As filed with the Securities and Exchange Commission on February 1, 2007

Registration No. 333-          

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

WESTERN ALLIANCE BANCORPORATION

(Exact name of Registrant as specified in its charter)

 

 

Western Alliance Bancorporation

2700 West Sahara Avenue

Las Vegas, Nevada 89102

Telephone: (702) 248-4200

(Name, address and telephone of principal executive offices)

 

Robert Sarver

President, Chief Executive Officer

2700 West Sahara Avenue

Las Vegas, Nevada 89102

Telephone: (702) 248-4200

(Name, address, including zip code and telephone number, including area code, of agent for service)

 

with copies to:

 

 

Approximate date of commencement of proposed sale of the securities to the public:  As soon as practicable after this Registration Statement becomes effective and all other conditions to the consummation of the transaction described herein have been satisfied or waived.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

CALCULATION OF REGISTRATION FEE

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

The Boards of Directors of Western Alliance Bancorporation (“Western Alliance”) and First Independent Capital of Nevada (“FICN”) have approved an agreement and plan of merger, pursuant to which FICN will merge with and into Western Alliance, with Western Alliance surviving (referred to herein as the “merger”).

 

If the merger takes place, you may elect to receive either $93.60 in cash or Western Alliance common stock of comparable value for each share of FICN common stock you own so long as Western Alliance’s weighted average trading price for the twenty consecutive trading days ending on the last trading day prior to the date the merger is completed is between $32.91 and $39.13, unless you exercise your dissenter’s rights. If the weighted average Western Alliance trading price at that date is less than $32.91, you will receive, with respect to shares for which you have elected to receive Western Alliance common stock, shares of Western Alliance common stock based on an exchange ratio that is fixed at 2.84412 shares of Western Alliance common stock for each share of FICN common stock. If the weighted average Western Alliance stock price is more than $39.13, the exchange ratio will be fixed at 2.39203 shares of Western Alliance common stock for each share of FICN common stock. In either case, the amount of cash consideration paid per share for which an election to receive cash is made will remain $93.60 per share. You will have the opportunity to elect the form of consideration to be received for your shares, subject to proration and allocation procedures set forth in the merger agreement which are intended to ensure that 80% of the FICN shares are exchanged for shares of common stock of Western Alliance. Therefore, your ability to receive cash or stock in accordance with your election may depend on the elections of other FICN shareholders. Western Alliance may opt to increase the exchange ratio in specific circumstances where FICN could otherwise terminate the merger agreement and likewise, FICN may opt to decrease the exchange ratio in specific circumstances where Western Alliance could otherwise terminate the merger agreement.

 

If you hold options to purchase FICN common stock that are outstanding at the effective time of the merger, you may choose either to cancel the options to purchase FICN common stock in exchange for cash consideration as provided in the merger agreement or to convert the options into options to purchase shares of Western Alliance common stock.

 

Shareholders and optionholders may also receive additional cash consideration of up to $2.38 per share during the two year period after the merger has been completed depending upon the performance of certain credits in the FICN loan portfolio. Of this amount, approximately $0.79 per share has become payable as of the date of this proxy statement/prospectus, pending the closing of the merger.

 

We expect that shareholders who receive Western Alliance common stock for their FICN common stock will generally not recognize any gain or loss with respect to the exchange. Shareholders who receive a combination of Western Alliance common stock and cash will generally recognize gain equal to the lesser of (1) the amount of cash received and (2) the excess of the “amount realized” in the transaction (i.e., the fair market value of the Western Alliance common stock at the effective time of the merger plus the amount of cash received), over their tax basis in their FICN common stock.

 

Western Alliance’s common stock is traded on the New York Stock Exchange under the symbol “WAL”.

 

This is a prospectus of Western Alliance relating to its offering of up to 2,942,636 shares of Western Alliance common stock to FICN shareholders in the proposed merger and a proxy statement of FICN. This document and the documents incorporated by reference contain important information about Western Alliance, FICN, the merger and the conditions that must be satisfied before the merger can occur. Please give all the information your careful attention.

 

Important Message for Holders of FICN Common Stock

 

Your vote is very important. The merger agreement must be approved by the holders of at least a majority of the outstanding shares of FICN’s common stock entitled to vote. To vote your shares, you may use the enclosed proxy card or attend the special shareholders’ meeting we will hold to allow you to consider and vote on the merger agreement. To approve the merger agreement, you must vote for the proposal by following the instructions on the enclosed proxy card. If you do not vote at all, that will, in effect, count as a vote against the proposal. Our board of directors urges you to vote FOR this proposal.

 

On behalf of our board of directors, we thank you for your continued support of our company and urge you to vote FOR adoption of the merger agreement.

 

 

 

 

 

Western Alliance’s common stock has not been approved or disapproved by the Securities and Exchange Commission, any state securities commission, or the Federal Deposit Insurance Corporation, nor have any of these institutions passed upon the accuracy or adequacy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense. The shares of Western Alliance common stock are not savings deposit accounts or other obligations of any bank or savings association, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

 

Please see “Risk Factors” beginning on page 12 and in the documents incorporated by reference in this prospectus for a discussion of risks associated with the merger and in owning Western Alliance stock.

 

THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT WESTERN ALLIANCE THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS AVAILABLE WITHOUT CHARGE TO YOU IF YOU CALL OR WRITE TO DALE GIBBONS, CHIEF FINANCIAL OFFICER, WESTERN ALLIANCE BANCORPORATION, 2700 WEST SAHARA AVENUE, LAS VEGAS, NV 89102, TELEPHONE: (702) 248-4200, OR LISA L. MILKE, CHIEF FINANCIAL OFFICER OF FIRST INDEPENDENT CAPITAL OF NEVADA, 5335 KIETZKE LANE, RENO, NEVADA 89511, TELEPHONE: (775) 824-4345, IN ORDER TO OBTAIN TIMELY DELIVERY OF DOCUMENTS YOU SHOULD REQUEST INFORMATION AS SOON AS POSSIBLE, BUT NO LATER THAN          , 2007

 

 

 

 

The date of this proxy statement/prospectus is          , 2007

and is first being mailed to shareholders, together with the attached proxy card, on          , 2007.

 

 

 

 

FIRST INDEPENDENT CAPITAL OF NEVADA
5335 Kietzke Lane
Reno, Nevada 89511

 

 

 

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON          , 2007

 

 

 

 

A special meeting of shareholders of First Independent Capital of Nevada (“FICN”) will be held at           local time on          , 2007, at its principal executive offices at 5335 Kietzke Lane, Reno, Nevada 89511, for the following purposes:

 

1. To consider and vote on a proposal to adopt and approve an agreement and plan of merger, pursuant to which FICN will merge with and into Western Alliance Bancorporation with Western Alliance Bancorporation surviving (referred to herein as the “merger”).

 

2. To transact any other business that properly comes before the special meeting, or any adjournments or postponements of the meeting, including, without limitation, a motion to adjourn the special meeting to another time and/or place for the purpose of soliciting additional proxies in order to approve the merger agreement or otherwise.

 

You are entitled to notice of and to vote at the special meeting or any adjournments or postponements thereof only if you were a holder of record of FICN’s common stock at the close of business on          , 2007.

 

FICN’s Board of Directors has determined that the merger is advisable and is fair to and in the best interest of FICN’s shareholders, has approved the merger agreement and the merger, and recommends that the holders of FICN’s common stock vote to approve the merger agreement.

 

The affirmative vote of a majority of the shares of FICN’s common stock outstanding on          , 2007 is required to approve the merger agreement and the merger. The required vote of FICN’s shareholders is based on the total number of shares of FICN’s common stock outstanding and not on the number of shares which are actually voted. Not returning a proxy card, or not voting in person at the special meeting or abstaining from voting will have the same effect as voting AGAINST the merger agreement.

 

If you hold FICN common stock on the record date, you are entitled to dissent from the merger under Sections 92A.300 through 92A.500 of the Nevada Revised Statutes. A copy of these sections is attached to the proxy statement/prospectus at Appendix B.

 

It is very important that all shares of FICN common stock be represented at the special meeting. Whether or not you plan to attend the special meeting, please complete, date and sign the enclosed proxy card and return it as soon as possible in the enclosed postage-paid envelope. A shareholder who executes a proxy may revoke it at any time before it is exercised by giving written notice to the Secretary of FICN at the address set forth above, by subsequently filing another proxy or by attending the special meeting and voting in person. Executed proxies with respect to shares of FICN common stock with no instructions indicated on the proxy card will be voted FOR the merger agreement and the merger.

 

By order of the Board of Directors,

 

Grant Markham

Chief Executive Officer

 

Reno, Nevada

          , 2007

 

Your vote is important. Please complete, sign, date and return your proxy card.

 

TABLE OF CONTENTS

 

 

SUMMARY

 

General

 

The Companies Involved in the Merger (page 23)

 

Merger Consideration (page 27)

	•	the excess of the per share cash consideration of $93.60 over the exercise price per share of such option and
	•	the number of shares of FICN common stock subject to such option.

	•	the number of shares of FICN common stock subject to the option immediately before the effective time of the merger shall be multiplied by the applicable exchange ratio, rounded down to the nearest whole share, and
	•	the exercise price per share of Western Alliance common stock under the option immediately after the effective time of the merger shall be equal to the exercise price per share of FICN common stock under the option immediately before the effective time of the merger, divided by the applicable exchange ratio, provided that such exercise price shall be rounded up to the nearest cent. The options you receive from Western Alliance will be exercisable immediately. The duration and other terms of the FICN options will otherwise be unchanged.

 

Election Procedures for Shareholders; Surrender of Stock Certificates (page 30)

 

Election Procedures for Option Holders (page 31)

 

Material Federal Income Tax Consequences (page 49)

 

FICN Board of Directors Recommends Approval (page 25)

 

Opinion of Financial Advisor to FICN (page 36)

 

Dissenters’ Appraisal Rights (page 45)

 

Differences in the Rights of Shareholders (page 58)

 

Interests of FICN Directors and Executive Officers in the Merger That are Different From Yours (page 43)

 

Regulatory Approvals We Must Obtain to Complete the Merger (page 31)

 

Termination of the Merger Agreement (page 42)

 

Information About the Special Meeting (page 14)

	•	to vote on the merger agreement; and
	•	to address any other matters that properly come before the special meeting, or any adjournments or postponements of the meeting, including a motion to adjourn the special meeting to another time and/or place to solicit additional proxies in favor of the merger agreement and the merger or otherwise.

