Enova International to Acquire Grasshopper Bancorp
In a unique move that has caught the attention of the financial industry, nonbank lender Enova International has announced its plans to acquire Grasshopper Bancorp. This acquisition is significant as it would allow Enova to take advantage of Grasshopper’s national bank charter.
This deal, worth approximately $369 million, is expected to close during the second half of 2026. The merger would make Enova, a company with roots in payday lending, the only higher-rate lender/bank combination in the public market, according to John Rowan, an analyst at Janney Montgomery Scott.
The Potential Impact of the Acquisition
The acquisition could potentially give Enova access to a broader geographical area, thereby increasing its market reach. However, critics are worried about the implications of this deal, arguing that it could expose more Americans to high-cost, risky loans.
Enova, a Chicago-based company, operates several nonbank subsidiaries, including CashNetUSA and OnDeck, which offer higher-rate loans to consumers and small businesses. Consumer advocacy groups argue that if Enova obtains a bank charter, it could further enable the company’s perceived exploitation of customers.
Lauren Saunders, associate director of the National Consumer Law Center, expressed her concerns, saying, “Enova makes incredibly predatory loans. 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 Regulatory Hurdles
The merger still needs the green light from the Federal Reserve and the Office of the Comptroller of the Currency (OCC). If approved, this could indicate a significant shift in the regulatory landscape of the financial industry.
Adam Rust, director of financial services at the Consumer Federation of America, warned that if Enova were to gain a bank charter, the number of states where its “risky” credit is available would increase. He said, “Right now, many working-class households are struggling to make ends meet. They don’t need higher interest rates in more places; they need affordable credit from banks they can trust.”
Grasshopper Bank’s Journey
Grasshopper Bancorp, based in New York City, was launched in 2019 with the mission to bank startups and venture capital backers. As of September 30, Grasshopper had $1.27 billion of on-balance-sheet deposits and $1.04 billion of loans and leases. It had also recently completed a $46.6 million funding round to support the acquisition of Auto Club Trust and expand its banking-as-a-service effort.
On the other hand, Enova reported about $5 billion of loans and no deposits. After the acquisition, Grasshopper Bank will become a subsidiary of Enova, which will transform into a bank holding company. The combined entity will possess $8.8 billion of assets, according to Enova.
Facing the Critics
Enova has faced regulatory scrutiny in the past, with the Consumer Financial Protection Bureau (CFPB) accusing the company of debiting consumers’ bank accounts without permission and failing to honor loan extensions. The company was fined and penalized multiple times for these and other violations. However, Enova has maintained that these issues were unintended system errors and not deliberate attempts to avoid the law.
Despite the company’s assurances, critics argue that these incidents indicate a pattern of law-breaking. Saunders said, “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.”
While this acquisition is pending approval, it comes at a time when the enforcement of consumer protection laws has been gradually rolling back under the second Trump administration, which could potentially influence the level of scrutiny applied to this deal.
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