Closing Complex Loans Faster With a Digitized Client Workflow

Join us for a discussion on changes in market demographics, suppliers and how focusing on customer experience and a few simple steps during the mortgage loan process can close deals 3x faster.

engage.marketing event: All eyes on purchase

To help power your business forward, we’re bringing together the smartest minds in purchase mortgage marketing to share the insights, tactics and strategies that set leaders apart.

Home appraisal’s ugly history and uncertain future

This is Part I of a deep dive into the home appraisal industry. Today we explore the origins of the appraisal industry and its current lack of diversity.

The digital journey starts at acquisition

Download this white paper to learn how to build a tech-enabled acquisition strategy that will directly contribute to a lender’s ability to maximize profitability and remain competitive.

IPO / M&AMortgage

Western Alliance to acquire AmeriHome for $1B

America's third-largest correspondent lender was previously a client of Western Alliance

Depository bank Western Alliance has reached a deal to acquire correspondent lender AmeriHome for $1 billion in cash, the firms announced late Tuesday afternoon.

With the acquisition, Western Alliance will grab full control of America’s third-largest correspondent lender from an affiliate of financial giant Apollo Global.

AmeriHome purchased approximately $65 billion in conventional conforming and government-insured originations in 2020. The nonbank lender works with a network of over 700 independent mortgage banks and credit unions. It also manages a mortgage servicing portfolio estimated at around $100 billion in unpaid balance.

Acquisition talks began in the fourth quarter, not long after Western Alliance bought non-QM aggregator Galton Funding for an undisclosed amount and AmeriHome’s IPO was delayed.

“It just so happened that AmeriHome approached us about potentially completing a transaction and we decided to look at it, that was in the fourth quarter,” Stephen Curley, division president of Western Alliance, said in an interview with HousingWire. “It came together really quickly. We’ve known the management longer than the four years that they’ve been a customer.”

The management team at AmeriHome, led by CEO Jim Furash, will remain in place and there will be no layoffs, Curley said. Synergies will result in about $50 million in savings, mostly through offering warehouse lines that currently go to other banks, Western Alliance said.

The purchase price represents approximately 1.4x adjusted tangible book value of AmeriHome. Before the end of the second quarter, Western Alliance intends to raise approximately $275 million of primary capital through the sale of common stock. The acquisition is expected to close in the second quarter of 2021.

“It’s a very financially compelling transaction, which produces 30% EPS (earnings per share) accretion for a full year,” Curley said. “We feel like it’s a really good acquisition for shareholders because it grows our earnings per share. It also diversifies our revenue profile so we’re going to see a nice increase in fee income. We’ve normally been a spread income lender, and we haven’t had as much fee income, so buying AmeriHome brings in an important source of fee income.”

The other factor, he said, is that banks these days are awash in liquidity. “We feel like AmeriHome can help us deploy that liquidity in higher-yielding, low-credit risk assets,” Curley said. “We are very familiar with their manufacturing process, we know that they produce high quality assets. We believe that’s a good fit for our balance sheet.”

Western Alliance, which operates more as a business-to-business bank rather than a consumer-focused retail lender, said they are looking at AmeriHome for its long-term potential.

“People will ask us, ‘Are you buying at the peak?’ so to speak,” said Curley. “We really looked at 2019, 2018 volumes. We really didn’t factor in 2020 volumes and profits into our strategy” because it was an outsize year, he said.

Leave a comment

Most Popular Articles

Fannie Mae, and the housing market’s inflation problem

Another month of steadily increasing home prices and insatiable demand led Fannie Mae’s Economic and Strategic Research Group to alter many of its 2021 predictions – in particular, its outlook on the symbiotic relationship between the housing market and inflation measures.

Jun 16, 2021 By

Latest Articles

Doug Duncan and the housing market’s supply conundrum

The housing market has suffered due to high material prices, spend-anything buyers & a lack of supply. A return to normalcy will require big changes. HW+ Premium Content

Jun 18, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please