 

Share Information and Market Prices (page 60)

		Last Reported Sale Price of
		Western Alliance’s				Equivalent per Share
Date		Common Stock				Data
December 18, 2006		$	34.83			$	93.60
, 2007		$				$

 

Comparative Unaudited Per Share Data

		At
		December 31,
		2006
Book value per share:
Western Alliance historical		$	15.09
FICN historical			28.43
Pro forma — 2.39203 exchange ratio			16.85
Pro forma — 2.84412 exchange ratio			16.62
FICN pro forma equivalent — 2.39203 exchange ratio			40.30
FICN pro forma equivalent — 2.84412 exchange ratio			47.26
Tangible book value per share:
Western Alliance historical		$	9.64
FICN historical			28.43
Pro forma — 2.39203 exchange ratio			8.91
Pro forma — 2.84412 exchange ratio			8.79
FICN pro forma equivalent — 2.39203 exchange ratio			21.31
FICN pro forma equivalent — 2.84412 exchange ratio			24.99

		Year Ended
		December 31,
		2006
Basic earnings per share:
Western Alliance historical		$	1.56
FICN historical			4.63
Pro forma — 2.39203 exchange ratio			1.57
Pro forma — 2.84412 exchange ratio			1.55
FICN pro forma equivalent — 2.39203 exchange ratio			3.75
FICN pro forma equivalent — 2.84412 exchange ratio			4.40
Diluted earnings per share:
Western Alliance historical		$	1.41
FICN historical			4.26
Pro forma — 2.39203 exchange ratio			1.43
Pro forma — 2.84412 exchange ratio			1.41
FICN pro forma equivalent — 2.39203 exchange ratio			3.41
FICN pro forma equivalent — 2.84412 exchange ratio			4.00

 

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:		Why are Western Alliance and FICN proposing the transaction?
A:		Western Alliance and FICN have a shared commitment to play integral roles in the growth and expansion of Nevada’s banking industry. The proposed merger provides an opportunity for Western Alliance to substantially expand its presence in Reno and throughout northern Nevada. FICN believes that the proposed merger will enable FICN to align with a partner who will enhance the banking services available to its customers without sacrificing the personal attention and dedication that FICN has always offered.
Q:		What will I receive in the merger?
A:		You may elect to receive either $93.60 in cash or Western Alliance common stock of comparable value for each share of FICN common stock you own so long as Western Alliance’s weighted average trading price for the twenty consecutive trading days ending on the last trading day prior to the date the merger is completed is between $32.91 and $39.13, unless you exercise your dissenter’s rights. If the weighted average Western Alliance trading price at that date is less than $32.91, you will receive, with respect to shares for which you have elected to receive Western Alliance common stock, shares of Western Alliance common stock based on an exchange ratio that is fixed at 2.84412 shares of Western Alliance common stock for each share of FICN common stock. If the weighted average Western Alliance stock price is more than $39.13, the exchange ratio will be fixed at 2.39203 shares of Western Alliance common stock for each share of FICN common stock. In either case, the amount of cash consideration paid per share for which an election to receive cash is made will remain $93.60 per share. You will have the opportunity to elect the form of consideration to be received for your shares, subject to proration and allocation procedures set forth in the merger agreement which are intended to ensure that 80% of the FICN shares are exchanged for shares of common stock of Western Alliance. Therefore, your ability to receive cash or stock in accordance with your election may depend on the elections of other FICN shareholders.
		Western Alliance may opt to increase the exchange ratio in specific circumstances where FICN could otherwise terminate the merger agreement and likewise, FICN may opt to decrease the exchange ratio in specific circumstances where Western Alliance could otherwise terminate the merger agreement. For more information regarding these termination rights and the adjustments that may result to the merger consideration, see “The Merger — Termination of the Merger Agreement.”
		You may also receive additional cash consideration of up to $2.38 per share during the two year period after the merger has been completed depending upon the performance of certain credits in the FICN loan portfolio. Of this amount, approximately $0.79 per share has become payable as of the date of this proxy statement/prospectus, pending the closing of the merger.
Q:		What if I hold options to purchase shares of FICN?

		If you hold options to purchase FICN common stock that are outstanding at the effective time of the merger, you may choose either to cancel the options to purchase FICN common stock in exchange for cash consideration as provided in the merger agreement or to convert the options into options to purchase shares of Western Alliance common stock. See “The Merger — Merger Consideration.” If you fail to properly make an election, you will be deemed to have elected to cancel your options in exchange for the cash consideration. You may also receive additional cash consideration of up to $2.38 per share depending upon the performance of certain credits in the FICN loan portfolio during the two year period after the merger has been completed. Of this amount, approximately $0.79 per share has become payable as of the date of this proxy statement/prospectus, pending the closing of the merger.
		If you elect to receive cash consideration for your options, you will receive an amount of cash, without interest, equal to the product of:

		• the excess of the per share cash consideration of $93.60 over the exercise price per share of such option and
		• the number of shares of FICN common stock subject to such option.

		If you elect to convert your options to purchase shares of FICN common stock into options to purchase shares of Western Alliance common stock, then:
		• the number of shares of FICN common stock subject to the option immediately before the effective time of the merger shall be multiplied by the applicable exchange ratio, rounded down to the nearest whole share and
		• the exercise price per share of Western Alliance common stock under the option immediately after the effective time of the merger shall be equal to the exercise price per share of FICN common stock under the option immediately before the effective time of the merger, divided by the applicable exchange ratio, provided that such exercise price shall be rounded up to the nearest cent. The options you receive from Western Alliance will be exercisable immediately. The duration and other terms of the FICN options will otherwise be unchanged.
Q:		How do I make an election with respect to my shares of FICN common stock?
A:		Each FICN shareholder will receive an election form, which you should complete and return, along with your FICN stock certificate(s), according to the instructions printed on the form. The election deadline will be 5:00 p.m., New York City time, on          , 2007, the date prior to the date of the special meeting (the “election deadline”). A copy of the election form is being mailed under separate cover on or about the date of this proxy statement/prospectus. If you do not send in the election form with your stock certificates by the deadline, you will be deemed not to have made an election and you may be paid in cash, Western Alliance common stock or a combination of cash and stock depending on, and after giving effect to, the number of valid cash elections and stock elections that have been made by other FICN shareholders. See “The Merger — Election Procedures for Shareholders; Surrender of Stock Certificates”.
Q:		Can I change my election with respect to my shares of FICN common stock?
A:		You may change your election at any time prior to the election deadline by submitting to American Stock Transfer & Trust Company written notice accompanied by a properly completed and signed, revised election form. You may revoke your election by submitting written notice to American Stock Transfer & Trust Company prior to the election deadline or by withdrawing your stock certificates prior to the election deadline. Shareholders will not be entitled to change or revoke their elections following the election deadline. All elections will be revoked automatically if the merger agreement is terminated.
Q:		How do I make an election with respect to my options to purchase shares of FICN common stock?
A:		If you own options to purchase shares of FICN common stock, you will receive an election form which you should complete and return to American Stock Transfer & Trust Company according to the instructions printed on the form. The election deadline will be the same as for elections with respect to shares of FICN common stock, which is 5:00 p.m., New York City time, on          , 2007, the date prior to the date of the special meeting. A copy of the election form is being mailed under separate cover on or about the date of this proxy statement/prospectus. If you do not complete and return your election form, you will be deemed to have elected to cancel your options in exchange for the cash consideration.
Q:		Can I change my election with respect to my options to purchase shares of FICN common stock?
A:		You may change or revoke your election by written notice received by American Stock Transfer & Trust Company prior to the election deadline. Optionholders will not be entitled to revoke or change their election following the election deadline, but may exercise their options in accordance with the terms thereof. Any exercise of options for which an election has been made will have the effect of automatically revoking such election. Once an option is exercised, such exercise cannot be revoked or undone. All elections will be revoked automatically if the merger agreement is terminated.
Q:		Will I receive any dividends?
A:		Before the merger takes place, FICN has agreed not to pay any dividends to its shareholders. After the merger, any dividends will be based on what Western Alliance pays to its shareholders. Western Alliance has not paid dividends in the past and does not presently intend to pay dividends.

Q:		How many votes are needed to approve the merger?
A:		A majority of the outstanding shares of FICN’s common stock entitled to vote must vote in favor of the merger agreement in order for it to be adopted and for the merger to be approved. Accordingly, the failure of any holder of FICN common stock to vote on this proposal will have the same effect as a vote against the proposal. Each of the executive officers and directors of FICN individually have entered into an agreement with Western Alliance to vote their shares of FICN common stock in favor of the merger agreement and against any competing proposal. These shareholders held approximately 24.43% of FICN’s outstanding common stock as of December 31, 2006.
Q:		Who can vote?
A:		You are entitled to vote at the FICN special meeting if you owned FICN common stock at the close of business on          , 2007. You will have one vote for each share of FICN common stock that you owned at that time.
Q:		What do I need to do now?
A:		You should first carefully read this proxy statement/prospectus. If you are a FICN stockholder:
		• After you have decided how to vote your shares, please indicate on the enclosed proxy card how you want to vote, and sign, date and return it as soon as possible in the enclosed envelope. If you sign and send in your proxy card and do not indicate how you want to vote, your proxy card will be voted FOR approval of the merger agreement. Not returning a proxy card, or not voting in person at the special meeting or abstaining from voting, will have the same effect as voting AGAINST the merger agreement.

	•	You can choose to attend the special meeting and vote your shares in person instead of completing and returning a proxy card. If you do complete and return a proxy card, you may change your vote at any time up to and including the time of the vote on the day of the special meeting by following the directions in the section “Shareholder Meeting — Revocability of Proxies”.

		• You should complete and return the election form, together with your stock certificate(s), to American Stock Transfer & Trust Company according to the instructions printed on the form. Do not send your FICN stock certificates and/or your election form with your proxy card.
		If you are a FICN option holder, you should complete and return the election form with respect to your options to American Stock Transfer & Trust Company according to the instructions printed on the form.
Q:		Can I change my vote after I have mailed my signed proxy card?
A:		Yes. There are three ways for you to revoke your proxy and change your vote. First, you may send a written notice to the Secretary of FICN at First Independent Capital of Nevada, 5335 Kietzke Lane, Reno, Nevada 89511, stating that you would like to revoke your proxy. Second, you may complete and submit a new proxy card. Third, you may vote in person at the special meeting.
Q:		When will the merger close?
A:		The merger is expected to close as soon as possible after the receipt of FICN shareholder and regulatory approvals, which is expected in the first half of 2007. However, we cannot assure you when or if the merger will occur.
Q:		What do I do with my stock certificates?
A:		You should send your FICN common stock certificates to the exchange agent, American Stock Transfer & Trust Company, with your completed, signed election form prior to the election deadline. If you do not send in the election form with your stock certificates by the election deadline, you will be deemed not to have made an election and you may receive cash, Western Alliance common stock or a mixture of cash and stock, for each share of your FICN common stock in the merger. Please DO NOT send your stock certificates with your proxy card.

