	%

Origination Fees

Origination fees are fees charged to borrowers in connection with the origination of a loan. As a result of our fair value option election, origination fees for newly originated HFI loans are now recognized in earnings at the time of origination, rather than being deferred and recognized over time under amortized cost accounting. Accordingly, origination fee revenue beginning in the first quarter of 2026 includes revenue from both HFI and HFS loan originations, whereas prior periods reflect HFS loan originations only.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The following tables present loan origination volume during each of the periods set forth below, as well as the volume of loans originated under the fair value option, which is a key driver of origination fee revenue:


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Current period originations sold or held for sale	$	2,144,603	$	2,038,544	$	2,027,406	5	%	6	%
Current period originations held for investment	1,191,887		1,106,631		629,053		8	%	89	%
Total loan originations(1)	$	3,336,490	$	3,145,175	$	2,656,459	6	%	26	%

Fair value option loan originations	$	3,336,490	$	3,145,175	$	2,027,406	6	%	65	%


	Nine Months Ended September 30,
	2026		2025		Change (%)
Current period originations sold or held for sale	$	5,900,422	$	5,043,778	17	%
Current period originations held for investment	3,250,416		2,077,208		56	%
Total loan originations(1)	$	9,150,838	$	7,120,986	29	%

Fair value option loan originations	$	9,150,838	$	5,043,778	81	%

(1) Beginning in the first quarter of 2026, includes all loans originated during the respective periods (unsecured consumer loans, auto loans and small business loans). Previously this included unsecured consumer loans and auto loans only. In the third and second quarters of 2026, this update included small business loan originations of $54 million and $38 million, respectively. In the first nine months of 2026, this update included small business loan originations of $108 million. Prior periods have been reclassified to conform to the current period presentation.

Sequential: Origination fees were $173.2 million and $164.0 million for the third and second quarters of 2026, respectively, an increase of 6%.

Year Over Year: Origination fees were $173.2 million and $105.7 million for the third quarter of 2026 and 2025, respectively, an increase of 64%.

Nine Months Over Nine Months: Origination fees were $467.3 million and $263.3 million for the first nine months of 2026 and 2025, respectively, an increase of 78%.

The increases in origination fees were primarily driven by higher loan origination volume, including HFI loan originations which contribute to origination fee revenue following our election of the fair value option.

Servicing Fees

We receive servicing fees to compensate us for servicing loans on behalf of marketplace investors, including managing payments from borrowers and remittances to those investors. Servicing fee revenue related to loans sold also includes the change in fair value of servicing assets associated with the loans.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The tables below illustrate the average balance of loans sold and subsequently serviced on behalf of the investors on our marketplace platform (in millions):


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Average AUM – Loans sold	$	8,182	$	7,991	$	7,399	2	%	11	%


	Nine Months Ended September 30,
	2026		2025		Change (%)
Average AUM – Loans sold	$	7,929	$	7,284	9	%

In addition to the loans serviced on our marketplace platform, we serviced $33.7 million, $37.2 million and $53.0 million in outstanding principal balance of commercial loans sold as of September 30, 2026, June 30, 2026 and September 30, 2025, respectively.

Sequential: Servicing fees were $13.6 million and $12.9 million for the third and second quarters of 2026, respectively, an increase of 5%. The increase was primarily driven by a lower market servicing rate, which resulted in an increase in the fair value of the servicing asset. The increase was partially offset by a reversal of the servicing asset related to the purchase of a portfolio of loans in the third quarter of 2026 that we previously originated and sold as well as higher fair value amortization of the servicing asset due to higher prepayments.

Year Over Year: Servicing fees were $13.6 million and $17.0 million for the third quarter of 2026 and 2025, respectively, a decrease of 20%. The decrease was primarily driven by a reversal of the servicing asset related to the purchase of a portfolio of loans in the third quarter of 2026 that we previously originated and sold as well as higher fair value amortization of the servicing asset due to higher prepayments. The decrease was partially offset by a lower market servicing rate, which resulted in an increase in the fair value of the servicing asset, and a higher average principal balance of loans serviced.

Nine Months Over Nine Months: Servicing fees were $39.6 million and $46.1 million for the first nine months of 2026 and 2025, respectively, a decrease of 14%. The decrease was primarily driven by a reversal of the servicing asset related to the purchase of a portfolio of loans in the third quarter of 2026 that we previously originated and sold, higher fair value amortization of the servicing asset due to higher prepayments and a reduction in collection fees on delinquent loans. The decrease was partially offset by a lower market servicing rate, which resulted in an increase in the fair value of the servicing asset, and a higher average principal balance of loans serviced.

Gain on Sales of Loans

In connection with loan sales to marketplace investors, we capitalize the initial fair value of servicing rights. A gain or loss is recorded based on the level to which the contractual servicing fee is above or below an estimated market rate of servicing at the time of sale. Additionally, we recognize transaction costs, if any, as a loss on sale of loans.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The following tables present the unpaid principal balance of the volume of loans sold, which is a key driver of our gain on sales revenue, during each of the periods set forth below:


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Loans sold	$	1,580,413	$	1,859,157	$	1,661,119	(15)	%	(5)	%


	Nine Months Ended September 30,
	2026		2025		Change (%)
Loans sold	$	4,846,757	$	4,021,832	21	%

Sequential: Gain on sales of loans was $19.6 million and $21.5 million for the third and second quarters of 2026, respectively, a decrease of 9%. The decrease was primarily driven by the decrease in the volume of loans sold, partially offset by a higher servicing asset value due to a lower market servicing rate.

Year Over Year: Gain on sales of loans was $19.6 million and $17.8 million for the third quarter of 2026 and 2025, respectively, an increase of 10%. The increase was primarily driven by a higher servicing asset value due to a lower market servicing rate, partially offset by the decrease in the volume of loans sold.

Nine Months Over Nine Months: Gain on sales of loans was $57.3 million and $43.5 million for the first nine months of 2026 and 2025, respectively, an increase of 32%. The increase was primarily driven by an increase in the volume of loans sold and a higher servicing asset value due to a lower market servicing rate.

Net Fair Value Adjustments

We record adjustments to the carrying value of loans, for which we have elected to account for under the fair value option, to reflect their fair value. These adjustments include gains or losses from sale prices in excess of or less than the loan principal amount sold and realized net charge-offs. In addition, as loans are held on the Balance Sheet, incremental fair value adjustments on the loans are recorded in “Net fair value adjustments” within “Non-interest income,” whereas the associated interest income is recorded within “Net interest income.”

