Q4 2020 First Foundation Inc Earnings Call
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Okay.
Greetings and welcome to first Foundation's fourth quarter, 'twenty and 'twenty earnings Conference call. Today's call is being recorded at this time all participants have been placed in a listen only mode and the floor will be open for your questions. Following the presentation.
Like to ask a question at that time. Please press star one on your Touchtone phone and.
But any point. Your question has been answered you may remove yourself from the queue by pressing the pound key we ask that you. Please pick up your handset to allow optimal sound quality.
Speaking today will be Scott Kavanaugh first Foundation's Chief Executive Officer, Kevin Thompson, Chief Financial Officer, and David The Pillow President.
Before I hand, the call over to Scott. Please note that management will make certain predictive statements during today's call that reflect their current views and expectations about the company's performance and financial results. These forward looking statements are made subject to the safe Harbor statement included in today's earnings release and.
Additionally, some of the discussion may include non-GAAP financial measures for.
A more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward looking statements and reconciliations of non-GAAP financial measures and see the company's filings with the Securities and Exchange Commission and.
And I would like to turn the call over to Scott Kavanaugh.
Hello, and thank you for joining us we would like to welcome all of you to our fourth quarter and full year 2020 earnings conference call.
We will be for providing some prepared comments regarding our activities and then we will respond to questions.
I'd like to say first and foremost we had a new format and.
We worked very hard on it and I hope everybody.
I appreciated the new format, we felt like it was a little more concise and and provided numbers and a little more and straightforward manner.
And as highlighted in the earnings report, we experienced another strong quarter, which capped off and great year for first foundation.
Our earnings for the fourth quarter were $22 4 million for <unk> 50 per share.
For the full year earnings increased by 50% over 2019 to $84 4 million or $1 and 88.
Fully diluted earnings per share.
Total revenues were $63 1 million for the quarter and $251 3 million for the year and 19% increase over 2019.
We are pleased to report that our stockholders and 2020 enjoy the payment of $12 5 million and the form of cash dividends and as we announced and our earnings report. This morning, we increased our quarterly dividend for 2021 by 29%.
From <unk> to <unk> per share for tangible.
Book value per share ended the year at $13 40 for a 16% increase during 2020.
Combined with the dividend and the increase and market cap we are.
And prior proud to a return to $128 million to our shareholders. During 2020 for a total return of 17%.
And a year that was marked with uncertainty and macroeconomic challenges. We are extremely pleased and how our team came together to serve our clients and deliver the results that we're reporting today.
Taking a look at our business lines.
Our banking operations experienced strong loan growth as.
And as loan production and the fourth quarter hit $715 million and $2 5 billion for the year, while deposits grew in the quarter by $449 6 million and 1.02 billion for the year for wealth management business saw a strong year both and.
And terms of new clients and positive investment returns and our portfolios.
Assets increased by $403 million and the fourth quarter and ended the year at a record $4 9 billion.
Our process for delivering sophisticated wealth planning strategies continues to help us uncover new opportunities to serve our clients, including making introductions to our banking and trust teams.
A metric that I'm very pleased about is our wealth management and trust business saw a combined pre tax profitability and 19% for the quarter. We believe the signals that we are hitting scale for this business and it is a metric that we can continue to strive to achieve and 2021 and beyond.
In general our business model, and providing banking and private wealth management services has performed very well lending deposits investments wealth planning and trust services are each contributing in meaningful ways.
We continue to build strong relationships with our clients, who turned to us for their banking and wealth management needs and this translates to client referrals and new business opportunities as well as healthy pipelines for each of our businesses heading into 2021.
Let me share other highlights for the year on.
Our commitment to enhancing our technology continued as we invested in new ways to serve our clients leveraging AI biometric and automation and we added the ability to easily opened and connect online checking accounts with our online savings accounts.
We increase the functionality to allow our clients to use convenient payment and account linking features.
We enhanced our client portal for our wealth management clients, who want real time information on.
On their portfolios.
And we have started to build a digital wealth planning offering to help clients better understand their complete financial profile.
In 2020, we also successfully completed the sale and securitization and 553 million on multifamily loans and the third quarter. This was our fifth securitization. Since 2015, we have sold $2 6 billion and loans and we are already taking.
Steps to prepare for six securities six securitization, which we expect to complete in 2021.
We also received recognition and the media and in the community for charitable giving efforts. This included are supporting our communities nonprofit initiative, which was especially meaningful this year amidst the pandemic, where many nonprofits needed our support to help further their mission.
Related to our corporate giving efforts we have taken the steps to create a charitable foundation and 'twenty 'twenty, one and we're excited about what the initiatives could mean for all nonprofits we support.