Q:		What needs to be done to complete the merger?
A:		Completion of the merger depends on a number of conditions being met. In addition to compliance with the merger agreement, these include:
		1. Approval of the merger agreement by FICN shareholders.
		2. Approval of the merger by federal and state regulatory authorities.
		3. Approval by the New York Stock Exchange of listing of Western Alliance’s common stock to be issued in the merger.
		4. The absence of any injunction or legal restraint blocking the merger or government proceedings trying to block the merger.
		5. The registration statement filed with the SEC to register the shares of Western Alliance’s common stock to be issued in the merger shall have been declared effective by the SEC.
		6. Receipt by FICN of a satisfactory legal opinion regarding certain tax matters.
		When the law permits, Western Alliance or FICN could decide to complete the merger even though one or more of these conditions has not been met. We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
Q:		Who can I call with questions or to obtain copies of this proxy statement/prospectus and other documents?
A:		Lisa L. Milke, Chief Financial Officer of FICN, at (775) 824-4345.
		A copy of the merger agreement and any of the documents incorporated by reference in this proxy statement/prospectus will be provided to you promptly without charge if you call or write to Dale Gibbons, Chief Financial Officer, Western Alliance Bancorporation, 2700 West Sahara Avenue, Las Vegas, Nevada 89102, Telephone: 702-248-4200. The merger agreement and the documents incorporated herein by reference have been previously filed with the SEC. See “Where You Can Find More Information” on page 61 and “Information Incorporated by Reference” on page 62.

 

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

	•	changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business;
	•	inflation, interest rate, market and monetary fluctuations;
	•	the inability to obtain the regulatory approvals for the merger on acceptable terms, on the anticipated schedule or at all;
	•	lower revenues following the merger than we expect;
	•	changes in gaming or tourism in our primary market area;
	•	risks associated with our growth and expansion strategy and related costs;
	•	increased lending risks associated with our high concentration of commercial real estate, construction and land development and commercial, industrial loans;
	•	increases in competitive pressures among financial institutions and businesses offering similar products and services;
	•	higher defaults on our loan portfolio than we expect;
	•	changes in management’s estimate of the adequacy of the allowance for loan losses;
	•	legislative or regulatory changes or changes in accounting principles, policies or guidelines;
	•	management’s estimates and projections of interest rates and interest rate policy;
	•	the execution of our business plan; and
	•	other factors affecting the financial services industry generally or the banking industry in particular.

 

In addition to the other information included in this proxy statement/prospectus (including the matters addressed in “Cautionary Note Concerning Forward-Looking Statements”) and incorporated by reference into this document, you should carefully consider the matters described below in determining whether to approve the merger agreement and in connection with your election with respect to the form of merger consideration you will receive for your FICN shares or options. Please also refer to the additional risk factors identified in the periodic reports and other documents of Western Alliance incorporated by reference into this document and listed in “Information Incorporated by Reference” on page 62. Any of these risks could have an adverse effect on Western Alliance’s business, financial condition, results of operations or prospects, which could in turn affect the price of its shares.

 

The integration of the companies will present significant challenges that may result in the combined business not operating as effectively as expected or in the failure to achieve some or all of the anticipated benefits of the transaction.

 

The benefits and synergies expected to result from the proposed transaction will depend in part on whether the operations of FICN can be integrated in a timely and efficient manner with those of Western Alliance. Western Alliance will face challenges in consolidating its functions with those of FICN, and integrating the organizations, procedures and operations of the two businesses. The integration of Western Alliance and FICN will be complex and time-consuming, and the management of both companies will have to dedicate substantial time and resources to it. These efforts could divert management’s focus and resources from other strategic opportunities and from day-to-day operational matters during the integration process. Failure to successfully integrate the operations of Western Alliance and FICN could result in the failure to achieve some of the anticipated benefits from the transaction, including cost savings and other operating efficiencies, and could have an adverse effect on the business, results of operations, financial condition or prospects of Western Alliance after the transaction.

 

The price of Western Alliance common stock will fluctuate before and after the merger, which could increase or decrease the value of the merger consideration received by FICN shareholders receiving Western Alliance common stock.

 

As long as Western Alliance’s weighted average trading price for the twenty consecutive trading days ending on the trading day immediately prior to the date the merger is completed is between $32.91 and $39.13, each share of FICN common stock for which stock consideration is paid will receive $93.60 in Western Alliance common stock. However, if Western Alliance’s weighted average trading price is less than $32.91, the exchange ratio will be fixed at 2.84412, and if the weighted average trading price is more than $39.13, the exchange ratio will be fixed at 2.39203. On December 18, 2006, the day before the merger agreement was executed, the closing price of a share of Western Alliance common stock was $34.83. On          , 2007, the most recent practicable date before the mailing of this proxy statement/prospectus, the closing price was $     . Based on the 2.84412 exchange ratio, the implied value of the merger consideration consisting of Western Alliance common stock was $99.06 per share of FICN common stock on December 18, 2006 and $      per share FICN common stock on          , 2007. Based on the 2.39203 exchange ratio, the implied value of the merger consideration consisting of Western Alliance common stock was $83.31 per share FICN common stock on December 18, 2006 and $      per share FICN common stock on          , 2007.

 

The price of Western Alliance common stock may increase or decrease before and after completion of the merger. Therefore, the market value of Western Alliance common stock received by a FICN shareholder in connection with the merger could be lower than the market value of Western Alliance stock on December 18, 2006,          , 2007 or the closing date of the merger, and the market value of the stock consideration could be less than the $93.60 cash consideration received by shareholders receiving the cash consideration. The market value of Western Alliance common stock received by a FICN shareholder in connection with the merger could also be higher than those trading prices, and shareholders receiving the cash consideration could

receive cash in an amount less than the market value of the stock consideration. The market price of Western Alliance stock fluctuates based upon general market economic conditions, Western Alliance’s business and prospects and other factors described herein and in the documents incorporated herein by reference.

 

Shareholders may receive a form of consideration different from what they elect.

 

While each FICN shareholder may elect to receive cash or Western Alliance common stock in the merger, 80% of the FICN common stock outstanding at the completion of the merger will be converted into Western Alliance common stock. Therefore, if FICN shareholders elect more cash or stock than is available under the merger agreement, their elections will be prorated to permit 80% of the FICN common stock outstanding at the completion of the merger to be converted into Western Alliance common stock. As a result, your ability to receive cash or stock in accordance with your election may depend on the elections of other FICN shareholders.

 

If you tender shares of FICN common stock to make an election, you will not be able to transfer those shares until after the merger, unless you revoke your election prior to the election deadline.

 

To make a cash or stock election, you must deliver your stock certificate(s) to the exchange agent. The deadline for doing this is 5:00 p.m. New York City time, on          , 2007, the day before the special meeting of shareholders. You will not be able to sell any shares of FICN common stock that you have delivered, unless you revoke your election before the deadline by providing written notice to the exchange agent. If you do not revoke your election, you will not be able to liquidate your investment in FICN common stock for any reason until you receive cash or Western Alliance common stock, or both, in the merger. During the period between delivery of your shares and the closing of the merger, the trading price of Western Alliance common stock may decrease.

 

The date that you will receive your merger consideration depends on the completion date of the merger, which is expected to occur in the first half of 2007. The completion date of the merger might be later than expected due to unforeseen events, such as delays in obtaining regulatory approvals.

 

The merger agreement limits FICN’s ability to pursue alternatives to the merger.

 

The merger agreement contains terms and conditions that make it more difficult for FICN to sell its business to a party other than Western Alliance. These “no shop” provisions impose restrictions on FICN that, subject to certain exceptions, limit FICN’s ability to discuss or facilitate competing third-party proposals to acquire all or a significant part of FICN.

 

In addition, the board of directors of FICN has agreed that it will not, directly or indirectly, facilitate or recommend a competing acquisition proposal, subject to limited exceptions. While the board of directors could take such actions if it determined that the failure to do so would violate its fiduciary duties, doing so would entitle Western Alliance to terminate the merger agreement and may entitle it to receive a termination fee. FICN will also be required to pay the termination fee if a competing acquisition proposal has been made known to FICN or its shareholders and the merger agreement is subsequently terminated for a variety of reasons (including because FICN shareholders fail to approve the merger or because FICN willfully breaches the merger agreement), and FICN completes, or enters into an agreement for, an alternative acquisition transaction during the 12 months after the termination of the merger agreement.

 

Western Alliance required FICN to agree to these provisions as a condition to Western Alliance’s willingness to enter into the merger agreement. However, these provisions might discourage a third party that might have an interest in acquiring all or a significant part of FICN from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than the current proposed merger consideration, and the termination fee might result in a potential competing acquirer proposing to pay a lower per share price to acquire FICN than it might otherwise have proposed to pay.

 

FICN’s executive officers and directors have interests in the merger that are different from your interest as an FICN shareholder.

 

FICN executive officers negotiated the merger agreement with Western Alliance, and the board of directors approved the agreement and is recommending that FICN shareholders who are entitled to vote, vote for the agreement. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that FICN’s executive officers and directors have interests in the merger in addition to the interests that they share with you as an FICN shareholder. As described in detail under the heading “Interests of FICN Directors and Executive Officers in the Merger That are Different Than Yours,” there are substantial interests to be conveyed to each director and executive officer of FICN as a result of the accelerated vesting of stock options and payments pursuant to severance agreements, as well as other considerations. Following the completion of the merger, the board of directors of Western Alliance will appoint Mr. John P. Sande III, currently the chairman of FICN and First Independent Bank of Nevada, to its board of directors. Mr. Sande will remain the chairman of First Independent Bank of Nevada.

 

We are first mailing this document to the holders of FICN’s common stock on or about          , 2007. It is accompanied by a proxy card furnished in connection with the solicitation of proxies by the FICN Board of Directors for use at the special meeting of FICN’s shareholders at      local time on          , 2007, at its principal executive offices at 5335 Kietzke Lane, Reno, Nevada 89511. At the special meeting, the holders of FICN’s common stock will consider and vote on proposals:

 

1. To adopt and approve an agreement and plan of merger, pursuant to which FICN will merge with and into Western Alliance with Western Alliance surviving (referred to herein as the “merger”).