As a result of our fair value option election, net fair value adjustments beginning in the first quarter of 2026 include adjustments related to newly originated HFI loans in addition to HFS and purchased HFI loans measured at fair value, whereas prior periods included only HFS and purchased HFI loans.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The following tables present the volume of loans originated under the fair value option, which is a key driver of the initial recognition of fair value adjustments:


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Fair value option loan originations	$	3,336,490	$	3,145,175	$	2,027,406	6	%	65	%


	Nine Months Ended September 30,
	2026		2025		Change (%)
Fair value option loan originations	$	9,150,838	$	5,043,778	81	%

Sequential: Net fair value adjustments were $(131.4) million and $(121.1) million for the third and second quarters of 2026, respectively, an increased negative fair value adjustment of $10.3 million.

Year Over Year: Net fair value adjustments were $(131.4) million and $(38.4) million for the third quarter of 2026 and 2025, respectively, an increased negative fair value adjustment of $93.0 million.

Nine Months Over Nine Months: Net fair value adjustments were $(341.5) million and $(95.5) million for the first nine months of 2026 and 2025, respectively, an increased negative fair value adjustment of $246.0 million.

The increases in negative net fair value adjustments were primarily driven by a higher volume of loans originated under the fair value option, resulting in larger initial negative fair value marks, as well as recurring negative fair value adjustments on a higher balance of loans measured at fair value. These increases were partially offset by $12 million of fair value gains from one-time items in the third quarter of 2026, primarily related to the purchase of a portfolio of loans that we previously originated and sold. In addition, increases in fair value losses resulting from higher benchmark rates were primarily offset by fair value gains on our hedging derivatives.

See “Notes to Condensed Consolidated Financial Statements – Note 5. Fair Value Measurements” for additional information on the significant unobservable inputs used in the fair value measurement of HFI and HFS loans, as well as activity within these loan portfolios.

Other Non-interest Income

Other non-interest income primarily consists of (i) rental income earned from third-party tenants under operating lease agreements and (ii) referral revenue that relates to fees earned from third-party companies when customers referred by us consider or purchase products or services from such third-party companies. The tables below illustrate the composition of other non-interest income for each period presented:


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Rental income	$	1,577	$	1,415	$	3,263	11	%	(52)	%
Referral revenue	2,504		3,372		958		(26)	%	161	%

Other	1,004		1,839		1,416		(45)	%	(29)	%
Other non-interest income	$	5,085	$	6,626	$	5,637	(23)	%	(10)	%

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	Nine Months Ended September 30,
	2026		2025		Change (%)
Rental income	$	4,984	$	5,117	(3)	%
Referral revenue	7,846		2,553		207	%

Other	4,353		4,620		(6)	%
Other non-interest income	$	17,183	$	12,290	40	%

Provision for Credit Losses

The allowance for loan and lease losses (ALLL) for lifetime expected losses under CECL on loans and leases HFI at amortized cost is initially recognized as “Provision for credit losses” at the time of origination. The ALLL is estimated using a discounted cash flow (DCF) approach, where effective interest rates are used to calculate the net present value (NPV) of expected cash flows. The effective interest rates are calculated based on the periodic interest income received from the loan’s contractual cash flows and the net investment in the loan, which includes deferred origination fees and marketing costs, to provide a constant rate of return over the loan term. The NPV from the DCF approach is then compared to the amortized cost basis of the loans and leases to determine the ALLL. Under the DCF approach, the provision for credit losses in subsequent periods includes a credit loss expense related to the discounting effect due to the passage of time after the initial recognition of the ALLL on originated loans and leases HFI at amortized cost.

As a result of our fair value option election for HFI loans originated on or after January 1, 2026, there will no longer be an initial recognition of an allowance for lifetime expected credit losses as required under amortized cost accounting. Therefore, following this election, the provision for credit losses reflects changes in credit loss assumptions associated with HFI loans originated prior to January 1, 2026 that continue to be accounted for at amortized cost.

The table below illustrates the composition of the provision for credit losses for each period presented, as well as the loan originations HFI at amortized cost during each period, which was a key driver for credit loss expense:


	Three Months Ended						Nine Months Ended September 30,
	September 30, 2026		June 30, 2026		September 30, 2025		2026		2025

Credit loss (benefit) expense for loans and leases held for investment at amortized cost	$	(14,327)	$	(10,885)	$	45,907	$	(24,366)	$	142,885
Credit loss (benefit) expense for securities available for sale	(1,481)		165		86		(1,593)		588
Credit loss (benefit) expense for unfunded lending commitments	(122)		(197)		287		(498)		689
Total provision for credit losses	$	(15,930)	$	(10,917)	$	46,280	$	(26,457)	$	144,162

Loan originations held for investment at amortized cost(1)	$	—	$	—	$	629,053	$	—	$	2,077,208

Balance of loans and leases held for investment at amortized cost, net	$	2,595,032	$	2,993,252	$	4,095,641	$	2,595,032	$	4,095,641

(1) Prior period amounts were reclassified to include small business loan origination volume. See “Non-interest Income” for additional information.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Sequential: The provision benefit was $15.9 million for the third quarter of 2026 compared to a provision benefit of $10.9 million for the second quarter of 2026. The change in provision was primarily due to strong credit performance, including lower observed net charge-offs and an improved credit outlook on our loan portfolio.

Year Over Year: The provision benefit was $15.9 million for the third quarter of 2026 compared to a provision expense of $46.3 million for the third quarter of 2025. The change in provision was primarily due to our election of the fair value option in 2026, under which newly originated HFI loans no longer required an initial allowance for credit losses (ACL). The third quarter of 2026 also reflected strong credit performance, including lower observed net charge-offs and an improved credit outlook on our loan portfolio.

Nine Months Over Nine Months: The provision benefit was $26.5 million for the first nine months of 2026 compared to a provision expense of $144.2 million for the first nine months of 2025. The change in provision was primarily due to our election of the fair value option in 2026, under which newly originated HFI loans no longer required an initial ACL. The first nine months of 2026 also reflected strong credit performance, including lower observed net charge-offs and an improved credit outlook on our loan portfolio.

