Western Liberty Bancorp (WLBC) was built to buy — but now it has decided to sell.

The Las Vegas company, which was formed for the purpose of acquiring other banks, has agreed to sell itself to Western Alliance Bancorp. (WAL) in Phoenix for $55 million in cash and stock.

Under the deal, announced Friday, Western Liberty's Service1st Bank of Nevada would be merged into the $7.2 billion-asset Western Alliance's Bank of Nevada.

The agreement comes less than two years after the $199 million-asset Western Liberty bought Service1st, which was its first acquisition after two other deals fell through.

Western Liberty has struggled with problem real estate loans, and in January said it formed a nonbank subsidiary to house problem assets. Six months earlier it said it had hired Sandler O'Neill & Partners to explore its options, including a potential sale.

Under the agreement announced Friday, Western Liberty shareholders may receive either $4.02 in cash or 0.4341 of a share of Western Alliance for each Western Liberty share owned. The deal values Western Liberty at 74% of tangible book value and represents a 41% premium to Friday's closing price of $2.85 per share, according to a note from Sandler O'Neill. The exchange is expected to be tax free for shareholders receiving their payment in stock.

"This transaction further strengthens our capital position, increases our core deposits, and enables us to further leverage our existing infrastructure in Las Vegas," Robert Sarver, chairman and chief executive of Western Alliance, said in a news release.

Western Alliance is a multibank holding company that serves Arizona, California, Nevada and Colorado. The deal is expected to be immediately accretive to Western Alliance's tangible book value and close in the fourth quarter.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.