- Key insight: In a rare move, nonbank lender Enova International plans to acquire Grasshopper Bank, which would allow Enova to leverage Grasshopper’s national bank charter.
- Supporting data: Post-closing, the combined entity would have $8.8 billion of assets, Enova said.
- Forward look: If the deal is approved, Enova, which has roots in payday lending, would gain access to a broader geographic area.
Update: This article includes new comments from a bank analyst and a consumer rights advocate.
Processing Content
In a rare example of a nonbank lender acquiring a bank, Enova International has reached a deal to buy Grasshopper Bancorp. The merger would give Enova a national banking charter, which critics say would expose more Americans to high-cost, risky loans.
Enova, a publicly traded company with roots in payday lending, announced the cash-and-stock deal, which is worth about $369 million, on Thursday. The transaction, if approved by regulators, is expected to close during the second half of 2026.
“Acquiring a bank has been an aspiration of ours for a long time and we believe we’ve found a perfect partner,” Enova CEO David Fisher told analysts Thursday during a call to discuss the deal. “We believe now is the perfect time to move forward with this important, strategic step.”
The move by a nonbank lender to acquire a bank-chartered company is somewhat unusual. If the deal is approved, it “will create the only higher-rate lender/bank combination in the public market,” John Rowan, an analyst at Janney Montgomery Scott, wrote Thursday in a research note.
He pointed out that in other instances where nonbank lenders have bought banks — LendingClub acquired Radius Bancorp in 2021, for example — the buyers have been lower-interest rate lenders that focus more on customers with prime credit scores.
Enova, based in Chicago, owns a number of nonbank subsidiaries, including CashNetUSA and OnDeck, which offer higher-rate loans to consumers and small businesses. On Thursday, consumer advocacy groups worried that if Enova obtains a bank charter, it could further enable what they see as the company’s exploitation of customers.
“Enova makes incredibly predatory loans,” Lauren Saunders, associate director of the National Consumer Law Center, told American Banker. “I really hope that they don’t use this bank acquisition as a way of trying to get around state laws that protect people from predatory lending.”
The merger still requires approval by the Federal Reserve and the Office of the Comptroller of the Currency. If they OK the deal, consumer advocates say, this would indicate a sea change in how the industry is regulated.
“For some time, the OCC has been vigilant to prevent evasionary use of national charters,” Adam Rust, director of financial services at the Consumer Federation of America, said in an email. “If approved, this merger would mark a significant shift in the exposure of the banking sector to high-cost lending.”
Rust also warned that if Enova were to gain a bank charter, the number of states where its “risky” credit is available would increase.
“Right now, many working-class households are struggling to make ends meet,” Rust said. “They don’t need higher interest rates in more places; they need affordable credit from banks they can trust.”
New York City-based Grasshopper
The announcement that Grasshopper and its parent company are being sold comes eight months after the bank
As of Sept. 30, Grasshopper had $1.27 billion of on balance-sheet deposits and $1.04 billion of loans and leases, according to the Federal Deposit Insurance Corp. It employs about 150 people.
Enova, by comparison, has about $5 billion of loans and no deposits.
Post-closing, Grasshopper Bank will be the bank subsidiary of Enova, which will become a bank holding company. At that time, Mike Butler, chairman and CEO of the $1.4 billion-asset Grasshopper, will become bank president and report to Steve Cunningham, the current chief financial officer at Enova, who will become CEO of the bank. Enova announced this summer that Cunningham would succeed Fisher as CEO of Enova, effective on Jan. 1, 2026.
If approved, the transaction would “allow Enova to export rates from Utah on consumer loans” since it will “relocate Grasshopper to Utah, from New York, on day 1,” wrote Janney Montgomery Scott’s Rowan. Doing so will permit the buyer “to potentially expand its addressable market.”
The $369 million purchase price will be paid 50% in cash and 50% in newly issued Enova shares. In addition to Fed and OCC approval, the pending deal requires a thumbs-up from Grasshopper shareholders. It is expected to generate adjusted earnings per share accretion of more than 15% within the first year after closing and more than 25% in future years, Enova said.
The deal is also expected to dramatically reduce Enova’s funding costs, the company’s executives said. Enova has traditionally funded its balance sheet with higher-cost wholesale deposits. Grasshopper’s deposit costs are 300 to 400 basis points lower than those of Enova’s securitizations, Enova said.
The combined company would have $8.8 billion of assets.
Butler, who joined Grasshopper in mid-2021, said in a press release that Enova is “a market leader in digital lending and a true innovator in the use of technology and analytics.”
Enova’s CashNetUSA business will operate outside of the bank subsidiary, Cunningham said on the call. Still, “we expect to continue to operate it as we have for 20 years,” he added.
CashNetUSA lends money to subprime borrowers, providing high-cost online installment loans and lines of credit in about a dozen states. Another Enova business, NetCredit, provides online loans up to $10,000 and lines of credit up to $4,500 in more than 30 states.
Enova executives mentioned several times Thursday that they looked forward to the ability to expand their products and services geographically, including some of their products that are geared for “near-prime” borrowers.
“This transaction accelerates our ability to execute on [our] mission by directly expanding access to more customers with more products, more efficiently and more broadly than ever,” Fisher said.
Enova has a checkered history with regulators. In 2019, the Consumer Financial Protection Bureau
The CFPB ordered Enova to pay a $3.2 million civil penalty and required other forms of compliance and redress to customers.
Then in 2023, during the Biden administration, the CFPB determined that Enova had
At the time, Enova said these “errors” affected only a very small portion of its customers. It also said it was fully cooperating with regulators.
“While the errors identified in this settlement are similar to those addressed in the 2019 order, they do not arise from deliberate attempts to avoid law, but instead resulted from unintended computer and system errors,” the company said in a 2023
But what Enova calls errors, the company’s critics call a pattern of law-breaking.
“Any company that has been found not only to violate the law once, but then to violate a consent order to address the first set of violations, is extremely troubling,” Saunders said.
The pending acquisition of Grasshopper may not draw as much scrutiny as it would likely have drawn under Biden.
The CFPB has been largely dismantled under the second Trump administration. In September, the agency terminated its orders against Enova. It has closed dozens of enforcement actions, and employees within the agency have said it is gradually