Happen, Inc.

Non-interest income consists of the following:

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.

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:

(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.

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

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.

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:

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.

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:

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: