Islamic Finance
A growing N. American market
Disclaimer / Disclosure long UNIB
November 22, 2025
University Bancorp (UNIB) trades at ~85% of its tangible book value which is <5x last quarter’s earnings. Earnings can be choppy but core earnings appear to be running ~$2.50 a year on a ~$16.50 stock as of this writing…
… They have created an insurance business, banking, and trust business as well as a Sharia compliant bank providing work around financial services to the Islamic communities. They have ~$94 million of equity with earnings adding ~$15 million per year. The CEO wants to list on the Nasdaq. He just cut a deal with Castle Creek. It gets UNIB $25 million of capital on decent terms. It gets their scale closer to qualifying for the Russell 2000 after which they’ll switch to the Nasdaq. I didn’t participate but like the structure for both sides and would probably have participated if there were room.
February 9, 2026
According to management, plenty of upside remains to UNIB’s opportunities. The potential US Islamic banking market is for a $50 billion asset bank. UNIB could get 40% of that market, growing to $20 billion in assets and $2 billion in equity. The bank should have a 20% ROE, so $400 million of net income. The Islamic banking market opportunity in Canada is about the same size.
The potential market opportunity for Islamic property casualty insurance is for a $5 billion insurance company, which requires $1.5 billion of equity. UNIB’s goal is to get 40% of that market as well or $2 billion in assets and $600 million in equity. The insurance company should have a 20% ROE, so $120 million of net income. There are further opportunities in Islamic Life Insurance and Islamic Health Insurance. As with banking, the market opportunity in Canadian Islamic insurance is the same size as the US market.
UNIB existing banking has solid growth potential. They want to cross sell wealth management and insurance in addition to existing banking, lending, mortgage banking, mortgage subservicing, and Islamic banking. I like this one and plan to get more involved in upcoming quarters.