And I'm, so proud of the contributions of our entire team and I'm grateful to our employees, who work hard every day to deliver amazing results for our clients.
Overall, it has been a strong year I believe that the strength of our offering and the favorable favorable business environment and positioned us well and 2021.
Looking at 2021, we plan to expand our presence and.
And to the state of Texas, the opportunities for growth and taxes for our banking and wealth management businesses are strong.
Specifically, the Dallas Metroplex is one of the largest markets for multifamily lending and the diversity of businesses. There makes it a strong fit for us.
And also aligns with our strategic goal of expanding into major markets that present, great opportunities for us. The board of directors is approved and move of our holding company to Dallas, which we expect to occur and the first half of 2021.
We will continue to maintain our presence and the markets. We currently serve including existing bank and wealth management headquarters here in Irvine, California.
Before I hand, it off to Kevin and we want to remind everyone that our updated investor presentation can be found on our Investor Relations website and provides many of the details we are discussing on this call.
As you will see we've taken the opportunity to enhance the way we report our data and results. We hope you find it valuable.
Let me turn it over to Kevin our CFO.
Thank you Scott.
Earnings per diluted share of $1 88, and 2020 is a 50% increase over 2019.
As a result of this momentum our tangible book value per share increased 16% to $13 four for in the year. The full year return on assets was a strong 126% with a return on tangible equity of 15, 5% as our business model has helped us to navigate these uncertain times with great flexibility and success.
The net interest margin expanded seven basis points to $3, one 9% and the quarter as a result of the progress we have made and lowering deposit pricing and maintaining discipline and loan production.
In addition, we recognized $1 million of net PPP fee income, which is approximately 26% of the total expected fee income and our PPP loans originated.
Excluding the effects of PPP, our NIM increased to $3, one 3% and the quarter.
Loan fundings and the quarter of $715 million were a record for first foundation with full year funding for $2 5 billion.
The loan yield increased 10 basis points and the quarter to $4 zero, 1% as we have maintained strong underwriting discipline and saw some remix and loan fundings towards multifamily production.
The cost of deposits decreased from 57% to 41 basis points and the quarter our strategy of increasing core deposits has gained traction as our core deposits increased from 75% to 94% to 2020.
Total deposits increased by over 1 billion and the year to an all time high with 39% growth and noninterest bearing accounts.
Credit metrics remain strong and all of our loan portfolios and the allowance for credit losses for loans remained essentially flat, resulting in an allowance of 50 basis points of loans. This was a result of higher balances and loans held for investments and net charge offs, partially offset by a slight improvement and the economic scenario, we utilized for the <unk>.
Calculation net.
Net charge offs were only two basis points for the full year and nonperforming assets remain low at 30 basis points total assets through this cycle first foundation's credit performance relative to the industry, it's been a key differentiator.
Asset management fees were strong with revenues of $7 6 million and our advisory and trust divisions achieved a combined pre tax profit margin of 19% and the quarter assets under management at <unk> increased to $4 9 billion, while trust assets under advisement.
<unk> increased to $1 1 billion.
The efficiency ratio for both the quarter and the full year was 49% with strong expense management and the investments we've made and our infrastructure.
We are seeing growing benefits from operational leverage and efficiencies.
I will now turn the call over to David the pillow and the.
First foundation.
Thank you Kevin It was indeed, a very successful year for first foundation, we're seeing and the benefits of scale and efficiency as evidenced by the financial results. We reported this morning.
And we're able to accomplish this.
And while supporting our colleagues clients and communities during some very challenging times.
And Toni Toni as I mentioned, we originated $2 5 million from 1 billion up loans a record year for us.
And the year, we maintained our focus on our core multifamily business, which has performed exceptionally well throughout the pandemic as well as to continue to diversify into high quality commercial.
Business lines, the composition of our loan originations during the year was as follows 53% multifamily.
And 37% CRE.
And C&I.
8% single family and 2% other.
As of December 31st our loan portfolio consists of 52% multifamily loans, 32% business loans, 15% consumer and single family loans, and 1% line and construction loans.
And it's worth mentioning that even with record originations in the fourth quarter up $715 million, we achieved a weighted average interest rate of $3 six one on originations compared to $3 six 7% for the third quarter. This demonstrates our ability to achieve robust volume, while it's still defending the yields on our portfolio.
And our credit quality of our loan portfolio is strong as evidenced by a low level of delinquencies and our NPA ratio declining to 30 basis points from December 31.
And so we had mentioned in recent quarters, we have low exposure to industries hardest hit by the pandemic, specifically hospitality and restaurants for.
Our balances are down by 54% or $30 million for only $25 million since last quarter, which represents 48 basis points of our loan portfolio.
There were no forbearance is and our multifamily consumer Orlando construction portfolios.
And there is only $4 $5 million on first round for variances and $9 6 million of second round forbearance is still outstanding.
During the quarter, we forgave $27 million or 16% of our PPP loans originated.
Our loan pipeline remains strong and the bank continues to be consistent with the levels of activity and we have seen in recent quarters deposit growth for the year was strong with a $1 billion increase and balances from 2020, we.
We experienced $523 million increase at the branch level and $979 million increase and specialty deposits.
The growth of our deposits.
And this during the year was also attribute to the success, we experienced and attracting new affluent clients through our digital channels.
Digital banking deposits, which were launched and the fourth quarter of 2019 increased $402 million and 2020 to finish the year at $550 million the.
And the growth and a retail digital and specialty deposits helps contribute to the success of our strategy to increase core deposits.
As Kevin mentioned, our core deposits grew to 94% of total deposits and in the quarter up from 90% from last quarter and up from 75% from the year end 2019.
Scott mentioned, we are seeing the investments that we've made and our digital delivery of both our client facing and back office operations of.
Of our offering and pay off this is most apparent by looking at our efficiency ratio, which as Kevin highlighted continues to improve to the best levels, we have seen to date.
But we are also starting to see the benefit of our growth strategy being able to offer and and then digital solution to attract clients through our existing branch network and through our digital and delivery capabilities will continue to be a powerful differentiator of our growth going forward for 2021, we are focused on creating seamless delivery of our solutions with <unk>.
<unk> engaged with us through our traditional branch network or digitally through a computer smartphone or tablet and Additionally, we have planned enhancements for our commercial lending platform our business online solution, our consumer online banking and our consumer banking app.
And this will help define the user experience that is uniquely cater to our clients' needs.
All of the success from 2020 non have been achieved without the great team. We have at first foundation I'm. So grateful for their dedication and hard work at this time, we are ready to take questions and I'll hand, it back to the operator.
Thank you. The floor is now opened for questions. If you wish to add.
Ask a question.
And then the number one on your telephone keypad.
Any point your question is answered EMEA remove yourself from the queue by pressing the pound key we ask that you. Please pickup your handset to allow optimal sound quality and our first question comes from the line of David Feaster of Raymond James.
Hey, good morning, everybody.
Yes, David.
First of all I like the new format and a lot of I think you guys did a great job and.
Okay.
Congrats on the expansion into Texas, and it's exciting and it makes a ton on strategic sense.
I was just curious if you could kind of give us a road map and maybe a timeline for the expansion just regarding the infrastructure necessary from both on location and personnel perspective and.
Maybe any impacts you expect on your growth trajectory and just appetite for even M&A to potentially accelerate the build out.
Yes, we're always looking at M&A on the one thing I would say is as Texas is riddled with banks everywhere and frankly, I hope that there are some opportunities out there.
I've already started talking to.
Investment bankers.
To see kind of what the landscape looks like.
But one thing I can say is as I think <unk> been looking at the press.
Many companies of all different kinds of have moved to the Dallas Metroplex area and continue to announce so I think it's a great expansion for us.
And frankly, I've already purchased a home it's under construction and it probably won't be done until.
April I'm, hoping.
That we can complete this by the March April timeframe.
And I think we will be holding our annual shareholder meeting, which I think is in may.
And Dallas so.
We're really optimistic about it.
I think.
There is a great opportunity just to enhance.
Geographically, our expansion and loans deposits.
And one of the things I wanted to do David is is also.
Get our trust.
Texas Trust powers and you can't really do that you have.
Sure.
Our branch out there at least one branch so we're already sending our facilities first and Mark Gordon out there too.
And trying to look around and see if we can find some place to start the expansion. So initially it's going to be de novo.
But I would hope that there is an opportunity to do some type of acquisition I would say David for financial modeling purposes, We really haven't included much benefit or expense load and in 2021 and are really looking at this is 2021 and as a positioning year.
For for my teams and <unk>.
Deploying and then.
Years beyond so it's really for us a long term strategy of diversification.
Okay.
That's helpful. And then just just any thoughts on on growth near term and maybe.
And it's great to see record production in the fourth quarter, what's the pulse of the multifamily.
Market what are you seeing there and then just thoughts on C&I. It was great to see the C&I strength in the quarter.
And maybe just expectations for growth as we're looking out for 2021.
Okay.
From the multifamily side I think what we saw was.
Strong pull back on the market at the end of the first quarter and through the second quarter and then starting to service some of that pent up demand into the third and obviously into the fourth quarter.
Still as a significant pent up demand and the market for both purchase and refi we've seen on the purchase market come back. So people are have operated.
