S&P: Western Alliance Bank view to negative

Standard & Poor’s said it revised the outlook on Western Alliance Bank to negative from stable.

The agency also said it affirmed the bank’s BBB- long-term and A-3 short-term issuer credit ratings.

The outlook revision follows news that the bank will acquire Bridge Bank, S&P said.

The aggressive growth profile of the combined entity could leave its credit quality and revenue stability vulnerable in a less benign credit environment, the agency said.

The transaction is valued at $425 million and will be funded with 10% cash and 90% in the bank’s stock. It is expected to close in the fourth quarter of 2015, S&P said.

While this acquisition will somewhat diversify the bank’s portfolio, the company’s concentration risks remain high, the agency said.

The merger demonstrates management’s dynamic risk appetite for growing new verticals, such as technology or solar-equipment financing, which are intrinsically riskier, S&P said.

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