 

2. To transact any other business that properly comes before the special meeting, or any adjournments or postponements of the meeting, including, without limitation, a motion to adjourn the special meeting to another time and/or place for the purpose of soliciting additional proxies in order to approve the merger agreement or otherwise.

 

The common stock is the only class of capital stock of FICN in which there are shares outstanding. Therefore, if you hold shares of common stock, you are entitled to vote those shares at the special meeting of shareholders.

 

The FICN Board of Directors has fixed the close of business on          , 2007 as the record date for determining the FICN shareholders entitled to receive notice of and to vote at the special meeting.  Only holders of record of FICN’s common stock at the close of business on that day will be entitled to vote at the special meeting or at any adjournment or postponement of the meeting. At the close of business on          , 2007, there were           shares of FICN’s common stock outstanding and entitled to vote at the special meeting, held by approximately           shareholders of record.

 

Each holder of FICN’s common stock on          , 2007 will be entitled to one vote for each share held of record on each matter that is properly submitted at the special meeting or any adjournment or postponement of the meeting. The presence, in person or by proxy, of the holders of a majority of FICN’s common stock issued and outstanding and entitled to vote at the special meeting is necessary to constitute a quorum. Abstentions with respect to shares of FICN common stock will be included in the calculation of the number of shares represented at the special meeting in order to determine whether a quorum has been achieved. Since approval of the merger agreement requires the affirmative vote of the holders of at least a majority of the

shares of FICN’s common stock issued and outstanding, abstentions with respect to shares of FICN common stock will have the same effect as a vote against the merger agreement.

 

If a quorum is not obtained, or if fewer shares of FICN’s common stock are voted in favor of the proposal for approval of the merger agreement than the number required for approval, it is expected that the special meeting will be adjourned to allow additional time for obtaining additional proxies. In that event, proxies will be voted to approve an adjournment, except for proxies as to which instructions have been given to vote against the merger agreement.

 

If you hold shares of FICN common stock and your proxy card is properly executed and received by FICN in time to be voted at the special meeting, the shares represented by the proxy card will be voted in accordance with the instructions marked on the proxy card. Executed proxies with respect to shares of FICN common stock with no instructions indicated on the proxy card will be voted FOR the merger agreement and the merger.

 

The FICN board of directors is not aware of any other matters that may properly come before the special meeting. If any other matters properly come before the special meeting, the persons named in the accompanying proxy will vote the shares represented by all properly executed proxies on those matters as determined by a majority of the FICN board of directors.

 

If you hold shares of FICN common stock, you are requested to complete, date and sign the accompanying proxy form and to return it promptly in the enclosed postage-paid envelope. The enclosed proxy card is different from the election form that you can use to elect to receive cash or stock in the merger. Do not return your proxy card with the election form. For information about the election form, see “The Merger-Election Procedures; Surrender of Stock Certificates”. To vote on the merger agreement, you need to hold shares of FICN common stock and complete the proxy card properly and return it in the enclosed envelope or attend the special meeting and vote in person.

 

You should not forward any stock certificates with your proxy card. If you complete a stockholder election form, you should forward your FICN stock certificates to the exchange agent with the election form. If you do not complete a stockholder election form, if the merger takes place, FICN stock certificates should be delivered in accordance with instructions that will be sent to you by the exchange agent promptly after the effective time of the merger.

 

In order to approve and adopt the merger agreement, the holders of at least a majority of the shares of FICN’s common stock issued and outstanding on          , 2007, must affirmatively vote FOR the merger agreement.

 

The required vote of FICN’s shareholders is based on the total number of outstanding shares of FICN’s common stock entitled to vote and not on the number of shares which are actually voted. Not returning a proxy card, not voting in person at the special meeting or abstaining from voting all will have the same effect as voting AGAINST the merger agreement.

 

The directors and executive officers of FICN have agreed to vote their shares in favor of the merger agreement and against competing proposals. The directors and executive officers beneficially owned as of December 31, 2006 a total of 273,620 shares of FICN’s common stock (excluding all options to purchase shares of FICN’s common stock), which was approximately 24.43% of the outstanding shares of FICN’s common stock on that date.

 

If you submit a proxy card, attending the special meeting will not automatically revoke your proxy. However, you may revoke a proxy at any time before it is voted by:

 

 

 

In addition to solicitation by mail, directors, officers and employees of FICN may solicit proxies for the special meeting from stockholders personally or by telephone or telecopier without receiving additional compensation for these activities. The cost of soliciting proxies will be paid by FICN.

 

Unaudited Consolidated Financial Results for 2006 and the Fourth Quarter of 2006

 

On January 23, 2007, Western Alliance announced its unaudited consolidated financial results for 2006 and the fourth quarter of 2006.

 

Total assets increased 45.9% to $4.17 billion at December 31, 2006 from $2.86 billion at December 31, 2005. Of this growth, $467 million was organic, while $845 million represents the assets acquired through the Bank of Nevada and Intermountain mergers completed on April 28, 2006 and March 31, 2006, respectively. Loans were $3.0 billion at December 31, 2006, an increase of 67.5%, or $1.21 billion, from December 31, 2005. Deposits were $3.4 billion at December 31, 2006, an increase of 42%, or $1.01 billion, from December 31, 2005.

 

Net Income.  Net income was $39.9 million for 2006, up 42.1% from $28.1 million for 2005. Diluted earnings per share were $1.41, compared to $1.24 for 2005. During the fourth quarter 2006, we liquidated $159 million of our securities portfolio and recognized a pre-tax loss of $4.4 million, or $0.10 per share.

 

Net Interest Income.  Net interest income increased 41.8% to $40.6 million in the fourth quarter of 2006 from $28.6 million in the fourth quarter of 2005. The net interest margin was 4.41% in the fourth quarter of 2006, compared with 4.42% in the third quarter of 2006. The margin was 4.44% in the fourth quarter of 2005.

 

Provision for Loan Losses.  The provision for loan losses was $0.7 million for the fourth quarter of 2006 compared with $1.0 million for the third quarter of 2006 and $2.0 million for the fourth quarter of 2005. Non-accrual loans were $1.4 million representing 0.05% of total loans at December 31, 2006, compared with 0.01% of total loans at December 31, 2005. Net charge offs were $0.3 million for the fourth quarter of 2006, compared with $0.1 million for the same period in 2005.

 

Non-Interest Income.  Non-interest income was $5.3 million for the fourth quarter of 2006, up 54.6% from $3.4 million for the same period in 2005. For the third quarter of 2006, non-interest income was $4.6 million.

 

Net Revenue.  Net revenue (the sum of net interest income and non-interest income) was $167.0 million for 2006, up 45.6% from $114.0 million for 2005. Net revenue was $45.8 million for the fourth quarter of 2006, up 43.2% from $32.0 million for the fourth quarter of 2005. For the third quarter of 2006, net revenue was $43.9 million.

 

Non-Interest Expense.  Non-interest expense was $26.9 million for the fourth quarter of 2006, up 58.0% from $17.1 million for the same period in 2005. For the third quarter of 2006, noninterest expense was $25.1 million. Western Alliance had 785 full-time equivalent employees on December 31, 2006 compared with 763 on September 30, 2006 and 537 on December 31, 2005. Western Alliance had 31 full-service banking offices on December 31, 2006 compared with 29 at September 30, 2006 and 16 on December 31, 2005.

 

The following tables contain selected consolidated financial and other data of Western Alliance at the dates and for the periods indicated. You should read this information in conjunction with the consolidated financial statements included in this document. The information at and for the three months and year ended December 31, 2006 is unaudited. However, in the opinion of Western Alliance management, all adjustments (consisting only of normal recurring adjustments) which are necessary to fairly present the results for the periods included have been made.

 

 

 

 

 

 

Unaudited Consolidated Financial Results for 2006 (Compared to 2005)

 

Total assets were $428.0 million at December 31, 2006, an increase of 21.0% from $353.8 million at December 31, 2005. Loans were $288.4 million at December 31, 2006, an increase of $56.4 million from December 31, 2005. Deposits were $386.2 million at December 31, 2006, an increase of $65.7 million from December 31, 2005. Stockholders’ equity increased approximately $6.2 million to $31.8 million at December 31, 2006. FICN had 89 full-time equivalent employees on December 31, 2006, compared to 84 full-time equivalent employees on December 31, 2005. Net income was $5.1 million, or $4.26 per diluted share, for 2006, compared with $4.4 million, or $3.74 per diluted share, for 2005.

 

The following tables contain selected consolidated financial and other data of FICN at the dates and for the periods indicated. The information at and for the year ended December 31, 2006 is unaudited. However, in the opinion of FICN management, all adjustments (consisting only of normal recurring adjustments) which are necessary to fairly present the results for the periods included have been made.

 

 

 

Set forth below are highlights from Western Alliance’s consolidated financial data of and for the years ended December 31, 2001 through 2005 and Western Alliance’s unaudited consolidated financial data as of and for the nine months ended September 30, 2005 and 2006. The results of operations for the nine months ended September 30, 2006 are not necessarily indicative of the results of operations of Western Alliance for the full year. Western Alliance’s management prepared the unaudited information on the same basis as it prepared Western Alliance audited consolidated financial statements. In the opinion of Western Alliance’s management, this information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data for these periods. You should read this information in conjunction with Western Alliance’s consolidated financial statements and related notes for the years ended December 31, 2003 through 2005 and for the nine months ended September 30, 2006 and 2005 that are incorporated by reference to this joint proxy statement/prospectus and from which this information is derived. See also “Where You Can Find More Information” on page 61 and “Information Incorporated by Reference” on page 62.

 

 

 

 

FICN is a registered bank holding company under the Bank Holding Company Act of 1956. FICN was incorporated in 2001 in order to serve as the holding company for First Independent Bank of Nevada, or First Independent Bank. FICN’s principal office is located at 5335 Kietzke Lane, Reno, Nevada 89511. FICN had approximately 111 shareholders as of December 31, 2006 and 1,120,074 shares of common stock issued and outstanding. On a consolidated basis, as of December 31, 2006, FICN had approximately $428.0 million in total assets, $288.4 million in total loans, $386.2 million in deposits and $31.8 million in total equity. There is no established public trading market for the common stock of FICN.