Allowance for Credit Losses

The activity in the ACL was as follows:


	Three Months Ended						Nine Months Ended September 30,
	September 30, 2026		June 30, 2026		September 30, 2025		2026		2025
Allowance for loan and lease losses:
Beginning of period	$	192,893	$	237,697	$	252,989	$	275,743	$	236,734
Credit loss (benefit) expense for loans and leases held for investment at amortized cost	(14,327)		(10,885)		45,907		(24,366)		142,885

Charge-offs	(39,000)		(46,427)		(47,886)		(138,197)		(164,316)
Recoveries	12,330		12,508		16,764		38,716		52,471
End of period	$	151,896	$	192,893	$	267,774	$	151,896	$	267,774


Allowance for securities available for sale:
Beginning of period	$	3,981	$	3,816	$	4,029	$	4,093	$	3,527
Credit loss (benefit) expense for securities available for sale	(1,481)		165		86		(1,593)		588
End of period	$	2,500	$	3,981	$	4,115	$	2,500	$	4,115


Reserve for unfunded lending commitments:
Beginning of period	$	633	$	830	$	1,585	$	1,009	$	1,183
Credit loss (benefit) expense for unfunded lending commitments	(122)		(197)		287		(498)		689
End of period(1)	$	511	$	633	$	1,872	$	511	$	1,872

(1) Relates to $29.9 million, $35.2 million and $114.4 million of unfunded commitments as of September 30, 2026, June 30, 2026 and September 30, 2025, respectively.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The following table presents the components of the ALLL:


	September 30, 2026		June 30, 2026		September 30, 2025
Gross allowance for loan and lease losses(1)	$	184,070	$	227,500	$	308,218
Recovery asset value(2)	(32,174)		(34,607)		(40,444)
Allowance for loan and lease losses	$	151,896	$	192,893	$	267,774

(1) Represents the allowance for future estimated net charge-offs on existing portfolio balances.

(2) Represents a negative allowance for expected recoveries of amounts previously charged-off.


	September 30, 2026			June 30, 2026			September 30, 2025
Total loans and leases held for investment at amortized cost	$	2,746,928		$	3,186,145		$	4,363,415

Allowance for loan and lease losses	$	151,896		$	192,893		$	267,774
Allowance ratio(1)	5.5		%	6.1		%	6.1		%

Gross allowance for loan and lease losses	$	184,070		$	227,500		$	308,218
Gross allowance ratio(1)	6.7		%	7.1		%	7.1		%

(1) Calculated as ALLL or gross ALLL, where applicable, to total loans and leases held for investment at amortized cost.

Net Charge-Offs

The following table presents information regarding average loan and lease balances at amortized cost, the associated net charge-offs and the annualized ratio of net charge-offs to average outstanding loans and leases HFI at amortized cost during the period. Net charge-offs are impacted by the expected timing of the charge-offs, anticipated recoveries and the age of the overall portfolio.


	Three Months Ended									Nine Months Ended September 30,
	September 30, 2026			June 30, 2026			September 30, 2025			2026			2025


Average loans and leases held for investment at amortized cost	$	2,965,382		$	3,440,984		$	4,337,771		$	3,461,753		$	4,208,326
Net charge-offs	$	26,670		$	33,919		$	31,122		$	99,481		$	111,845
Net charge-off ratio	3.6		%	3.9		%	2.9		%	3.8		%	3.5		%

Nonaccrual

Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual. Unsecured consumer loans are generally charged-off when a borrower is contractually 120 days past due.

The following table presents nonaccrual loans and leases HFI at amortized cost:


	September 30, 2026			June 30, 2026			September 30, 2025











Nonaccrual loans and leases held for investment at amortized cost	$	57,838		$	55,319		$	55,349
% of total loans and leases held for investment at amortized cost	2.1		%	1.7		%	1.3		%

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

For additional information on the ACL and nonaccrual loans and leases, see “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies” in our Annual Report and “Notes to Condensed Consolidated Financial Statements – Note 4. Loans” in this Report.

Non-Interest Expense

Non-interest expense primarily consists of (i) compensation and benefits, which include salaries and wages, benefits and stock-based compensation expense, (ii) marketing, which includes costs attributable to borrower and deposit customer acquisition efforts and building general brand awareness, (iii) equipment and software, (iv) depreciation and amortization, (v) professional services, which primarily consist of consulting fees, and (vi) occupancy, which includes rent expense and all other costs related to occupying our office spaces.


	Three Months Ended						Change (%)
	September 30, 2026		June 30, 2026		September 30, 2025		Q3 2026 vs Q2 2026		Q3 2026 vs Q3 2025
Non-interest expense:
Compensation and benefits	$	64,529	$	68,221	$	60,830	(5)	%	6	%
Marketing	72,763		62,580		40,712		16	%	79	%
Equipment and software	17,500		15,846		13,465		10	%	30	%
Depreciation and amortization	17,062		18,152		16,879		(6)	%	1	%
Professional services	10,889		11,989		10,922		(9)	%	—	%
Occupancy	3,644		4,982		5,245		(27)	%	(31)	%
Other non-interest expense	15,928		16,345		14,660		(3)	%	9	%
Total non-interest expense	$	202,315	$	198,115	$	162,713	2	%	24	%


	Nine Months Ended September 30,
	2026		2025		Change (%)
Non-interest expense:
Compensation and benefits	$	198,264	$	181,208	9	%
Marketing	190,758		103,531		84	%
Equipment and software	48,639		42,604		14	%
Depreciation and amortization	51,033		46,248		10	%
Professional services	34,645		30,986		12	%
Occupancy	15,017		14,377		4	%
Other non-interest expense	46,607		42,344		10	%
Total non-interest expense	$	584,963	$	461,298	27	%

Compensation and Benefits

Sequential: Compensation and benefits expense decreased $3.7 million, or 5%, for the third quarter of 2026 compared to the second quarter of 2026. The decrease was primarily due to a decrease in variable compensation expense.

Year Over Year: Compensation and benefits expense increased $3.7 million, or 6%, for the third quarter of 2026 compared to the same period in 2025. The increase was primarily due to an increase in compensation expense.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Nine Months Over Nine Months: Compensation and benefits expense increased $17.1 million, or 9%, for the first nine months of 2026 compared to the same period in 2025. The increase was primarily due to an increase in compensation expense.

Marketing

As a result of our fair value option election, marketing expenses associated with newly originated HFI loans are now recognized in current period earnings at the time of origination, rather than being deferred and recognized over time under amortized cost accounting. Accordingly, marketing expense for the first nine months of 2026 includes costs associated with the origination of both HFI and HFS loans, whereas prior periods reflect only marketing expenses related to the origination of HFS loans.

Sequential: Marketing expense increased $10.2 million, or 16%, for the third quarter of 2026 compared to the second quarter of 2026.

Year Over Year: Marketing expense increased $32.1 million, or 79%, for the third quarter of 2026 compared to the same period in 2025.

Nine Months Over Nine Months: Marketing expense increased $87.2 million, or 84%, for the first nine months of 2026 compared to the same period in 2025.

