Phoenix, Arizona-based Western Alliance is doubling down on middle-market companies in niches that have a heavy presence in California.
Since Julian Parra, the lender’s national head of commercial and industrial banking, joined the bank about a year ago, Western Alliance has added an aerospace and defense banker team, and a food and agriculture banker team, both based in California. Those industries, in addition to the entertainment and gaming verticals the bank already served, present robust opportunities in Parra’s eyes.
In the Southwest region the bank serves today, “there’s some really key industries that are heavily concentrated or domiciled in our geographies, that allow us to really go deeper with clients and even expand nationally,” Parra said during a recent interview.
The $80 billion-asset bank was among last year’s closely watched regional lenders, as the failures of Signature Bank, Silicon Valley Bank and First Republic Bank rocked the industry. Amid the crisis of confidence among investors, Western Alliance’s stock dropped; $8 billion in deposits were withdrawn in a single day in March 2023. In the wake of that turmoil, Western Alliance sought to highlight its deposit strength and beat back rumors of a sale.
Parra, who spent more than three decades at Bank of America in two stints, was approached by Western Alliance as it sought to sharpen its focus on commercial lending. During the spring 2023 crisis, Parra happened to be “on the sidelines, watching intently, knowing that this was somewhere I wanted to come work.”
The industry turmoil “proved out the strengths of the broader company,” and the depth of the relationships the bank has with clients, Parra said.
“Deposit-taking is about trust,” he added, pointing to the bank’s ability to grow deposits since its 2023 rough patch. The bank’s deposits totaled $66.2 billion as of June 30, about a 30% jump from the year-earlier period.
In the massive California market, however, Western Alliance faces no shortage of competitors also targeting commercial lending, from banks based in the state such as Banc of California and Five Star Bank, to bigger names such as JPMorgan Chase and U.S. Bank, which have expanded their presence in California through acquisitions, and even regionals such as Citizens that have made recent hires to chase middle-market business in the state.
Parra has spent most of his career as a commercial corporate banker and was intrigued by the task of growing Western Alliance’s C&I lending segment. Middle-market companies “get lost” at larger banks, while smaller lenders may not have the capabilities to stand out when it comes to people and service, he said.
Western Alliance, he argued, has the financial strength and capabilities of a large bank while remaining “small and nimble, in terms of the service that we can provide.”
The bank’s client “sweet spot” is companies generating between $20 million and $250 million in revenue, who are seeking traditional cash management products and loans, as well as foreign exchange, trade finance and interest rate hedging capabilities, Parra said.
“Quite frankly, we're not going to focus on billion-dollar companies that have got global needs,” he said.
The lender has hired 12 new bankers in California since Parra joined last year, with the bulk of those hires focused on aerospace and defense or food and agriculture.
“We could easily hire a similar [number] of bankers every year going forward for the next several years,” he said, without providing a specific target for 2025 or 2026.
Client and talent acquisition have “to line up with our geography or the industry verticals that we're good at, so we can leverage the expertise we have,” Parra said. He sees “thousands” of client opportunities in the bank’s existing footprint, as well as the prospect of further growth of those industries the bank is focused on.
Parra didn’t comment on the scope Western Alliance expects to encompass in the future, but noted C&I loans made up 41% of the bank’s loan portfolio as of June 30 – up from 35% a year earlier. “We’re starting to see the impact,” Parra said.
In vying for middle-market business in those niche verticals, Parra said it’s essential that bankers are relationship-oriented and provide advice while bringing local connectivity and industry knowledge. “You can’t go into aerospace and defense banking tomorrow with no expertise prior,” he added.
Western Alliance is also eyeing commercial expansion into other states through those industries. Parra flagged Texas and Florida as possibilities to scale in the food and agriculture sector; the Washington, D.C., area in aerospace and defense; and the southeastern U.S. for entertainment; with the bank leaning on its national presence to grow its commercial segment.
As far as possible expansion into other industries, Parra named healthcare and logistics as areas of future opportunity for the bank.
