OakNorth, a digital bank focused on serving entrepreneurs, has agreed to acquire Community Unity Bank (CUB), a community bank in Birmingham, Michigan.
The acquisition will be executed as a stock-for-stock transaction and is pending regulatory approval.
The latest move follows OakNorth’s recent receipt of authorisation from the Federal Reserve and the New York State Department of Financial Services to establish a Representative Office in New York, granted in August 2024.
The acquisition of CUB will allow OakNorth to enhance its business lending capabilities across the US, including in Michigan.
Since commencing operations in the US in mid-2023, OakNorth has provided over $700m in loans to businesses, including clients with operations in both the US and UK, such as F1 Arcade, Ultimate Performance, Croud, and The Boundary.
CUB, which began operations in 2023, offers a comprehensive range of banking services to businesses and individuals in Southeast Michigan. Following the acquisition, Greg Wernette, the current CEO of CUB, will assume the role of CEO for OakNorth’s US operations.
OakNorth CEO and co-founder Rishi Khosla 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’ve 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 c.3x our initial expectations.
“As a founder-led business built by entrepreneurs, CUB appealed to us as it shares a lot of our same values with regards to customer experience. These values are reflected in its customer feedback, as well as its strong company culture.”
Founded in September 2015, OakNorth has positioned itself as a leader in providing financial support to lower mid-market businesses, defined as those with revenues between $1m and $100m.
To date, OakNorth has disbursed approximately $16bn to businesses across multiple sectors.
Its lending activities have resulted in the creation of 56,000 new jobs and the development of 34,000 new homes in both the UK and the US, with a focus on affordable and social housing. CUB CEO Greg Wernette said: “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.”
