Western Alliance Bancorp in Las Vegas has significantly boosted market share in its hometown with two acquisitions this year, and now it has turned its attention to Nevada's second-largest city.
The multibank holding company announced Wednesday that it has a deal to buy the $402 million-asset First Independent Capital of Nevada in Reno for $105 million in cash and stock.
Western's chairman and chief executive, Robert Sarver, said he had been eager to increase the company's market share in Reno, where it has just one branch and 0.44% of deposits. After the deal closes, it would have five branches and a 2.54% deposit share, according to Federal Deposit Insurance Corp. data.
"Reno is the second-largest market in Nevada, which is the fastest-growing state in the country," Mr. Sarver said. "We're fortunate enough to make a deal with what we think is a premier franchise in that marketplace."
The announcement capped a busy year for the $4.2 billion-asset Western, and the deal would continue its expansion in fast-growing markets of the West. (This was not the only news Western made Wednesday. It also said that it plans to sell 25% of its $609 million securities portfolio to improve its liquidity, net interest margin, and future earnings. See related story on page 19.)
In March, it bought the $463 million-asset Intermountain First Bancorp in Las Vegas, and in April it closed its deal for the $254 million-asset Bank of Nevada, also in Las Vegas. (Western integrated the latter into its BankWest of Nevada but then renamed the subsidiary Bank of Nevada.)
In October, the parent company also opened a start-up bank, Alta Alliance Bank, in Oakland, Calif. Alta Alliance is the third start-up Western has opened since early 2003. The others, Alliance Bank in Phoenix and Torrey Pines Bank in San Diego, have more than $1 billion of assets combined.
It has also been growing organically. Its subsidiary banks have opened 18 branches in the past two years, Mr. Sarver said.
Western has been among the Southwest's fastest-growing banking companies since 2002, when it had $700 million of assets, and its growth pace accelerated after it went public in July 2005.
Todd Hagerman, an analyst at Fox-Pitt, Kelton Inc. in New York, said that he does not expect the Reno deal to slow down Western's expansion plans.
"My expectation is that they're going to stay the course with their expansion strategy," he said, "and continue to either fill in existing markets or enter some of these other high-growth western markets."
Likely target markets could be Seattle; Boise, Idaho; Riverside, Calif.; Denver; and Colorado Springs, he said.
Western is set to open at least another dozen branches in its existing markets, while considering both purchases and start-ups in new markets, Mr. Sarver said, though he would not specify them.
Brad Milsaps, an analyst at Sandler O'Neill & Partners LP, said the company is on track to reach its ultimate goal: securing significant market share in six to 10 large metropolitan areas west of Texas. Western's flagship subsidiary, the $2.8 billion-asset Bank of Nevada, had the No. 6 deposit share in the Las Vegas metropolitan area, with 2.1% at June 30, up from 0.68% a year earlier.
"It's definitely going to take some time, but I think they have all the right tools - a very deep management and commercial banking model - so I think it's very possible," Mr. Milsaps said.
Under the terms of Wednesday's deal, First Independent stockholders would get $93.60 per share in either cash or a comparable value of Western's stock; overall, 80% of the consideration would be in the form of stock.
Two years after the deal closes, former First Independent shareholders may also be eligible to get an additional $2.38 per share in cash, depending on the performance of certain loans the Reno bank has made.
The deal price works out to 2.9 times First Independent's book value, 19 times its trailing earnings, and a 26% premium to its core deposits.
The sale is expected to close in the second quarter and be immediately accretive to earnings.
First Independent would become a wholly owned subsidiary of Western but retain its name and management team, and the Bank of Nevada branch in Reno would ultimately be merged into First Independent. John P. Sande 3rd would remain the bank's chairman and would join Western's board of directors.