The increases in marketing expense were primarily due to an increase in variable marketing expenses based on higher origination volume. In addition, marketing expense for 2026 includes the immediate recognition of marketing costs for newly originated HFI loans under the fair value option.

Equipment and Software

Sequential: Equipment and software expense increased $1.7 million, or 10%, for the third quarter of 2026 compared to the second quarter of 2026.

Year Over Year: Equipment and software expense increased $4.0 million, or 30%, for the third quarter of 2026 compared to the same period in 2025.

Nine Months Over Nine Months: Equipment and software expense increased $6.0 million, or 14%, for the first nine months of 2026 compared to the same period in 2025.

The increases in equipment and software expense were primarily due to an increase in software license expense and cloud services.

Depreciation and Amortization

Sequential: Depreciation and amortization expense decreased $1.1 million, or 6%, for the third quarter of 2026 compared to the second quarter of 2026. The decrease was primarily due to impairment of internally-developed software recognized in the second quarter of 2026, partially offset by an increase in the amortization of internally-developed software placed into service.

Year Over Year: Depreciation and amortization expense increased $0.2 million, or 1%, for the third quarter of 2026 compared to the same period in 2025.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Nine Months Over Nine Months: Depreciation and amortization expense increased $4.8 million, or 10%, for the first nine months of 2026 compared to the same period in 2025. The increase was primarily due to an increase in the amortization of internally-developed software placed into service and due to impairment of internally-developed software recognized in the second quarter of 2026.

Professional Services

Sequential: Professional services decreased $1.1 million, or 9%, for the third quarter of 2026 compared to the second quarter of 2026.

Year Over Year: Professional services remained relatively flat for the third quarter of 2026 compared to the same period in 2025.

Nine Months Over Nine Months: Professional services increased $3.7 million, or 12%, for the first nine months of 2026 compared to the same period in 2025.

The changes in professional services expense were primarily due to changes in business consulting services.

Occupancy

Sequential: Occupancy expense decreased $1.3 million, or 27%, for the third quarter of 2026 compared to the second quarter of 2026. The decrease was primarily due to the expiration of our former headquarters’ lease in April 2026 and the costs incurred in the second quarter of 2026 in connection with the relocation of our headquarters to the office building purchased in the second quarter of 2025.

Year Over Year: Occupancy expense decreased $1.6 million, or 31%, for the third quarter of 2026 compared to the same period in 2025. The decrease was primarily due to the expiration of our former headquarters’ lease in April 2026.

Nine Months Over Nine Months: Occupancy expense increased $0.6 million, or 4%, for the first nine months of 2026 compared to the same period in 2025. The increase was primarily due to costs incurred in connection with the relocation of our headquarters to the office building purchased in the second quarter of 2025, partially offset by the expiration of our former headquarters’ lease in April 2026.

Other non-interest expense

Sequential: Other non-interest expense decreased $0.4 million, or 3%, for the third quarter of 2026 compared to the second quarter of 2026.

Year Over Year: Other non-interest expense increased $1.3 million, or 9%, for the third quarter of 2026 compared to the same period in 2025.

Nine Months Over Nine Months: Other non-interest expense increased $4.3 million, or 10%, for the first nine months of 2026 compared to the same period in 2025.

The changes in other non-interest expense were primarily due to changes in miscellaneous operating expenses.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Income Taxes

For the third quarter and first nine months of 2026, we recorded an income tax expense of $17.5 million and $50.7 million, respectively, representing an effective tax rate of 22.8% and 23.1%, respectively. For the third quarter and first nine months of 2025, we recorded an income tax expense of $13.0 million and $32.8 million, respectively, representing an effective tax rate of 22.6% and 25.8%, respectively. The effective tax rate differs from the federal statutory rate primarily due to state taxes, the favorable impact of recurring items such as tax credits, the unfavorable impact of the non-deductible portions of executive compensation, and the net discrete impact of stock-based compensation. The decrease in the effective tax rate for the first nine months of 2026 compared to the first nine months of 2025 was primarily driven by the discrete tax expense recognized in the second quarter of 2025 related to the revaluation of our deferred tax assets following the enactment of California Senate Bill 132 on June 27, 2025, and the reduction in the overall effective state tax rate resulting from the law’s requirement that banks and financial companies use a single-sales-factor apportionment formula, effective for tax years beginning in 2025.

As of September 30, 2026, we maintained a valuation allowance of $48.0 million related to certain state net operating loss carryforwards (NOLs) and state tax credit carryforwards. The realization and timing of any remaining state NOLs and state tax credit carryforwards is uncertain and may expire before being utilized, based primarily on limitations related to the allocation of taxable income to the Parent and not related to our earnings. Changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions are recorded as current period income tax expense or benefit.

Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return. Differences between separate entity and consolidated tax returns are eliminated upon consolidation.

Segment Information

Reportable Segments

We define operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Chief Operating Decision Maker (CODM) to allocate resources and evaluate financial performance. The measure of segment profit used by the CODM in this evaluation is net income. The CODM consists of our Chief Executive Officer and Chief Financial Officer. This information is reviewed according to the legal organizational structure of our operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, Happen Bank, which are both considered reportable segments. Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return.

Happen Bank

Happen, Inc. (Parent Only)

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

limited to, servicing fee revenue on purchased servicing assets, and interest income and interest expense related to transactions entered into prior to Happen Bank’s formation.

Financial information for the segments is presented in the following tables:


	Happen Bank				Happen, Inc. (Parent only)				Total Reportable Segments

Three Months Ended September 30,	2026		2025		2026		2025		2026		2025
Interest income:
Interest income	$	278,062	$	241,616	$	240	$	185	$	278,302	$	241,801
Interest expense	(95,231)		(83,362)		—		—		(95,231)		(83,362)
Net interest income	182,831		158,254		240		185		183,071		158,439

Non-interest income:

Origination fees(1)	173,226		105,762		(6)		(31)		173,220		105,731
Servicing fees(1)	7,837		5,350		4,313		6,764		12,150		12,114
Gain on sales of loans(1)	19,608		17,799		—		—		19,608		17,799
Net fair value adjustments(1)	(131,664)		(39,071)		255		696		(131,409)		(38,375)
Other non-interest income	9,540		13,601		488		1,762		10,028		15,363
Total non-interest income	78,547		103,441		5,050		9,191		83,597		112,632

Total net revenue	261,378		261,695		5,290		9,376		266,668		271,071

Provision for credit losses	15,930		(46,280)		—		—		15,930		(46,280)

Non-interest expense:
Compensation and benefits	(63,190)		(59,194)		(1,339)		(1,636)		(64,529)		(60,830)
Marketing	(72,763)		(40,712)		—		—		(72,763)		(40,712)
Equipment and software	(17,381)		(13,460)		(119)		(5)		(17,500)		(13,465)
Depreciation and amortization	(16,740)		(15,828)		(322)		(1,051)		(17,062)		(16,879)
Professional services	(10,821)		(10,797)		(68)		(125)		(10,889)		(10,922)
Occupancy	(3,044)		(3,304)		(600)		(1,941)		(3,644)		(5,245)
Other non-interest expense	(16,240)		(16,071)		(3,196)		(3,429)		(19,436)		(19,500)
Total non-interest expense	(200,179)		(159,366)		(5,644)		(8,187)		(205,823)		(167,553)

Income tax expense	(17,400)		(12,667)		(99)		(297)		(17,499)		(12,964)
Net income (loss)(2)	$	59,729	$	43,382	$	(453)	$	892	$	59,276	$	44,274
Capital expenditures	$	18,203	$	21,003	$	—	$	—	$	18,203	$	21,003

(2) Total net income from reportable segments reflects net income on a consolidated basis.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)


	Happen Bank				Happen, Inc. (Parent only)				Total Reportable Segments

Nine Months Ended September 30,	2026		2025		2026		2025		2026		2025
Interest income:
Interest income	$	807,716	$	710,329	$	728	$	628	$	808,444	$	710,957
Interest expense	(270,122)		(248,312)		—		—		(270,122)		(248,312)
Net interest income	537,594		462,017		728		628		538,322		462,645

Non-interest income:

Origination fees(1)	466,870		263,269		444		(16)		467,314		263,253
Servicing fees(1)	18,817		8,060		14,451		19,328		33,268		27,388
Gain on sales of loans(1)	57,338		43,541		—		—		57,338		43,541
Net fair value adjustments(1)	(342,924)		(99,396)		1,445		3,901		(341,479)		(95,495)
Other non-interest income	31,987		40,637		4,293		5,542		36,280		46,179
Total non-interest income	232,088		256,111		20,633		28,755		252,721		284,866

Total net revenue	769,682		718,128		21,361		29,383		791,043		747,511

Provision for credit losses	26,457		(144,162)		—		—		26,457		(144,162)

Non-interest expense:
Compensation and benefits	(194,013)		(176,264)		(4,251)		(4,944)		(198,264)		(181,208)
Marketing	(190,758)		(103,531)		—		—		(190,758)		(103,531)
Equipment and software	(48,488)		(42,553)		(151)		(51)		(48,639)		(42,604)
Depreciation and amortization	(49,474)		(42,622)		(1,559)		(3,626)		(51,033)		(46,248)
Professional services	(34,267)		(30,453)		(378)		(533)		(34,645)		(30,986)
Occupancy	(10,654)		(8,550)		(4,363)		(5,827)		(15,017)		(14,377)
Other non-interest expense	(50,464)		(46,075)		(8,920)		(11,403)		(59,384)		(57,478)
Total non-interest expense	(578,118)		(450,048)		(19,622)		(26,384)		(597,740)		(476,432)

Income tax expense	(49,469)		(31,073)		(1,264)		(1,721)		(50,733)		(32,794)
Net income(2)	$	168,552	$	92,845	$	475	$	1,278	$	169,027	$	94,123
Capital expenditures	$	71,954	$	124,763	$	—	$	—	$	71,954	$	124,763

(2) Total net income from reportable segments reflects net income on a consolidated basis.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Total net revenue – reportable segments	$	266,668	$	271,071	$	791,043	$	747,511
Intercompany eliminations	(3,508)		(4,840)		(12,777)		(15,134)
Total net revenue – consolidated	$	263,160	$	266,231	$	778,266	$	732,377

The material drivers and trends affecting our reportable segments’ results of operations presented above are consistent with those discussed on a consolidated basis in "Results of Operations."

Non-GAAP Financial Measures

To supplement our financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Tangible Book Value (TBV) Per Common Share and Return on Tangible Common Equity (ROTCE). Our non-GAAP financial measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

We believe these non-GAAP financial measures provide management and investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies.

We believe TBV Per Common Share is an important measure used to evaluate the Company’s use of equity. TBV Per Common Share is a non-GAAP financial measure representing tangible common equity for the period (common equity reduced by goodwill and customer relationship intangible assets), divided by the ending number of common shares issued and outstanding.

We believe ROTCE is an important measure because it reflects the Company's ability to generate income from its core assets. ROTCE is a non-GAAP financial measure calculated by dividing annualized net income by the average tangible common equity for the applicable period.

The following table provides a reconciliation of TBV Per Common Share to the nearest GAAP measure:


As of	September 30, 2026		June 30, 2026		September 30, 2025
GAAP common equity	$	1,593,073	$	1,567,465	$	1,462,213
Less: Goodwill	(75,717)		(75,717)		(75,717)
Less: Customer relationship intangible assets	(3,963)		(4,492)		(8,206)
Tangible common equity	$	1,513,393	$	1,487,256	$	1,378,290

Book value per common share
GAAP common equity	$	1,593,073	$	1,567,465	$	1,462,213
Common shares issued and outstanding	115,395,673		115,407,464		115,301,440
Book value per common share	$	13.81	$	13.58	$	12.68

Tangible book value per common share
Tangible common equity	$	1,513,393	$	1,487,256	$	1,378,290
Common shares issued and outstanding	115,395,673		115,407,464		115,301,440
Tangible book value per common share	$	13.11	$	12.89	$	11.95

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The following table provides a reconciliation of ROTCE to the nearest GAAP measure:


	Three Months Ended									Nine Months Ended
	September 30, 2026			June 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
Average GAAP common equity	$	1,583,105		$	1,544,238		$	1,424,538		$	1,545,294		$	1,385,214
Less: Average goodwill	(75,717)			(75,717)			(75,717)			(75,717)			(75,717)
Less: Average customer relationship intangible assets	(4,228)			(4,766)			(6,722)			(4,795)			(7,452)
Average tangible common equity	$	1,503,160		$	1,463,755		$	1,342,099		$	1,464,782		$	1,302,045

Return on average equity
Annualized GAAP net income	$	237,104		$	232,592		$	177,096		$	225,369		$	125,497
Average GAAP common equity	1,583,105			1,544,238			1,424,538			1,545,294			1,385,214
Return on average equity	15.0		%	15.1		%	12.4		%	14.6		%	9.1		%

