LendingClub Is Changing Its Name to Happen Bank, as It Makes Progress on Its Medium-Term Growth Plan. Is the Stock a Buy?

The digital bank and personal loan company LendingClub (NYSE: LC) reported strong 2026 first-quarter earnings, as it makes progress on its medium-term growth strategy.

LendingClub also said it will change its name to Happen Bank, a process expected to be completed this summer, to reflect its enhanced banking capabilities and further reflect its core mission: "To clear the way for people going places."

The company reported earnings per share (EPS) of $0.44, beating Wall Street consensus estimates by $0.08, and revenue of over $252 million, beating estimates by about $3 million. Loan originations for the quarter came in at nearly $2.7 billion.

The company also maintained its full-year diluted EPS outlook of $1.65 to $1.80 and its originations outlook of $11.6 billion to $12.6 billion. The stock surged in after-hours trading last night, but had given back those gains as of 12:06 p.m. ET.

Is LendingClub a buy?

Image source: Getty Images.

Delivering a very solid quarter amid noisy market conditions

LendingClub has had a number of moving parts in recent quarters, as it transitioned to a new accounting method, entered a major new lending space, and changed its name, all while working toward medium-term growth targets it announced at an investor day last November.

This is the first quarter that LendingClub has elected to account for all loans held on its balance sheet using the fair value option (FVO). Previously, LendingClub would take a provision for future credit losses, similar to a traditional commercial bank.

However, the provision cut into earnings in a material way; the various loan accounting methods seemed to confuse investors and also created a misalignment between revenue recognition and the timing of losses.

Using FVO results in no provision, but it leads to higher negative fair value adjustments because loans are marked to market each quarter. While there are some pros and cons to each accounting method, the FVO is more capital-efficient and generates higher returns on capital. In the first quarter, LendingClub delivered record pre-tax earnings and a strong 14.5% return on tangible common equity (ROTCE).

Credit quality, a particularly important metric for a personal lender, also looked really good in the quarter. Net charge-offs, or loan losses unlikely to be recovered, declined from the prior quarter and LendingClub says its 30-day delinquencies are coming in 50% below its competitive set.

Furthermore, LendingClub, which sells many of its loans to private credit loan buyers, continued to see strong demand in a quarter when concerns about private credit were front and center.

Despite the noise, LendingClub's CEO Drew LaBenne said on the company's earnings call that, "loan buyers have been very steady as we've gone through time. So private credit, insurance [are] ramping up. We've definitely seen stability there, and we expect to see stability as we go into Q2 as well, in terms of the amount of loans and the demand..."

LendingClub also began originating home improvement loans in the quarter. The company previously announced a partnership with Wisetack, in which it embeds its technology and proprietary credit underwriting models into Wisetack's platform, which serves over 40,000 contractor merchants and pushes real-time loan offers and approvals to homeowners.

LendingClub views the home improvement market as a $500 billion opportunity and noted that it is seeing interest from other partners to potentially set up similar arrangements.

Where can the stock go over the medium term?

At investor day, LendingClub's management team said its medium-term goal was to increase annual originations from about $10 billion to $18 billion to $22 billion, while growing ROTCE from a recent 12%-13% to 18%-20%.

I think this quarter shows the company is making good progress on these goals. The stock reaction is likely muted today because management did not raise guidance, which is likely due to headwinds such as fewer-than-expected interest rate cuts this year, which benefit LendingClub's business.

But overall, the results were rock-solid, and there seem to be strong growth opportunities, whether from additional partnerships like Wisetack or from artificial intelligence, an area the company supposedly has numerous initiatives underway.

LendingClub has always been ahead of the game in automating the loan issuance and approval process, and over 90% of loan issuance at the company is now fully automated, requiring no human intervention. So I'd be curious to see if the company can continue to make headway on this front.

More importantly, LendingClub appears well on its way to growing originations and achieving a higher, more sustainable ROTCE, which is why I think investors can take advantage of the muted response to earnings and buy the stock.

Bram Berkowitz has positions in LendingClub. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.