USA, May 24, 2009 (Info-Prod Research) -- Moody's Investors Service changed the rating outlook on Western Alliance Bancorporation (NYSE:WAL) and its subsidiary, Bank of Nevada, to stable from negative. Western Alliance Bancorporation has an issuer rating of Ba3. Bank of Nevada is rated D+ for bank financial strength (BFSR) and Ba1 for long-term deposits. The short-term ratings of the bank are Not Prime. The change in outlook was based on the improved financial flexibility the company obtained by raising approximately $200 million of common equity. This capital raise improves Western Alliance's tangible common equity (TCE), as defined by Moody's, by four percentage points to 10.1% of risk-weighted assets on a pro-forma basis as of March 31, 2009, while Tier 1 risk-based capital increases to an estimated 13.4%. Moody's had downgraded Western Alliance's ratings on April 6, 2009 (BFSR to D+ from C-, and long-term deposits to Ba1 from Baa2) in response to the capital pressures it was likely to experience because of its large real estate lending concentration in some of the weakest U.S. markets, specifically Nevada, Arizona, and California. Western Alliance's improved capital position provides a significantly larger capital cushion to absorb expected losses. As noted, Moody's views the additional capital as a positive development, but remains concerned by both the company's concentration in commercial real estate (CRE) in three of the most distressed real estate markets in the U.S., as well as the asset quality deterioration that Western Alliance has experienced through the first quarter of 2009. Western Alliance's CRE exposure, excluding owner-occupied properties, equals about $1.5 billion or 3 times TCE, including the additional equity. Over the last 5 quarters, Western Alliance's nonperforming assets (NPAs), including 90 days past due, have steadily increased. In the first quarter of 2009, NPAs doubled for the second consecutive quarter to 30% of proforma TCE and reserves as of March 31, 2009. Net charge-offs in the first quarter were 1.7%, moderately higher than those in the prior quarter. In addition, Moody's said that it believes the expected rise in credit costs will significantly pressure Western Alliance's ability to return to profitability. This performance, together with uncertainty about the long-term franchise characteristics of a firm that has historically been focused on CRE, currently limits Moody's views on upward pressure for Western Alliance's ratings. Western Alliance Bancorporation, which is headquartered in Las Vegas, Nevada reported total assets of $5.3 billion as of March 31, 2009.