Resilient Shoppers and Confident Small Businesses Drive Enova Lending to Record High

Online lender Enova International saw improvements in both originations and credit during the second quarter, with consumer spending remaining resilient and small businesses optimism increasing, Enova CEO Steve Cunningham said during a Thursday (July 23) earnings call.

Enova’s originations grew 27% year over year and its consolidated net charge-off ratio decreased by 0.8 percentage points to 7.3% during the second quarter, according to a Thursday earnings release.

The total company combined loans and finance receivables rose 28% year over year to reach a record high of $5.5 billion, according to the release.

“In the second quarter, healthy originations growth and credit, supported by a stable macro environment, drove top and bottom line financial results that exceeded our expectations,” Cunningham said during the call.

Enova’s year-over-year growth of 27% in originations took the second quarter’s total to nearly $2.3 billion. This marked the 11th consecutive quarter of consolidated year-over-year origins growth of 20% or more, and reflected strength across both consumer and small business, Cunningham said.

The decrease in consolidated net charge-off ratio marked both sequential and year-over-year improvements. Cunningham said during the call that it was “the best we’ve seen in quite some time as consumer credit improved and small business credit remained stable.”

“Our consumer results reflect the resiliency of the U.S. consumer that’s benefiting from a stable labor market, steady wage gains and moderating inflation,” Cunningham said.

Turning to small business, Cunningham highlighted recent studies showing growth in consumer spending at small businesses, a resilient economy, and an increase in small business optimism.

“Supported by this constructive backdrop, our SMB business had another solid quarter of growth and stable credit as we continue to leverage our leading brand presence, scale, competitive position and international diversification across geographies and industries,” Cunningham said.

Enova expects its planned acquisition of digital-first bank Grasshopper Bank to close in the second half, subject to regulatory approvals, Grasshopper shareholder approval and customary closing conditions, according to an investor presentation released Thursday.

The company announced in December that it signed a definitive agreement to acquire Grasshopper Bancorp and its wholly owned subsidiary.

When announcing the plan to acquire the bank in December, Enova said the deal would create a “stronger, more diversified financial services provider.”

During Thursday’s call, Cunningham said that “our integration planning is largely complete, and once we receive approval, we stand ready for a speedy close and will immediately start delivering on the significant synergies from geographic expansion of our existing products and lower funding costs from Grasshopper’s existing deposit businesses.”