 

First Independent Bank was organized as a Nevada banking corporation in 1999 and began operations in September 1999. First Independent Bank is chartered to engage in the business of banking by the Nevada

Division of Financial Institutions and receives deposit insurance from and is regulated by the Federal Deposit Insurance Corporation. First Independent Bank provides a full range of traditional banking services, with a special emphasis on serving the banking needs of the Northern Nevada area’s business community. Although First Independent Bank also offers consumer-banking services, it generally targets its services to the needs of commercial customers. First Independent Bank’s services include the acceptance of checking, savings, and money market deposits (all of which are insured by the FDIC up to applicable limits), and the granting of commercial, real estate, construction, small business administration and consumer loans. First Independent Bank also offers traveler’s checks, safe deposit boxes, courier and other services. Its headquarters is located at 5335 Kietzke Lane, Reno, Nevada 89511 and it operates four branch locations in the greater Reno-Sparks area and in the Fallon central business district.

 

First Independent Bank grants commercial, construction, real estate and consumer loans to customers. First Independent Bank’s loans are expected to be repaid from cash flows or proceeds from the sale of selected assets of the borrower. First Independent Bank’s policy for requiring collateral is to obtain collateral whenever it is available or desirable, depending upon the degree of risk that First Independent Bank is willing to accept.

 

First Independent Bank had loan loss reserves of approximately $3.5 million (approximately 1.20% of its total loan portfolio) as of December 31, 2006. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against allowance for loan losses when management of First Independent believes the collection of loan principal is unlikely. The allowance is an amount that management believes will be adequate to absorb probable losses on existing loans that may become uncollectible, based on evaluation of the collectability of loans, prior credit loss experience and peer bank experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall quality, review of specific problem credits, and current economic conditions that may affect the bank’s borrowers. In addition, the FDIC, as an integral part of its examination process, periodically reviews First Independent Bank’s allowance for loan losses, and may require it to make additions to the allowance based on its judgment about information available to the FDIC at the time of its examination.

 

As of December 31, 2006, FICN had no employees and First Independent Bank had a total of 89 full time equivalent employees. None of the companies’ employees is represented by a union. Management considers their working relationships with the First Independent Bank employees to be good and the companies have never experienced an interruption of operation due to any labor dispute.

 

First Independent Bank owns a 30,000 square foot commercial office building on over two acres on Kietzke Lane in Reno, Nevada. Such property is used for its retail banking business, for certain administrative and support functions and for the principal executive offices of FICN and First Independent Bank. The property is unencumbered by any mortgage debt. First Independent Bank subleases a small portion of the premises to a third party. In addition, First Independent Bank owns a 4,917 square foot free standing full service branch bank facility on approximately one acre of land in Sparks, Nevada. The property is unencumbered by any mortgage debt and no rent is charged for the use of these facilities. First Independent Bank also owns a 4,324 square foot free standing full service branch bank facility on approximately one acre of land off Interstate 80 and the Robb Drive interchange in West Reno, Nevada. Directly adjacent to the Robb Drive property, First Independent Bank owns an approximately one acre vacant parcel of land. This property is currently for sale and the bank, through it’s brokerage representation, is actively soliciting buyers. Both Robb Drive properties are unencumbered by any mortgage debt and no rent is charged for the use of these facilities or the vacant land.

 

First Independent Bank has agreed to lease approximately 3,920 square feet in Fallon, Nevada for a full service branch bank facility under a non-cancelable operating lease expiring in December 2017. The lease

includes two renewal option periods of five years. The monthly rental for 2007 is $13,600 with annual increases of approximately 3.5% thereafter beginning in January of each subsequent year. In September 2005, First Independent Bank also entered into a ground lease for approximately one acre of land in the Spanish Springs area of Sparks, Nevada under a non-cancelable operating lease expiring September 2025. The lease includes four renewal option periods of five years. First Independent Bank entered into this ground lease for purposes of constructing a new branch bank facility. The land lease calls for monthly payments of $5,740 with a 10% increase on each five year anniversary of the initial lease.

 

In the normal course of business, FICN and First Independent Bank may be involved in various legal proceedings. FICN is not aware of any proceedings, which are likely to have a material adverse effect on FICN’s financial position. FICN is currently not a party to any legal proceedings.

 

The following table provides information regarding FICN’s equity compensation plans in effect at December 31, 2006.

 

 

The information in this section is qualified in its entirety by reference to the full text of the merger agreement, a copy of which is attached to this proxy statement/prospectus as Appendix A beginning on page A-1 and which is incorporated by reference into this document.

 

Western Alliance and FICN have entered into an agreement and plan of merger pursuant to which Western Alliance will acquire FICN and its wholly owned subsidiary First Independent Bank of Nevada through the merger of FICN with and into Western Alliance, with Western Alliance surviving. FICN’s wholly owned subsidiary First Independent Bank of Nevada will survive the merger as a wholly owned subsidiary of Western Alliance.

 

Western Alliance is a bank holding company headquartered in Las Vegas, Nevada that provides a full range of banking and related services to locally owned businesses, professional firms, real estate developers and investors, local non-profit organizations, high net worth individuals and other consumers through subsidiary banks and financial services companies located in Nevada, Arizona and California. On a consolidated basis, as of September 30, 2006, Western Alliance had approximately $4.0 billion in assets, $2.9 billion in total loans, $3.3 billion in deposits and $393.1 million in stockholders’ equity.

 

FICN is a bank holding company headquartered in Reno, Nevada. Through its wholly owned subsidiary, First Independent Bank of Nevada, FICN operates four banking offices and a commercial real estate brokerage division in the Reno/Sparks and Fallon communities of northern Nevada. On a consolidated basis, as of December 31, 2006, FICN had approximately $428.0 million in assets, $288.4 million in total loans, $386.2 million in deposits and $31.8 million in stockholders’ equity.

 

During the normal course of its business, the management and board of directors of FICN periodically reviewed and assessed the strategic options of the Company. Consistent with its fiduciary obligations to its shareholders, the board of directors of FICN periodically considered strategic options including strategies to grow and enhance FICN’s business through internal and external means. Those discussions included analyses of the financial institution merger market on a national and regional basis, the potential value of the FICN franchise based on current merger market fundamentals, and the potential market value of the FICN stock assuming the execution of its current business plan under various scenarios. The board of directors and management of FICN also routinely discussed the increasing level of competition, continuing consolidation, regulatory burden and related costs, and other developments in the financial services industry.

 

In this regard, a number of strategic alternatives to maximize value for shareholders including potential acquisitions, organic growth opportunities, and capital management options were discussed at a board of directors meeting on October 26, 2006. Furthermore, the potential alternative of merging with a larger organization was also discussed. In a presentation by Hovde Financial, Inc. (“Hovde”), an investment banking firm used by the board to provide financial analysis from time to time, the board reviewed management’s financial forecasts as well as the potential value of FICN on a sale. Additionally, the board discussed the characteristics of several potential partners, including Western Alliance, and the requirements that would have to be satisfied in order to be considered as a candidate for a merger.

 

In light of the potential sale alternative discussed, the board agreed at the October 26, 2006 board meeting to accept an invitation that had been previously extended to meet with representatives from Western Alliance. On November 6, 2006 Robert Sarver, Chairman and CEO of Western Alliance, Dale Gibbons, CFO of Western Alliance, Larry Woodrum, former CEO of Bank of Nevada and current director of Western Alliance, and James Lundy, current CEO of Alliance Bank of Arizona met in Reno with FICN’s strategic planning committee and executive management team, including John P. Sande, III, Chairman, Leo Seevers, Vice Chairman, Blake Smith, director, Grant Markham, CEO and director, Jim DeVolld, President, and Lisa Milke, CFO. In addition to discussing operational topics, Mr. Sarver communicated to the FICN representatives Western Alliance’s desire for a partnership with FICN, including integration strategies and the potential both companies could achieve as a combined entity. No pricing was discussed at this meeting.

 

Following the November 6, 2006 meeting and through a letter dated November 14, 2006, Western Alliance submitted a non-binding indication of interest to acquire FICN. In addition to pricing and a stock and cash mixture consideration, the indication detailed structural and social considerations including First Independent Bank remaining as a separate subsidiary, the management team and board of directors remaining in place, and one board member being added to the Western Alliance board. Western Alliance also expressed confidence in getting a transaction announced by the end of 2006 and closed in the first or second quarter of 2007. After discussion, the board determined that it was in the best interest of FICN and its shareholders to explore the prospect of a combination, concluding that a partnership could provide an attractive return on shareholder investment while providing access to additional capital to promote expansion opportunities and maintaining the people and structure in place at First Independent Bank.

 

In consideration of the Western Alliance indication and other potential partnership opportunities, the board of directors decided to retain Hovde to assist and advise in evaluating the offer from Western Alliance, explore other potential transactions, and issue a fairness opinion in the event such a transaction were to occur. FICN entered into an engagement agreement with Hovde on November 15, 2006.

 

In parallel to evaluating the Western Alliance indication of interest, the board of directors, with input and analysis from its advisors, authorized Hovde to contact on a confidential basis two other parties to gauge interest in a potential transaction. No due diligence material was distributed and no confidentiality agreements were requested. One of the parties indicated they would not be interested in a potential transaction at this time. The other party indicated that they would be interested in making an acquisition in the region; however, they referenced a significant concern about pricing in the current merger market. After considering the high-level feedback received from the additional parties and the offer from Western Alliance, the board of directors elected to begin negotiations of an agreement exclusively with Western Alliance and to begin due diligence. A

confidentiality agreement was executed by Western Alliance on November 15, 2006 and due diligence took place over the next few weeks, including an onsite review of FICN’s loan portfolio, operations, and facilities. FICN also reviewed public information available on Western Alliance to gain comfort on the reinvestment opportunity in Western Alliance’s common stock.

 

FICN retained Jones Vargas as legal counsel in connection with the negotiations with Western Alliance. On November 24, 2006, Western Alliance provided to FICN and its representatives an initial draft of the merger agreement. During the following weeks, the parties and their representatives continued due diligence and negotiated the terms of the merger agreement and ancillary agreements. The terms of the employment agreements for certain executives and managers of FICN and First Independent Bank were also negotiated during this period.

 

Western Alliance’s board of directors met on December 18, 2006 to discuss the proposed transaction and terms of the agreement. After this discussion, Western Alliance’s board approved the transaction by the unanimous vote of all directors, and authorized management to execute and deliver the merger agreement, with such changes as management, on the advice of legal counsel, deemed necessary or appropriate.

