OakNorth to acquire Community Unity Bank in US expansion move

By Gloria Methri

OakNorth, the UK-based commercial digital bank, is set to acquire Community Unity Bank (CUB), the FDIC-insured bank based in Birmingham, Michigan, in a stock-for-stock transaction.

The acquisition follows authorisation that OakNorth received in August 2024 from the Federal Reserve and the New York State Department of Financial. It will enable OakNorth, through CUB, to expand its business lending throughout the United States and Michigan.

Launched in September 2015, OakNorth supports the lower mid-market (businesses with $1M-100M revenue) by providing fast, flexible debt finance and personalised banking services. It leverages data and analytics to apply larger company lending approaches to this market segment, and its granular, forward-looking approach enables it to develop an in-depth understanding of different industries and businesses.

To date, OakNorth has provided $16 billion to businesses across a wide range of sectors, achieving performance metrics that place it amongst the top 1% of commercial banks globally in terms of return on assets (ROA) and efficiency ratio.

OakNorth began operating in the US in mid-2023. It has since lent over $700 million to businesses there, including to several of its existing customers with US and UK operations, such as F1 Arcade, Ultimate Performance, Croud, and The Boundary.

Rishi Khosla, CEO and Co-founder of OakNorth, said, “In the summer of 2023, following the collapse of several US banks which had been focused on serving the lower mid-market, we saw an opportunity to step up and do our part in helping to fill the funding gap they were experiencing. Over the last 18 months, we have supported businesses with their growth ambitions, providing several hundred million dollars of capital. Demand from US borrowers continues to be exceptionally strong, and our differentiated offering and unique approach to lending has enabled us to rapidly establish a strong presence in the US market, resulting in us lending 3x of our initial expectations. As a founder-led business built by entrepreneurs, CUB appealed to us as it shares a lot of our values with regard to customer experience. These values are reflected in its customer feedback, as well as its strong company culture.”

Launched in 2023, CUB is an Oakland County, Michigan, Community Bank that provides a full-service suite of banking products to businesses and individuals, primarily in Southeast Michigan. The bank has brought together a high-quality team of bankers with decades of experience in the local community. This team has been establishing relationships with a broad range of local businesses with funding for business expansions and depository services.

Greg Wernette, CEO of CUB, said, “CUB was formed by bringing together entrepreneurs from around Oakland County with diverse backgrounds to meet a growing need for small business banking. As business owners and executives, we know that access to capital means everything, and CUB has started to meet that need by assembling a team experienced at lending during both up cycles and down cycles. With an entrepreneurial focus at our core and every team member striving for customer delight, we are very excited to be joining forces with OakNorth to support an even greater number of US businesses together.”