Why Western Alliance's Acquisition of AmeriHome Is Looking Better and Better

When the $43 billion asset Western Alliance Bancorporation (NYSE: WAL) announced that it would purchase the mortgage company AmeriHome Mortgage, some investors might have been surprised, given Western Alliance's dominance in the commercial and industrial (C&I) lending space. After all, if it's not broke, why fix it? And in this case, if it's an industry leader, why fix it?

But since the deal got announced in February, it is already looking like Western Alliance made the right decision. Here's why.

Despite the economy beginning to show signs of recovery, loan growth at most banks remained stagnant in the first quarter of the year, with many banks reporting a decline in total loan volume and net interest income from the preceding quarter. Furthermore, even with many economists expecting the U.S. government to generate robust gross domestic product (GDP) growth this year, some banks have seemed a little less optimistic about loan growth. Many say they expect loan growth to pick up in the back half of the year, although many aren't presenting precise numbers to go with their predictions, making it look more like optimism than anything else.

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Source Fool.com