 

A special meeting of FICN’s board of directors was held on December 19, 2006 to discuss the proposed transaction and terms of the agreement. Jones Vargas provided a review of the merger agreement and ancillary agreements and directors’ fiduciary duties in connection with a possible transaction with Western Alliance. Hovde presented a summary of its financial analyses relating to the proposed merger and responded to questions posed by the board of directors. Hovde provided its written opinion that, as of the date of the opinion and based upon and subject to the considerations described in the opinion, the consideration to be received by the holders of common stock in the proposed merger was fair, from a financial point of view, to such holders. The board meeting included, among other things, discussions of the form of consideration to be received by the shareholders of FICN, the break-up fee, potential price adjustments, caps and collars, the current stock price of Western Alliance, and the implications to FICN’s shareholders, employees and customers. Also discussed were the reasons for completing the merger weighed against the implications of FICN remaining independent. FICN’s board of directors evaluated the information provided in the presentation made by Hovde and fairness opinion that was presented. After due deliberations, the board of directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, were advisable to, fair to and in the best interests of FICN and its shareholders and voted unanimously to approve the terms of the merger agreement and the merger.

 

FICN and Western Alliance executed the definitive merger agreement on December 19, 2006, and a joint press release was issued later that evening.

 

FICN’s board of directors has determined that the merger is fair to and in the best interests of FICN and its shareholders and, by the unanimous vote of all the directors of FICN present at the meeting, approved and adopted the merger agreement and the merger. ACCORDINGLY, FICN’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL HOLDERS OF FICN COMMON STOCK VOTE “FOR” APPROVAL OF THE MERGER AGREEMENT.

 

In the course of reaching its determination, FICN’s board of directors consulted with its legal counsel regarding its fiduciary duties, the terms of the merger agreement and related issues, and reviewed with its financial advisors, Hovde, Inc, and its senior management of FICN, among other things, operational matters, the financial aspects and the fairness of the transaction to the shareholders from a financial point of view.

 

In reaching its determination to approve the merger agreement, FICN’s board of directors considered all factors it deemed material. The board of directors analyzed information with respect to the financial condition, results of operations, businesses and prospects of FICN. In this regard, FICN’s board of directors considered the performance trends of FICN over the past several years. The board of directors compared FICN’s current and anticipated future operating results to publicly available financial and other information for other similarly sized banking institutions. The board also considered the ability of FICN to grow as an independent institution,

the prospects of FICN to make potential acquisitions, and its ability to further enhance shareholder value without engaging in a strategic transaction. In this regard, FICN’s board of directors considered the long-term as well as the short-term interests of FICN and its shareholders, including whether those interests may best be served by continued independence.

 

The board of directors used this information in analyzing the options available to FICN.

 

In reaching its decision to approve the merger agreement and the merger, the board of directors also considered a number of factors, including the following:

 

1. FICN’s board of directors considered the opinion, dated December 19, 2006, of its financial advisor, Hovde Financial, Inc. to the effect that, as of the date of the opinion and based on and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken described in its written opinion, the merger consideration was fair, from a financial point of view, to the holders of FICN common stock. The fairness opinion is included in this proxy statement/prospectus in Appendix C beginning on page C-1.

 

2. FICN’s board compared the purchase price offered for the common stock to the purchase prices obtained by comparable companies in recent transactions.

 

3. FICN’s board of directors considered the current operating environment, including but not limited to the continued consolidation and increasing competition in the banking and financial services industries, the prospects for further changes in these industries, and the importance of being able to capitalize on developing opportunities in these industries. FICN’s board of directors also considered the current and prospective economic and competitive conditions facing FICN in its market areas. FICN’s board also considered the challenges facing FICN in remaining an independent banking institution, the lack of opportunities to grow through potential acquisitions or “merger of equals,” and the difficulties of further enhancing shareholder value.

 

4. FICN’s board of directors reviewed the terms and conditions of the merger agreement, including the parties’ respective representations, warranties and covenants, the conditions to closing, and the fact that the merger agreement permits FICN’s board of directors, in the exercise of its fiduciary duties, under certain conditions, to furnish information to, or engage in negotiations with, a third party which has submitted an unsolicited superior proposal to acquire FICN, and provisions providing for FICN’s payment of a termination fee to Western Alliance in certain circumstances.

 

5. FICN’s board of directors considered the ability of Western Alliance to pay the merger consideration, and accordingly, reviewed Western Alliance’s financial condition, results of operations, liquidity and capital position.

 

6. FICN’s board of directors considered the ability of Western Alliance to consummate the transaction in an efficient and timely manner based on its history of consummating other acquisitions.

 

7. FICN’s board of directors considered the likelihood of the merger being approved by the appropriate regulatory authorities. See “The Merger — Regulatory Approvals” beginning on page 28 of this proxy statement/prospectus for more information.

 

8. FICN’s board of directors examined current financial market conditions with respect to shares of FICN common stock. In particular, the board noted that shares of Western Alliance common stock are publicly traded on the New York Stock Exchange while FICN’s common stock is relatively illiquid.

 

9. FICN’s board of directors considered the potential impact of the merger on FICN’s customers. The board viewed the potential impact on customers as positive in view of Western Alliance’s history of providing exceptional service to customers, and the fact that the merger will enhance the services available to FICN’s customers without sacrificing the personal attention and dedication that FICN has offered.

 

10. FICN’s board of directors considered the merger’s impact on FICN’s employees and offices. The board viewed the impact on employees as generally positive, in that they would become part of a more geographically diversified institution with greater resources and opportunities than FICN.

 

11. FICN’s board of directors considered community and societal considerations, and Western Alliance’s commitment to local civic groups, charitable organizations, and the towns and cities in which it operates.

 

12. FICN’s board of directors considered the fact that the shareholders of Western Alliance would not be required to approve the merger agreement.

 

This description of the information and factors considered by FICN’s board of directors is not intended to be exhaustive, but is believed to include all material factors the board considered. In determining whether to approve and recommend the merger agreement, FICN’s board of directors did not assign any relative or specific weights to any of the foregoing factors, and individual directors may have weighed factors differently. After deliberating with respect to the merger and the merger agreement, considering, among other things, the reasons discussed above, FICN’s board of directors approved and adopted the merger agreement and the merger as being in the best interests of FICN and its shareholders, based on the total mix of information available to the board.

 

The purpose of the merger is to enable Western Alliance to acquire the assets and business of FICN and its subsidiary First Independent Bank of Nevada. First Independent Bank of Nevada will continue to operate following the merger as a subsidiary of Western Alliance.

 

FICN will merge into Western Alliance with Western Alliance continuing as the surviving entity following the merger. When the merger takes place, except as discussed below, each issued and outstanding share of FICN’s common stock will be converted into the right to receive cash and shares of Western Alliance’s common stock based on the merger consideration, as described below. Cash will be paid instead of fractional shares of Western Alliance common stock. Shares of FICN’s common stock held as treasury stock or held directly or indirectly by FICN, Western Alliance or any of their subsidiaries will be canceled and shall cease to exist.

 

Western Alliance and FICN expect that the merger will take place in the first half of 2007, or as soon as possible after we receive all required regulatory and shareholder approvals and all regulatory waiting periods expire. If the merger does not take place by September 30, 2007, the merger agreement may be terminated by either party unless both parties agree to extend it.

 

Cash or Stock Consideration.  You may elect to receive either $93.60 in cash or Western Alliance common stock of comparable value for each share of FICN common stock you own so long as Western Alliance’s weighted average trading price for the twenty consecutive trading days ending on the last trading day prior to the date the merger is completed is between $32.91 and $39.13, unless you exercise your dissenter’s rights. If the weighted average Western Alliance trading price at that date is less than $32.91, you will receive, with respect to shares for which you have elected to receive Western Alliance common stock, shares of Western Alliance common stock based on an exchange ratio that is fixed at 2.84412 shares of Western Alliance common stock for each share of FICN common stock. If the weighted average Western Alliance stock price is more than $39.13, the exchange ratio will be fixed at 2.39203 shares of Western Alliance common stock for each share of FICN common stock. In either case, the amount of cash consideration paid per share for which an election to receive cash is made will remain $93.60 per share. You will have the opportunity to elect the form of consideration to be received for your shares, subject to proration and allocation procedures set forth in the merger agreement which are intended to ensure that 80% of the

FICN shares are exchanged for shares of common stock of Western Alliance. Therefore, your ability to receive cash or stock in accordance with your election may depend on the elections of other FICN shareholders.

 

Western Alliance may opt to increase the exchange ratio in specific circumstances where FICN could otherwise terminate the merger agreement and likewise, FICN may opt to decrease the exchange ratio in specific circumstances where Western Alliance could otherwise terminate the merger agreement. In the case of any increase or decrease in the exchange ratio, because the formula with respect to the adjusted exchange ratio is dependent on the future price of Western Alliance’s common stock, it is not possible presently to determine what the adjusted ratio would be. For more information regarding these termination rights and the adjustments that may result to the merger consideration, see “— Termination of the Merger Agreement.”

 

Potential Additional Cash Consideration.  Shareholders and optionholders may also receive additional cash consideration of up to $2.38 per share depending upon the performance of certain credits in the FICN loan portfolio. Payment of additional cash consideration may occur at any time until two years following the closing of the merger. If certain loans identified in the merger agreement are repaid, this payment, which will not exceed $3.0 million in the aggregate, will be distributed to the shareholders and optionholders as additional cash consideration for the merger on a pro rata per share basis, including shares issuable pursuant to options outstanding as of the closing date of the merger. If, however, FICN, Western Alliance or their subsidiaries record a loss with respect to any of these loans, any distributions to be made as additional cash consideration will be reduced by the amount of such recorded loss and by expenses paid to third parties in connection with the attempted recovery of amounts due from those loans. Of this amount, approximately $0.79 per share, or $1.0 million in the aggregate, has become payable as of the date of this proxy statement/prospectus, pending the closing of the merger.

 

FICN Stock Options.  If you hold options to purchase FICN common stock that are outstanding at the effective time of the merger, you may choose either to cancel the options to purchase FICN common stock in exchange for cash consideration as provided in the merger agreement or to convert the options into options to purchase shares of Western Alliance common stock. If you do not make an election prior to the merger becoming effective, you will be deemed to have elected to receive the cash consideration.

 

If you elect to receive the cash consideration, you will receive an amount of cash, without interest, equal to the product of (i) the excess of (A) the per share cash consideration of $93.60 over (B) the exercise price per share of such option and (ii) the number of shares of FICN common stock subject to such option.

 

If you elect to convert your options to purchase shares of FICN common stock into options to purchase shares of Western Alliance common stock, then:

 

 

The adjustment will be made in a manner consistent with Section 424(a) of the Internal Revenue Code of 1986, as amended. The options you receive from Western Alliance will be exercisable immediately. The duration and other terms of the FICN options will otherwise be unchanged except that all references to FICN in any of the FICN stock plans (and corresponding references in any option agreement documenting such option) shall be deemed to be references to Western Alliance.

 

The merger will also result in acceleration of the vesting of all options issued under FICN’s stock option plan.

