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UPDATE 2-Western Alliance to buy mortgage firm AmeriHome for $1 bln

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(Adds CEOs comments, details, context)

Feb 16 (Reuters) - Western Alliance Bancorp said onTuesday it would buy mortgage servicer AmeriHome for about $1billion in cash, in a deal that would strengthen the bank's homefinance business.

Backed by private equity firm Apollo Global Managementand its insurance affiliate Athene Holding,Thousand Oaks, California-based AmeriHome acquires and servicesmortgages originated by a network of brokers and financialinstitutions across the United States.

The deal, partially funded by a $275 million sale of newWestern Alliance shares, would boost the bank's fee income andgenerate enough revenue to quickly cover the purchase price,Western Alliance Chief Executive Ken Vecchione told Reuters.

News of the sale comes four months after AmeriHome hadannounced plans for an initial public offering (IPO) that wouldhave valued it at more than $1.3 billion. The offering did notgo ahead.

Mortgage firms have struggled to attract investors to shareofferings due to concerns mortgage activity may have peaked in2020 as consumers took advantage of historically low interestrates to refinance existing home loans.

Earlier this month, mortgage lender loanDepot Incslashed its IPO size and share sale price to ensure it couldcomplete its listing.

Vecchione told Reuters he believed Western Alliance wasgetting "a fairly priced deal," and the bank used AmeriHome's2019 financial results when evaluating whether to buy thecompany, to allow for last year's elevated business levels.

AmeriHome Chief Executive Jim Furash, who will continue tolead the company as a unit within Western Alliancepost-completion, added that AmeriHome's business was weightedmore towards new mortgages, which sheltered it from lowerrefinancing activity expected in 2021.

Evercore and Guggenheim Securities were the financialadvisers to Western Alliance on the deal, which is expected toclose in the second quarter of 2021. Houlihan Lokey Capital andWells Fargo Securities advised AmeriHome.(Reporting by Niket Nishant in Bengaluru and David French inNew York; Editing by Shailesh Kuber, Maju Samuel and SonyaHepinstall)