Return on tangible common equity
Annualized GAAP net income	$	237,104		$	232,592		$	177,096		$	225,369		$	125,497
Average tangible common equity	1,503,160			1,463,755			1,342,099			1,464,782			1,302,045
Return on tangible common equity	15.8		%	15.9		%	13.2		%	15.4		%	9.6		%

Supervision and Regulatory Environment

We are subject to supervision, regulation, examination, enforcement and other proceedings by multiple federal banking regulatory bodies. Specifically, as a bank holding company, the Company is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Board of Governors of the Federal Reserve System (FRB). Further, as a national bank, Happen Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Office of the Comptroller of the Currency (OCC). Additionally, as a depository institution with assets over $10 billion, Happen Bank is subject to supervision and enforcement authority relating to federal consumer financial laws and regulations by the Consumer Financial Protection Bureau (CFPB). Accordingly, we have been and continue to invest in regulatory compliance and be subject to certain parameters, obligations and/or limitations set forth by the banking regulations and regulators with respect to the operation of our business.

Further, we are subject to periodic supervision, regulation, examination, enforcement and other proceedings from various other federal and state regulatory and/or law enforcement agencies. Additionally, we are subject to claims, individual and class action lawsuits, and lawsuits alleging regulatory violations. Although historically the Company has generally resolved these matters in a manner that was not materially adverse to its financial results or business operations, no assurance can be given as to the timing, outcome or consequences of any of these matters in the future.

If we are found to not have complied with applicable laws, regulations or requirements, we could: (i) lose one or more of our licenses or authorizations, or be required to obtain a new license or authorization, (ii) become subject to a consent order or administrative enforcement action, (iii) face lawsuits (including class action lawsuits), sanctions, penalties, or other monetary losses due to judgments, orders, or settlements, (iv) be in breach of certain contracts, which may void or cancel such contracts, (v) decide or be compelled to modify or suspend certain of our business practices and/or (vi) be unable to execute on certain Company initiatives, which may have an adverse effect on our ability to operate and/or evolve our lending marketplace and other products and/or services; any of which may harm our business or financial results.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

See “Part I – Item 1. Business – Regulation and Supervision,” “Part I – Item 1A. Risk Factors – Risks Related to Regulation, Supervision and Compliance,” and “Part I – Item 1A. Risk Factors – Risks Related to Operating Our Business” in our Annual Report for further discussion regarding our supervision and regulatory environment.

Capital Management

The prudent management of capital is fundamental to the successful achievement of our business initiatives. We actively review capital through a process that continuously assesses and monitors the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations.

The formation of Happen Bank as a nationally chartered association and the organization of the Company as a bank holding company subjects us to various capital adequacy guidelines issued by the OCC and the FRB, including the requirement to maintain regulatory capital ratios in accordance with the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (Basel III). As a Basel III standardized approach institution, we selected the one-time election to opt-out of the requirements to include all the components of accumulated other comprehensive income included in common stockholder’s equity. The minimum capital requirements under the Basel III capital framework are: a Common Equity Tier 1 (CET1) risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a Tier 1 leverage ratio of 4.0%. Additionally, a capital conservation buffer of 2.5% must be maintained above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, share repurchases, and certain discretionary bonus payments. In addition to these guidelines, the banking regulators may require a banking organization to maintain capital at levels higher than the minimum ratios prescribed under the Basel III capital framework. See “Part I – Item 1. Business – Regulation and Supervision – Capital and Liquidity Requirements and Prompt Corrective Action” in our Annual Report and “Notes to Condensed Consolidated Financial Statements – Note 18. Regulatory Requirements” of this Report for additional information regarding regulatory capital requirements.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The following table presents the actual capital amounts and ratios of the Company and Happen Bank as well as the regulatory capital minimum and “well capitalized” requirements (dollars in millions):


	September 30, 2026				December 31, 2025				Required Minimum(1)		Well Capitalized Minimum
	Amount		Ratio		Amount		Ratio
Happen, Inc.:
CET1 capital(2)	$	1,498.1	15.7	%	$	1,342.6	17.4	%	7.0	%	N/A
Tier 1 capital	$	1,498.1	15.7	%	$	1,342.6	17.4	%	8.5	%	6.0	%
Total capital	$	1,617.4	17.0	%	$	1,441.0	18.7	%	10.5	%	10.0	%
Tier 1 leverage	$	1,498.1	12.0	%	$	1,342.6	12.0	%	4.0	%	N/A
Risk-weighted assets	$	9,513.9	N/A		$	7,696.1	N/A		N/A		N/A
Quarterly adjusted average assets	$	12,527.1	N/A		$	11,174.0	N/A		N/A		N/A

Happen Bank:
CET1 capital(2)	$	1,390.6	14.7	%	$	1,183.9	15.5	%	7.0	%	6.5	%
Tier 1 capital	$	1,390.6	14.7	%	$	1,183.9	15.5	%	8.5	%	8.0	%
Total capital	$	1,509.2	16.0	%	$	1,281.8	16.8	%	10.5	%	10.0	%
Tier 1 leverage	$	1,390.6	11.1	%	$	1,183.9	10.7	%	4.0	%	5.0	%
Risk-weighted assets	$	9,449.4	N/A		$	7,652.0	N/A		N/A		N/A
Quarterly adjusted average assets	$	12,475.1	N/A		$	11,090.4	N/A		N/A		N/A

N/A – Not applicable

(1) Required minimums presented for risk-based capital ratios include the required capital conservation buffer of 2.5%.

The higher risk-based capital ratios for the Company reflect higher capital at Happen, Inc. as compared with Happen Bank.

Liquidity

We manage liquidity to meet our cash flow and collateral obligations in a timely manner at a reasonable cost. We must maintain operating liquidity to meet our expected daily and forecasted cash flow requirements, as well as contingent liquidity to meet unexpected funding requirements.

As our primary business at Happen Bank involves taking deposits and originating loans, a key role of liquidity management is to ensure that customers have timely access to funds from deposits and for loans. Liquidity management also involves maintaining sufficient liquidity to repay borrowings, pay operating expenses and support extraordinary funding requirements when necessary.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Happen Bank Liquidity

The following table summarizes Happen Bank’s primary sources of short-term liquidity as of the periods presented:


	September 30, 2026		December 31, 2025
Cash and cash equivalents	$	769,343	$	901,246
Securities available for sale(1)	$	388,254	$	384,846
Deposits	$	11,565,727	$	9,948,426


Available borrowing capacity:
FRB Discount Window(2)	$	3,507,526	$	3,294,827
FHLB of Des Moines(3)	674,957		679,361
Total available borrowing capacity	$	4,182,483	$	3,974,188

(1) Excludes illiquid securities available for sale.

(2) As of September 30, 2026 and December 31, 2025, the Company had $4.6 billion and $4.2 billion in loans pledged under the FRB Discount Window, respectively.

(3) As of September 30, 2026, the Company had $469.2 million in loans and $379.9 million in securities pledged to the Federal Home Loan Bank (FHLB) of Des Moines. As of December 31, 2025, the Company had $486.2 million in loans and $375.7 million in securities pledged to the FHLB of Des Moines.

The primary uses of Happen Bank liquidity include (i) the funding/acquisition of loans and securities purchases, (ii) withdrawals, maturities and the payment of interest on deposits, (iii) compensation and benefits expense, (iv) taxes, (v) capital expenditures and (vi) costs associated with the continued development and support of our digital marketplace bank.

Deposits

Deposits represent an important source of funding for Happen Bank. We offer deposit accounts to our members, which include both interest-bearing and noninterest-bearing deposits. As of September 30, 2026 and December 31, 2025, the amount of uninsured deposits totaled $1.3 billion and $1.2 billion, respectively, or 11% and 12% of total deposits, respectively. Uninsured time deposits as of September 30, 2026, by remaining time to maturity, were as follows:


3 months or less	$	40,503
Over 3 months through 6 months	34,931
Over 6 months through 12 months	80,273
Over 12 months	12,916
Total uninsured time deposits(1)	$	168,623

(1) Consist of certificates of deposit accounts that are in excess of the FDIC insurance limit of $250 thousand per account holder.

Capital Expenditures

Net capital expenditures were $72.0 million, or 9.3% of total net revenue, and $124.8 million, or 17.4% of total net revenue, for the first nine months of 2026 and 2025, respectively. Capital expenditures in 2026 are expected to be approximately $90 million, primarily driven by costs associated with the continued development and support of our digital marketplace bank as well as improvements to the office building we purchased.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Happen, Inc. Liquidity

The primary source of liquidity at the holding company is $92.7 million and $127.1 million in cash and cash equivalents as of September 30, 2026 and December 31, 2025, respectively. The decrease in cash and cash equivalents was primarily driven by share repurchases. Additionally, the holding company has the ability to access the capital markets through additional registrations and public equity offerings.

Uses of cash at the holding company include the routine cash flow requirements as a bank holding company, such as interest and expenses, share repurchases, the needs of Happen Bank for additional equity and, as required, its need for debt financing and support for extraordinary funding requirements when necessary.

Factors Impacting Liquidity

Our liquidity could be adversely impacted by deteriorating financial and market conditions, the inability or unwillingness of a creditor to provide funding, an idiosyncratic event (e.g., a major loss, causing a perceived or actual deterioration in our financial condition), an adverse systemic event (e.g., default or bankruptcy of a significant capital markets participant), or others.

We believe, based on our projections, that our cash on hand, liquid available for sale (AFS) securities, deposits, available borrowing capacity, and net cash flows from operating, investing and financing activities are sufficient to meet our liquidity needs for the next twelve months, as well as beyond the next twelve months. See “Item 1. Financial Statements – Condensed Consolidated Statements of Cash Flows” for additional detail regarding our cash flows.

Market Risk

Market risk represents the risk of potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices, and/or other relevant market rates or prices. The primary market risk to which we are exposed is interest rate risk. Interest rate risk arises from financial instruments including loans, securities and borrowings, all entered into for purposes other than trading.

Interest Rate Sensitivity

Happen Bank

Our earnings are affected by changes in the level of interest rates, the impact of interest rate fluctuations on asset prepayments, and the level and composition of deposits and liabilities, among other factors.

Loans and securities retained on our balance sheet are funded primarily through our deposit base. The majority of loans and securities are fixed-rate instruments over the term of the assets. As a result, our primary exposure to interest rate risk arises from the impact of fluctuations in loan, security, and deposit rates. We use a sensitivity analysis to assess the impact of hypothetical changes in interest rates on our earnings. The outcome of the analysis is influenced by a variety of assumptions, including the maturity profile and prepayment level of our loans and securities and expected consumer responses to changes in interest rates paid on non-maturity deposit products. Our assumptions are periodically calibrated to observed data and/or expected outcomes. We actively monitor the level of exposure to movements in interest rates and use economic hedging instruments to manage such risk. Interest rate settlements associated with economic hedging instruments are recognized within “Net fair value adjustments” on the Income Statement. See “Notes to Condensed Consolidated Financial Statements – Note 7. Derivative Instruments and Hedging Activities” for additional information.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The following table presents the change in modeled earnings which includes net interest income and interest rate settlements on economic hedges for the next twelve months due to a hypothetical instantaneous parallel change in interest rates relative to current rates:


	September 30, 2026		December 31, 2025
Instantaneous Change in Interest Rates:
+ 200 basis points	(5.3)	%	(7.8)	%
+ 100 basis points	(2.5)	%	(3.8)	%
– 100 basis points	2.6	%	3.2	%
– 200 basis points	5.0	%	5.9	%

As illustrated in the table above, earnings from net interest income and interest rate settlements on our economic hedges decreases over the next twelve months during hypothetical rising interest rate environments primarily as a result of higher rates paid on interest-bearing deposits. The decrease is partially offset by higher rates earned on new loans, security purchases, cash and cash equivalents, as well as by higher interest rate settlements on our economic hedges. Conversely, earnings increases over the next twelve months during hypothetical declining interest rate environments. Interest rate sensitivity as of September 30, 2026 compared to December 31, 2025 primarily reflects changes in loan and deposit portfolio composition and interest rate economic hedging activity.

Although we believe that these measurements provide an estimate of our interest rate sensitivity, they do not account for potential changes in credit quality, balance sheet mix, size of our balance sheet, changes in fair value of assets and derivatives due to changes in benchmark and discount rates, or other business developments that could affect net income. Actual results could differ materially from the estimated outcomes of our simulations.

For additional details regarding maturities of loans and leases HFI, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk” in our Annual Report.

For the contractual maturities and weighted-average yields on the Company’s AFS securities portfolio, see “Notes to Condensed Consolidated Financial Statements – Note 3. Securities Available for Sale.”

Happen, Inc.

At the holding company level, we continue to measure interest rate sensitivity by evaluating the change in fair value of certain assets and liabilities due to a hypothetical change in interest rates. Principal payments on our loans continue to reduce the outstanding balance of this portfolio, and, as a result, the fair value impact from changes in interest rates continues to diminish.