 

Non-Electing Shares.  FICN shareholders who make no election to receive cash or Western Alliance common stock in the merger, and FICN shareholders who do not make a valid election, will be deemed not to

have made an election. Shareholders not making an election may be paid in cash, Western Alliance common stock or a mix of cash and shares of Western Alliance common stock depending on, and after giving effect to, the number of valid cash elections and stock elections that have been made by other FICN shareholders using the proration adjustment described below.

 

Election Limitations.  The merger agreement provides proration and allocation procedures to ensure that 80% of the FICN shares of common stock are exchanged for shares of Western Alliance common stock. The remaining shares of FICN common stock will be converted into cash. Therefore, the cash elections are subject to proration to preserve this requirement regarding the number of shares of FICN common stock to be converted into Western Alliance common stock in the merger. As a result, if you elect to receive only cash, or only stock, you may nevertheless receive a mix of cash and stock. In addition, the total number of shares to be issued by Western Alliance is not to exceed one share less than 20% of the total number of shares of Western Alliance common stock outstanding immediately prior to the effective time of the merger.

 

Proration if Too Much Stock is Elected.  If FICN shareholders elect to receive more Western Alliance common stock than Western Alliance has agreed to issue in the merger, then all FICN shareholders who elected to receive cash will receive cash and those shareholders who have elected Western Alliance common stock or have made no election will be treated in the following manner:

 

 

Proration if Too Much Cash is Elected.  If FICN shareholders elect to receive shares of Western Alliance common stock in exchange for less than 80% of FICN common stock, then all FICN shareholders who elected to receive Western Alliance common stock will receive Western Alliance common stock and those shareholders who have elected cash or have made no election will be treated in the following manner:

 

 

Fractions of Shares.  Certificates for fractions of shares of Western Alliance’s common stock will not be issued. Instead of a fractional share of Western Alliance’s common stock, an FICN shareholder will be entitled to receive an amount of cash equal to the product obtained by multiplying (A) the fractional share interest to which the holder would otherwise be entitled by (B) the average of the 4:00 p.m. Eastern time closing sales prices of Western Alliance common stock reported on the New York Stock Exchange composite tape for the five consecutive trading days immediately preceding the last trading day prior to the closing date for the merger.

 

Conversion.  The conversion of FICN’s common stock into the merger consideration will occur automatically upon completion of the merger. Under the merger agreement, after the effective time of the merger, Western Alliance will cause its exchange agent to pay the “purchase price” to each FICN shareholder who surrenders the appropriate documents to the exchange agent. In this document, we use the term “purchase price” to refer to the (i) shares (if any) of Western Alliance’s common stock, (ii) cash (if any) and (iii) any cash to be paid instead of a fraction of a share of Western Alliance’s common stock, payable to each holder of FICN’s common stock.

 

An election form is being mailed under separate cover on or about the date of this proxy statement/prospectus. The election form entitles the record holder of FICN common stock to specify (a) the number of shares of FICN common stock owned by such holder for which the holder elects to receive shares of Western Alliance common stock, or (b) the number of shares of FICN common stock owned by such holder for which the holder elects to receive $93.60 in cash, without interest. If no election is made, then such holder shall receive cash, stock or a combination of cash and stock in the merger as outlined above.

 

To make an effective election, a record shareholder must submit a properly completed election form to American Stock Transfer & Trust Company, which will be acting as the exchange agent, on or before the election deadline, which is 5:00 p.m., New York City time, on          , 2007. An election form will be deemed properly completed only if accompanied by stock certificates representing all shares of FICN common stock covered by the election form. You may change your election at any time prior to the election deadline by written notice accompanied by a properly completed and signed, revised election form received by the exchange agent prior to the election deadline. You may revoke your election by written notice received by the exchange agent prior to the election deadline or by withdrawal of your stock certificates prior to the election deadline. All elections will be revoked automatically if the merger agreement is terminated.

 

Shareholders will not be entitled to revoke or change their elections following the election deadline. As a result, shareholders who have made elections will be unable to transfer their shares of FICN common stock during the interval between the election deadline and the date of completion of the merger.

 

FICN shareholders who do not submit a properly completed election form or revoke their election form prior to the election deadline will have their shares of FICN common stock designated as non-election shares and will receive cash, stock or a combination of stock and cash in the merger as outlined above. FICN stock certificates represented by elections that have been revoked will be returned without charge.

 

Western Alliance will deposit with the exchange agent the certificates representing Western Alliance’s common stock and the cash to be issued to FICN shareholders in exchange for FICN’s common stock. As soon as practicable after the completion of the merger, the exchange agent will mail to FICN shareholders who do not submit election forms a letter of transmittal, together with instructions for the exchange of their FICN stock certificates for the merger consideration. Upon surrendering his or her certificate(s) representing shares of FICN’s common stock, together with the signed letter of transmittal, the FICN shareholder shall be entitled to receive, as applicable, (i) certificate(s) representing a number of whole shares of Western Alliance’s common stock determined in accordance with the applicable exchange ratio, (ii) a check representing the amount of cash to which such holder shall have become entitled to, and (iii) a check representing the amount of cash in lieu of fractional shares. You will not be paid dividends or other distributions declared after the merger with respect to any Western Alliance common stock into which your shares have been converted until you surrender your FICN stock certificates for exchange. No interest will be paid or accrue to FICN shareholders on the cash consideration, cash instead of fractional shares or unpaid dividends and distributions, if any. After the effective time of the merger, there will be no further transfers of FICN common stock. FICN stock certificates presented for transfer after the completion of the merger will be cancelled and exchanged for the merger consideration.

 

If your stock certificates have been lost, stolen or destroyed, you will have to prove your ownership of these certificates and certify that they were lost, stolen or destroyed before you receive any consideration for

your shares. Upon request, American Stock Transfer & Trust Company will send you instructions on how to provide evidence of ownership.

 

If any certificate representing shares of Western Alliance’s common stock is to be issued in a name other than that in which the certificate for shares surrendered in exchange is registered, or cash is to be paid to a person other than the registered holder, it will be a condition of issuance or payment that the certificate so surrendered be properly endorsed or otherwise be in proper form for transfer and that the person requesting the exchange either:

 

 

Any portion of the purchase price made available to the exchange agent that remains unclaimed by FICN shareholders for six months after the effective time of the merger will be returned to Western Alliance. Any FICN shareholder who has not exchanged shares of FICN’s common stock for the purchase price in accordance with the merger agreement before that time may look only to Western Alliance for payment of the purchase price for these shares and any unpaid dividends or distributions after that time. Nonetheless, Western Alliance, FICN, the exchange agent or any other person will not be liable to any FICN shareholder for any amount properly delivered to a public official under applicable abandoned property, escheat or similar laws.

 

If you hold options to purchase shares of FICN common stock, you will soon receive under separate cover an election form that you may use to indicate whether your preference is to receive cash in exchange for the cancellation of your options or to convert your options into options to purchase shares of Western Alliance common stock. The election deadline will be the same as for elections with respect to shares of FICN common stock, which is 5:00 p.m., New York City time, on [ • ], 2007, the date prior to the date of the special meeting. To make an election, an optionholder must submit a properly completed election form and return it so that the form is actually received by American Stock Transfer & Trust Company at or before the election deadline in accordance with the instructions on the election form. FICN option holders who make no election with respect to their options, or who do not make a valid election, will be deemed to have elected to receive cash in exchange for their options. You may change or revoke your election by written notice received by American Stock Transfer & Trust Company prior to the election deadline. Optionholders will not be entitled to revoke or change their election following the election deadline, but may exercise their options in accordance with the terms thereof. Any exercise of options for which an election has been made will have the effect of automatically revoking such election. Once an option is exercised in accordance with its, such exercise cannot be revoked or undone. All elections will be revoked automatically if the merger agreement is terminated.

 

For the merger of Western Alliance and FICN to take place, we must receive approvals from the Federal Reserve Board (the “FRB”) and the Nevada Financial Institutions Division (the “NFID”). In this section, we refer to these approvals as the “required regulatory approvals”. Western Alliance and FICN have agreed to cooperate to obtain the required regulatory approvals.

 

On January 24, 2007, Western Alliance filed with the FRB an application under the Bank Holding Company Act of 1956, as amended, for approval of the merger of Western Alliance and FICN. This filing will require consideration by the FRB of various factors, including assessments of the competitive effect of the contemplated transaction, the managerial and financial resources and future prospects of the companies and banks involved in the transaction, the effectiveness of the institutions involved in combating money laundering, the effect of the contemplated transaction on the convenience and needs of the communities to be served and the availability of information needed to determine and enforce compliance with the BHC Act. The Community Reinvestment Act of 1977, commonly referred to as the “CRA”, also requires that the FRB, in deciding whether to approve the merger, assess the records of performance of the insured depository

institutions controlled by Western Alliance and FICN in meeting the credit and other needs of the communities they serve including low- and moderate- income neighborhoods. Both First Independent Bank of Nevada, FICN’s only bank, and Bank of Nevada, Western Alliance’s lead bank, received “outstanding” ratings at their most recent CRA performance evaluations by the FDIC. Western Alliance’s other subsidiary banks received “satisfactory” ratings at their most recent CRA evaluations by the FDIC. FRB regulations require publication of notice and an opportunity for public comment concerning the application filed in connection with the merger, and authorize the FRB to hold informal or formal hearings or meetings in connection with the application if the FRB, after reviewing the application or other materials, determines it desirable to do so or receives and acts favorably upon a request for a hearing or meeting. It is not unusual for the FRB to receive protests and other adverse comments from community groups and others. Any hearing or meeting, or comments provided by third parties, could prolong the period during which the merger is subject to review by the FRB. The merger may not be consummated for 30 days after action by the FRB unless the Department of Justice authorizes a waiting period of 15 days. During either the 15 or 30 day waiting period, the Department of Justice has authority to challenge the merger on antitrust grounds. The commencement of an antitrust action would stay the effectiveness of any approval granted by the FRB unless a court specifically orders otherwise. If the Department of Justice does not start a legal action during the waiting period, it may not challenge the transaction afterward, except in an action under Section 2 of the Sherman Antitrust Act.

 

Application also will be made to the NFID in order to effect the merger of FICN into Western Alliance. This application will be subject to the review of the NFID under Chapter 666 of the Nevada Revised Statutes. In determining whether to approve the merger of Western Alliance and FICN, the Nevada Commissioner of Financial Institutions (the “Commissioner”) will consider Western Alliance’s subsidiary depository institutions’ records of compliance with the CRA and whether the proposed transaction will meet the needs of those counties whose populations are less than 100,000 and whose residents are not being adequately served by existing financial institutions. In addition, the Commissioner must also consider the effect of the proposal on Western Alliance and the banks that it and FICN control, as well as the effect of the merger on competition in banking.

