Ann Arbor, Mich.-based University Bancorp Inc. issued series 5 convertible preferred shares to a company owned by Robert Kauffman.

Kauffman is a co-founder of alternative asset fund manager Fortress Investment Group LLC. He joined the boards of both University Bancorp and subsidiary University Bank immediately following the transaction.

The preferred shares were issued for $4.75 million and have a face value of $5 million. They are convertible into common shares at $10 apiece.

Varnum LLP was the primary legal adviser to University Bancorp in the transaction, while Cleary Gottlieb Steen & Hamilton LLP was the primary legal adviser of Kauffman. Donnelly Penman & Partners was the sales agent and provided a fairness opinion to University Bancorp's board.