Western Alliance looking to blockchain, digital payments for deposit growth

Western Alliance Bancorp. executives said they are looking to grow deposits from their participation in a blockchain consortium as well as from a nonbank deal announced this week.

In the 2021 fourth quarter, the bank reported a loan-to-deposit ratio of 82%. Looking ahead, the bank expects the ratio to move higher into the 90% range as it expects deposit growth to keep pace with loan growth. For the full year, CEO Kenneth Vecchione increased the bank's guidance, projecting loans held for investment to grow more than $2 billion per quarter, an increase from prior guidance of $1.5 billion to $2 billion of loan growth per quarter.

Management fielded several questions during the bank's Jan. 28 earnings call on deposit growth. Executives said activity in January has been strong, suggesting the bank's first-quarter figures would exceed guidance with deposit growth coming in near double the $2 billion figure.

The executives pointed to its recent deal to acquire Digital Disbursements, a digital payment platform focused on the class action legal industry. They also cited the bank's partnership with Tassat to develop a blockchain solution as a potential driver of deposit growth.

"We are very hopeful and we expect for those programs to generate greater deposits," Vecchione said. He added that the bank's deposit growth forecast does not include any assumptions that the blockchain project or Digital Disbursements deal would contribute to deposit growth.

On additional M&A, management said the bank prioritizes "return on management's time" when considering whether to pursue a deal. Executives said they are not looking for a sizable deal, and a niche or bolt-on acquisition would be more likely.