Western Alliance Bancorporation has agreed to purchase Aris Mortgage Holding Company, the parent of residential mortgage acquirer and servicer AmeriHome Mortgage Company, in a cash deal valued at around $1bn.
The deal consideration includes $275m and adjusted tangible book value at completion.
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AmeriHome will serve as a subsidiary of Western Alliance Bank upon deal completion in the second quarter of this year.
Established in 2013, Thousand Oaks, California-based AmeriHome is backed by private equity firm Apollo Global Management as well as its insurance affiliate Athene Holding.
The firm’s independent correspondent mortgage originator client base of more than 700 includes independent mortgage bankers, community and regional banks, as well as credit unions.
It is said to be the third-largest correspondent mortgage acquirer in the US, with a mortgage servicing portfolio of $99bn at the end of December 2020.
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By GlobalDataExisting AmeriHome president and CEO Jim Furash will continue to spearhead the business.
Furash called Western Alliance a “great match” and said that the deal is an opportunity to ramp up AmeriHome’s strategic objectives.
He noted: “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 specialised financing groups that excel through differentiated B2B expertise and strong client service.”
AmeriHome will trade as, AmeriHome, a Western Alliance Bank company, following completion of the acquisition.
Western Alliance anticipates annual after-tax funding cost synergies of nearly $50m from the deal. After-tax merger and integration expenses are estimated at around $27m.
In order to facilitate the deal and drive future growth, Western Alliance plans to raise around $275m of primary capital via registered public offering of common stock.
Western Alliance president and CEO Ken Vecchione said: “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.
“AmeriHome’s effective business model and exceptional leadership team will leverage Western Alliance’s liquidity and capital strength, market reach, complementary businesses and commercial customers.
“This move meaningfully enhances our EPS baseline and growth, diversifies our revenue mix, and mitigates business cycle volatility with a firm that augments our commercial-focused portfolio.”
Recently, UK-based Tandem Bank announced plans to acquire mortgage book worth £100m from private bank Bank and Client (B&C).
Last month, JPMorgan invested £500m in the mortgage lending business of the UK-based property financing platform LendInvest.