Contingencies

For a comprehensive discussion of contingencies as of September 30, 2026, see “Notes to Condensed Consolidated Financial Statements – Note 17. Commitments and Contingencies.”

Critical Accounting Estimates

Certain of the Company’s accounting policies that involve a higher degree of judgment and complexity are discussed in “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” in our Annual Report. There have been no significant changes to these critical accounting estimates during the first nine months of 2026, except as noted below, where the estimate has been updated to incorporate all loans held at fair value, regardless of their classification as HFS or HFI.

HAPPEN, INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Loans at Fair Value

Loans that we elect to account for under fair value option are classified as Level 3 instruments. We use a DCF approach to calculate the NPV of expected cash flows. This model uses significant unobservable inputs that inherently require judgment and reflect our best estimates of the assumptions a market participant would use to calculate fair value. Those significant unobservable inputs used in the fair value measurement of loans include:

•Discount Rate – The weighted-average rate at which the expected cash flows are discounted to arrive at the net present value of the loan. The discount rate is primarily determined based on the Company’s estimate of market participants’ return expectations.

•Annualized prepayment rate – The annualized rate of lifetime prepayments expressed as a percentage of the average principal balance of loan pools with similar risk characteristics.

HAPPEN, INC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a comprehensive discussion regarding quantitative and qualitative disclosures about market risk, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk.”

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2026. In designing and evaluating its disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance, not absolute assurance, of achieving the desired control objectives, and is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures as of September 30, 2026 were designed and functioned effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the third quarter of 2026, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a comprehensive discussion of legal proceedings, see “Part I. Financial Information – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 17. Commitments and Contingencies – Legal,” which is incorporated herein by reference.

Item 1A. Risk Factors

The risks described in “Part I – Item 1A. Risk Factors” in our Annual Report, could materially and adversely affect our business, financial condition, operating results and prospects, and the trading price of our common stock could decline. While we believe the risks and uncertainties described therein include all material risks currently known by us, it is possible that these may not be the only ones we face. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The Risk Factors section of our Annual Report remains current in all material respects, with the exception below.

HAPPEN, INC.

Our business operations may be adversely impacted by political events, terrorism, military conflict or acts of war, cyber-attacks, public health issues, natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes and other business interruptions.

Our business operations are subject to interruption by, among other things, political events, terrorism, military conflict or acts of war, cyber-attacks, public health issues, natural disasters, severe weather, climate change (including longer-term shifts in climate patterns, such as extreme heat, sea level rise and more frequent and prolonged drought), infrastructure failure or outages (including power outages), labor disputes and other events which could: (i) decrease demand for our products and services, (ii) adversely affect the macroeconomy and/or our customers, or (iii) make it difficult or impossible for us to deliver a satisfactory experience to our customers. Any such events could also affect the Company by impacting the stability of our deposit base, impairing the ability of our borrowers to repay their outstanding loans, causing significant property damage or otherwise impair the value of collateral securing our loans, and/or resulting in loss of revenue and/or causing us to incur additional expenses. While we may undertake measures indicated to mitigate the adverse impacts of such events, there are no assurances that any of the measures we take will be sufficient or successful.

Furthermore, in the event of any disruption to our operations or those of the companies with whom we do business, we could experience delays in product development, marketing, operations and customer service efforts, incur significant losses, require substantial recovery time and experience significant expenditures in order to resume or maintain operations, any of which could have a material adverse impact on our business, financial condition and results of operations.

Similarly, natural disasters have had, and likely will continue to have, unpredictable and/or adverse effects on our customers. With increases to the frequency, breadth and impact of natural disasters, such as fires and hurricanes, the potential for a single or series of natural disaster(s) to have a material adverse impact on our business is also increasing.

Finally, geopolitical conflicts as well as natural disasters, and their impacts, have had, and may continue to have, the effect of heightening many of the other risks described in “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K, such as elevating inflation, macroeconomic uncertainty and the possibility of a decline in economic conditions. For example, although we do not have operations or customers in Iran, the 2026 Iran conflict is, among other things, impacting inflation in the United States which could have an adverse effect on our customers and thereby our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not have any unregistered sales of equity securities during the three months ended September 30, 2026.

Issuer Purchases of Equity Securities

On November 4, 2025, our Board of Directors approved a program to repurchase and acquire up to $100 million of our common stock through December 31, 2026 (the Repurchase and Acquisition Program). The Repurchase and Acquisition Program is inclusive of the anticipated fair market value of shares of our common stock acquired by holding back a portion of vesting restricted stock units held by our employees to satisfy applicable tax withholding obligations. The timing, amount and methodology of shares acquired through the Repurchase and Acquisition Program are discretionary and will depend on our stock price, business and market conditions, and other factors.

HAPPEN, INC.

The following table sets forth information on Happen, Inc.’s share repurchase activity for the third quarter of 2026 (dollars in millions, except per share data):


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program(1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(1)
July 1 – July 31, 2026	5,006	$	17.99	5,006	$	49.6
August 1 – August 31, 2026	84,544	$	18.40	84,544	$	47.2
September 1 – September 30, 2026	406,919	$	16.02	406,919	$	40.6
Total	496,469	$	16.45	496,469

(1) In August 2026, we utilized $0.9 million to hold back 50,083 shares of our common stock at an average per share price of $18.25 to satisfy applicable tax withholding obligations in connection with the vesting of restricted units held by our employees. Since the inception of the program in November 2025 through September 30, 2026, we have utilized a total of $59.4 million of the $100 million authorization under the Repurchase and Acquisition Program to acquire a total of 3,537,635 shares of our common stock at an average per share price of $16.78 (inclusive of the amount held back to satisfy applicable tax withholding obligations).

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the third quarter of 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

HAPPEN, INC.

Item 6. Exhibits

Exhibit Index

The exhibits noted in the accompanying Exhibit Index are filed or incorporated by reference as a part of this Report and such Exhibit Index is incorporated herein by reference.

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Filed Herewith

3.1

Ninth Amended and Restated Certificate of Incorporation, effective July 28, 2026

Third Amended and Restated Bylaws of the Company, effective July 28, 2026

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document‡

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Taxonomy Extension Label Linkbase

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

‡ The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

HAPPEN, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HAPPEN, INC.

(Registrant)

Date:

October 29, 2026

/s/ SCOTT SANBORN

Scott Sanborn

Chief Executive Officer

Date:

October 29, 2026

/s/ ANDREW LABENNE

Andrew LaBenne

Chief Financial Officer

LendingClub - 10-Q quarterly report FY2026 Q3

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