 

Western Alliance and FICN are not aware of any other material governmental approvals that are required for the merger to take place that are not described above. If any other approval or action is required, we expect that we would seek the approval or take the necessary action.

 

The merger cannot take place without the required regulatory approvals, which we have not yet received. There is no assurance that we will receive these approvals, or if we do, when we will receive them or that they will not contain a non-customary condition that materially alters the anticipated benefits and effects of the merger. Also, there is no assurance that the Department of Justice will not challenge the merger of Western Alliance and FICN on antitrust grounds following regulatory approval, or, if a challenge is made, what the result of a challenge would be.

 

Under the merger agreement, Western Alliance and FICN are not obligated to complete the merger unless the following conditions are satisfied:

 

 

 

Western Alliance is not obligated to complete the merger unless the following additional conditions are satisfied or waived:

 

 

FICN is not obligated to complete the merger unless the following additional conditions are satisfied or waived:

 

 

The merger agreement contains various restrictions on the operations of FICN before the effective time of the merger. In general, the merger agreement obligates FICN to continue to carry on its businesses in the ordinary course consistent with past practices and with prudent banking practices, with specific limitations on

the lending activities and other operations of FICN. The merger agreement prohibits FICN, without the written consent of Western Alliance, from:

 

 

 

 

 

Under the merger agreement, FICN generally may not, and must instruct its officers, directors, employees, agents and other representatives not to, maintain, initiate, solicit or encourage (including by way of furnishing information or assistance) or take any other action to facilitate any inquiries or the making of any proposal that constitutes or reasonably may be expected to lead to any “competing proposal.” The merger agreement also prohibits FICN from holding discussions or negotiations relating to any competing proposal and from agreeing to or endorsing any competing proposal.

 

The merger agreement defines a “competing proposal” as (i) any inquiry, proposal or offer from any person relating to any direct or indirect acquisition or purchase of FICN or any business line of FICN that constitutes 15% or more of the net revenues, net income or assets of FICN or any of its subsidiaries or 15% or more of any class of equity securities of FICN, (ii) any tender offer or exchange offer that if consummated would result in any person beneficially owing 15% or more of any class of equity securities of FICN or any of its subsidiaries or (iii) any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving FICN or any of its subsidiaries, other than the transactions contemplated by the merger agreement.

 

Notwithstanding the above restrictions, in connection with a “superior competing transaction” and subject to other specified conditions, FICN will be permitted to furnish information with respect to, or enter into discussions or negotiations with, any person that makes an unsolicited bona fide proposal to acquire FICN; provided, however, that (a) the special meeting FICN shareholders to consider the merger has not occurred; (b) the FICN board of directors has determined in good faith, after consultation with outside counsel, that such action is reasonably required in order to comply with the board’s fiduciary duties to the FICN shareholders under Nevada law; (c) FICN provides prior written notice to Western Alliance of its decision to take such action; (d) FICN receives an executed confidentiality agreement on terms no less favorable to FICN than those contained in the confidentiality agreement between Western Alliance and FICN; and (e) FICN keeps Western Alliance informed, on a current basis, of the status and details of any such discussions or negotiations.

 

The merger agreement defines a “superior competing transaction” as any proposal made by a third party to acquire, directly or indirectly, including pursuant to a tender offer, exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the shares of FICN common stock then outstanding or all or substantially all the assets of FICN, and otherwise on terms which the Board of Directors of FICN after consulting with legal counsel and FICN’s financial advisors, determines in its good faith judgment to be more favorable to its stockholders than the merger and for which financing, to the extent required, is then committed or which if not committed is, in the good faith judgment of its Board of Directors, reasonably capable of being obtained by such third party.

 

The merger agreement generally provides that all costs and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement shall be paid for by the party incurring such expense. However, if the merger agreement is terminated by Western Alliance as a result of FICN’s failure to hold the special meeting within a specified time period, to recommend approval of the merger or to oppose any third party proposal, the merger agreement provides for FICN to pay all documented, reasonable costs and expenses of the terminating party up to $300,000, plus a breakup fee of $4.8 million. In the event the merger agreement is terminated by Western Alliance due to FICN’s shareholders’ not having approved the merger agreement and (a) after the date of the merger agreement (December 19, 2006) and before the special meeting date, there shall have been a “third party public event” (as defined in the merger agreement) and (b) within 12 months following such special meeting, FICN enters into an agreement for an “acquisition transaction” (as defined in the merger agreement) or an acquisition transaction otherwise occurs, FICN shall pay all documented, reasonable costs and expenses of Western Alliance up to $300,000, plus a breakup fee of $4.8 million. In the event the merger agreement is terminated by Western Alliance due to FICN’s willful material breach of a representation, warranty, covenant or other agreement contained in the merger agreement, FICN shall pay all documented, reasonable costs and expenses of Western Alliance up to $300,000, plus a breakup fee of $4.8 million. In the event the merger agreement is terminated by Western Alliance due to FICN’s material breach (not willful) of a representation, warranty, covenant or other agreement contained in the merger agreement, FICN shall pay all documented, reasonable costs and expenses of Western Alliance up to $300,000. In the event FICN has given written notice to Western Alliance that FICN desires to enter into a superior competing proposal, FICN shall also pay all documented, reasonable costs and expenses of Western Alliance up to $300,000, plus a breakup fee of $4.8 million.

 

Hovde Financial, Inc. (“Hovde”) has delivered to the Board of Directors of FICN its opinion that, based upon and subject to the various considerations set forth in its written opinion dated December 19, 2006, the total transaction consideration to be paid to the shareholders of FICN is fair from a financial point of view as of such date. In requesting Hovde’s advice and opinion, no limitations were imposed by FICN upon Hovde with respect to the investigations made or procedures followed by it in rendering its opinion. The full text of the opinion of Hovde, dated December 19, 2006, which describes the procedures followed, assumptions made, matters considered and limitations on the review undertaken, is attached hereto as Appendix C. FICN shareholders should read this opinion in its entirety.

 

Hovde is a nationally recognized investment banking firm and, as part of its investment banking business, is continually engaged in the valuation of financial institutions in connection with mergers and acquisitions, private placements and valuations for other purposes. As a specialist in securities of financial institutions, Hovde has experience in, and knowledge of, banks, thrifts and bank and thrift holding companies. FICN’s board of directors selected Hovde to act as its financial advisor in connection with the merger on the basis of the firm’s reputation and expertise in transactions such as the merger.

 

Hovde will receive a fee from FICN for performing a financial analysis of the merger and rendering a written opinion to the Board of Directors of FICN as to the fairness, from a financial point of view, of the merger to FICN’s shareholders. Further, Hovde will receive a fee from FICN for rendering financial advisory services in connection with the merger, which is contingent upon the completion of the merger and which is calculated as a percentage of the consideration paid in connection with the merger. In addition to its fees and regardless of whether the merger is consummated, FICN has agreed to reimburse Hovde for certain of its reasonable out-of-pocket expenses and to indemnify Hovde against certain claims, losses and expenses arising out of the merger or Hovde’s engagement.

 

Hovde’s opinion is directed only to the fairness, from a financial point of view, of the total transaction consideration, and, as such, does not constitute a recommendation to any FICN shareholder as to how the shareholder should vote at the FICN shareholder meeting. The summary of the opinion of Hovde set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion.

 

The following is a summary of the analyses performed by Hovde in connection with its fairness opinion. Certain of these analyses were confirmed in a presentation to the FICN board by Hovde. The summary set forth below does not purport to be a complete description of either the analyses performed by Hovde in rendering its opinion or the presentation delivered by Hovde to the FICN board, but it does summarize all of the material analyses performed and presented by Hovde.

 

The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances. In arriving at its opinion, Hovde did not attribute any particular weight to any analysis and factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Hovde may have given various analyses more or less weight than other analyses. Accordingly, Hovde believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, without considering all factors and analyses, could create an incomplete view of the process underlying the analyses set forth in its report to the FICN board and its fairness opinion.

 

In performing its analyses, Hovde made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of FICN and Western Alliance. The analyses performed by Hovde are not necessarily indicative of actual value or actual future results, which may be significantly more or less favorable than suggested by such analyses. Such analyses were prepared solely as part of Hovde’s analysis of the fairness of the transaction consideration, from a financial point of view, to FICN shareholders. The analyses do not purport to be an appraisal or to reflect the prices at which a company might actually be sold or the prices at which any securities may trade at the present time or at any time in the future. Hovde’s opinion does not address the relative merits of the merger as compared to any other business combination in which FICN might engage. In addition, as described above, Hovde’s opinion to the FICN board was one of many factors taken into consideration by the FICN board in making its determination to approve the merger agreement.

 

During the course of its engagement, and as a basis for arriving at its opinion, Hovde reviewed and analyzed material bearing upon the financial and operating conditions of FICN and Western Alliance and material prepared in connection with the merger, including, among other things, the following:

 

 

Hovde conducted meetings and had discussions with members of senior management and the board of directors of FICN for purposes of reviewing the future prospects of FICN. Hovde also took into account its experience in other transactions, as well as its knowledge of the commercial banking industry and its general experience in securities valuations.

 

In rendering its opinion, Hovde assumed, without independent verification, the accuracy and completeness of the financial and other information and relied upon the accuracy of the representations of the parties contained in the merger agreement. Hovde also assumed that the financial forecasts furnished to or discussed with Hovde by FICN were reasonably prepared and reflected the best currently available estimates and

judgments of senior management of FICN as to the future financial performance of FICN. Hovde has not made any independent evaluation or appraisal of any properties, assets or liabilities of FICN. Hovde assumed and relied upon the accuracy and completeness of the public and non-public financial information provided to it by FICN and Western Alliance, relied upon the representations and warranties of FICN and Western Alliance made pursuant to the merger agreement, and did not independently attempt to verify any of such information.

 

The merger agreement provides that the total merger consideration shall include additional payments of up to $3 million in cash to the shareholders of FICN after the closing and at such times as set forth in the merger agreement if certain contingencies are satisfied. Hovde’s willingness to render its opinion was not dependent on whether these contingent payments were made.

 

Analysis of Selected Mergers.  As part of its analysis, Hovde reviewed three groups of comparable merger transactions. The first peer group included transactions, which have occurred since January 1, 2005, that involved banks in the United States that had total assets between $250 million and $600 million (the “United States Merger Group”). This United States Merger Group consisted of the following 22 transactions: