OakNorth, a UK-based challenger bank, is advancing its presence in the US banking industry by acquiring Community Unity Bank (CUB), a Michigan-based financial institution. This move marks OakNorth’s first acquisition in the US and reflects its growing ambitions in the American market. With a focus on business lending, the bank has already extended $700 million in loans to US businesses since mid-2023. The purchase of CUB is expected to enhance OakNorth’s ability to provide financial services to a broader range of American businesses. OakNorth’s expansion strategy is indicative of a broader trend among international fintech firms seeking to establish a foothold in the US banking sector.
OakNorth has previously acquired fintech companies such as Fluidly and secured a stake in Ask Partners, but this is its first purchase of a US-based financial institution. The move comes at a time when businesses in the lower mid-market face funding challenges following the collapse of several regional banks in the US. Earlier reports from OakNorth’s leadership indicated that the company had been exploring opportunities in the US for some time, with a focus on filling gaps in business lending. The bank’s decision to expand through acquisition rather than organic growth suggests a strategic approach to entering the US market more rapidly.
Why Did OakNorth Acquire Community Unity Bank?
OakNorth’s acquisition of CUB is aimed at expanding its lending capabilities across the US. The Michigan-based bank serves retail and business clients and has been operational for three years. By integrating CUB’s existing infrastructure, OakNorth plans to scale its services and extend financial solutions to more US businesses. The acquisition was structured as an all-share deal, and CUB, which is insured by the Federal Deposit Insurance Corporation (FDIC), will now operate under OakNorth’s ownership.
Rishi Khosla, CEO and co-founder of OakNorth, explained the rationale behind the acquisition:
“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.”
What Does This Mean for Community Unity Bank’s Customers?
CUB’s customers, particularly small business owners in Southeast Michigan, will now have access to a broader range of financial products from OakNorth. The transition is expected to bring expanded lending capacity and new business banking services. CUB’s leadership has expressed optimism about the acquisition, emphasizing shared values with OakNorth in supporting small and mid-sized businesses.
Greg Wernette, CEO of CUB, commented on the acquisition:
“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 was started to meet that need, 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.”
OakNorth’s expansion aligns with a wider trend of UK-based fintech companies entering the US market through acquisitions. In comparison to its previous purchases, which focused on fintech and lending innovations, acquiring a regulated US bank represents a shift toward a more traditional banking approach. This acquisition provides OakNorth with a banking license in the US, potentially accelerating future growth opportunities.
As OakNorth integrates CUB’s operations, the long-term impact on the US banking landscape will depend on how effectively it leverages its expertise in digital banking and business lending. The bank’s focus on serving businesses with revenues between £1 million and £100 million could fill a gap left by recent financial sector disruptions. With demand for business loans remaining strong, OakNorth’s continued expansion efforts will likely be closely observed by competitors and industry analysts.
