Western Alliance Cuts 2026 Net Interest Income Growth Forecast to 11%-12%

Western Alliance Bancorporation lowered its 2026 net interest income growth forecast to 11%-12% from 12%-14% as deposit changes reshape the earnings outlook for a bank serving institutional digital asset businesses.

The company has reshaped $4.5 billion of higher-cost deposits over the past two quarters and expects $5 billion in deposit optimization for 2026. It now projects deposit growth of $3.5 billion-$4 billion this year, down from its previous $6 billion forecast.

Western Alliance also lowered its forecast for growth in loans held for investment to $4 billion from $5 billion. Those loans remain on the company’s balance sheet rather than being held for sale. The revised projections reflect slower expected growth in both deposits and lending.

The company raised its 2026 noninterest income growth forecast to 18%-21% from 13%-17%. It also narrowed its forecast for deposit costs recorded in noninterest expense to $650 million-$675 million from $650 million-$700 million.

In the third quarter ended Sept. 30, net interest income reached $807.6 million, up $10.7 million, or 1.3%, from the second quarter. It rose $57.2 million, or 7.6%, from a year earlier. Net interest margin increased to 3.57% from 3.53% in the prior quarter.

Deposit costs recorded in noninterest expense fell $13.8 million to $165.4 million from the second quarter, primarily as average ECR-related deposit balances declined. The figure measures that expense category, rather than all interest paid on deposits.

Commercial banking deposits grew $1.8 billion during the third quarter, lifting their share of total deposits to 34% from 31%. Total deposits stood at $81.8 billion on Sept. 30, down $119 million from June 30.

Western Alliance serves approved institutional digital asset businesses through WA VenueX Network, which provides 24/7 U.S. dollar settlement. Our earlier coverage of Western Alliance’s third-quarter results detailed its earnings and the settlement network.

The revised net interest income forecast assumes a further 25-basis-point interest rate increase in December.