Western Alliance aims to optimise the acquired mortgage servicing rights assets for both ongoing operations and regulatory capital treatment


Western Alliance to buy AmeriHome. (Credit: Gerd Altmann from Pixabay.)

Western Alliance Bancorporation has agreed to acquire Aris Mortgage Holding Co., the parent company of AmeriHome, for an estimated purchase price of $1bn in cash.

Under the terms of the agreement, AmeriHome will become a subsidiary of Western Alliance Bank.

The bank will pay $275m in cash, plus adjusted tangible book value for the estimated total consideration.

Western Alliance anticipates after-tax funding cost synergies of around $50m per annum with estimated after-tax merger and integration costs totalling nearly $27m.

The purchase price indicates around 1.4 times the adjusted tangible book value based on 31 December 2020 financials.

Western Alliance intends to raise about $275m primary capital through a registered public offering of common stock to support the transaction and future growth.

Western Alliance president and CEO Ken Vecchione said: “We look forward to maximizing the strategic and financial opportunities created by partnering with AmeriHome, which has been a valued client of Western Alliance Bank for years.

“Acquiring this differentiated, high-performing mortgage platform provides a powerful growth engine and expands mortgage offerings to existing clients that give us flexible levers to drive consistent returns throughout market cycles.

With the acquisition of AmeriHome, Western Alliance will extend its national commercial businesses with a complementary, low-risk national mortgage franchise.

The transaction is expected to be completed in the second quarter of 2021, subject to customary closing terms and conditions.

Once the transaction is closed, AmeriHome will continue its operations with its current brand name AmeriHome, as a Western Alliance Bank company. Its current president and chief executive officer Jim Furash will lead the company.

Western Alliance intends to optimise the acquired mortgage servicing rights assets for both ongoing operations and regulatory capital treatment.

Jim Furash said: “Joining Western Alliance Bank is a terrific opportunity to accelerate our own strategic objectives and pathway to growth, with an outstanding partner we know very well.

“AmeriHome’s successful results and unique business model proved to be highly attractive for Western Alliance Bank, which has a history of growing by adding specialized financing groups that excel through differentiated B2B expertise and strong client service.”