Call it close to year in this environment. We are one of the most locked down or the most lockdown states and.
And the Union, however people have navigated very well on the strength of the product is for.
And the confidence back so we our expectation is 2021.
Trajectory should mirror, what we saw on the fourth quarter, which is continued strong demand and.
And we don't necessarily see that anticipating and any time on the future.
Even though the yield curve has steepened slightly rates are still on a historical basis.
Very competitive.
And obviously for us the ROE on that is.
Higher than it's been and.
Since we've seen in quite some time on the C&I side, it's very interesting and it's a tale of the haves and have not.
We've been focusing on business is set up and.
Very successful or reposition themselves through the pandemic.
And have insulated and themselves.
And we've tended to go a little bit upstream to companies that are a little bit larger than <unk>.
Access to capital and fortified balance sheets, and I think that served us very well and it's.
And certainly proved itself out and the numbers and we're going to continue to stay diversified and discipline, but our expectation on the C&I side is consistent growth as what we've seen in the latter half of 2020. So also on the residential mortgage side.
Even though that's not a huge business for us our demand is.
Way outstripping our ability to provide.
On our customer base. So we are adding some additional resources around that equipment finance is back to levels.
And that we saw pre pandemic and continues to grow.
So I would say, we're hitting on all cylinders from a production side and we just don't see anything near term.
And especially in the fact that.
With.
It appears to be easing restrictions and California.
As far as the rest of the country on some of the.
The shutdown some knockdowns.
Our expectations are it couldnt.
Potentially get better from here as well.
Okay.
And David debt.
Our municipal financing Division, we launched at a little over a year ago.
And it's done incredibly well and.
And we're very thankful that we.
Got the talent that we have there and frankly.
And frankly.
I don't care, where there is a trust business assets under management pipelines of loans deposits.
I feel like our pipelines are just so robust right now that.
And very optimistic for 2021.
That's great that's great color and then just want to talk about your rate sensitivity I mean this rate environment has really played right into your hands.
And can start we've been pretty liability sensitive, but just curious how that may have changed in light of the liquidity build and the deposit remix and impacts of floors and maybe just how you plan to manage your sensitivity going forward.
I guess this is Kevin and I can start off and you are right. The sensitivity has changed somewhat and this rate environment as it has for for many banks and.
We are and at least from an academic perspective, when you shock your interest rate risk scenarios by 100 basis points 200 basis points. We're liability sensitive now that often plays out differently and reality as you have different types of yield curves and the dynamics and we model that as well from.
And academic perspective, we are a little less liability sensitive as of <unk>.
Result of some of the changes and mix, we are still somewhat liability sensitive, but we monitor this very closely and really manage the balance sheet and a very flexible way in order to take advantage of different interest rate environments.
The one thing I would add also David is we have 100 million and home loan bank advances that mature in April some time.
And our position is.
That will retire upon maturity and.
And I think at that point.
Okay.
And I'm not sure we'll have any home loan bank advances out.
As you've seen a restructuring of our broker deposits is substantially down.
So we've been very successful.
And kind of repositioning.
Deposit side, and I think youre going to continue to see that and that 2021 and there is on the asset side, there's probably a few things that affected our AR relative duration on those and then shortened up certainly from historical levels. One is on.
Our portfolios are now starting to season.
And as you probably noted from 2000.
And 15 through.
2018, 19 or growth rates were compounded at 30%, 40% and that was relatively on the season product.
And and interest rate environment, where it was actually increasing.
Now that we've kind of plateau on and we're in.
And our growth rates closer to call it 10% to 12% on the loan portfolio.
Our CPR against that is relatively.
Increased so the duration on those assets shortened as well as a little more focus and emphasis on.
C&I has also shortened the duration on the portfolio. So we're kind of seeing the benefits on both sides and that kind of plays into Kevin's comment on.
Our interest rate sensitivity has come in from historical levels and the last thing I'll add is our shift to more core deposits and benefits our interest rate profile as well with that relationship based approach.
Okay, and you kind of taken that altogether and it sounds like probably further room for modest core NIM expansion and exclusive on PPP.
Yes look I think.
Loan yields are holding up we've got some room on the deposits.
Our strategy is we've loaded up on liquidity, where effectively you're going to be deploying that liquidity and some of that as Scott mentioned is paying down higher cost.
Deposits.
Way of brokered as well as we still have a few home loan bank advances that are maturing and theyre not at the levels and rates, we saw before but it does give us a lot of room. So I would say deploying excess cash for the first quarter on and the form of.
Additional funding and certain paydown of other borrowings so probably have a near term impact and then it will be gradual.
Effect of declining rates as we re price going forward, assuming asset yields stay where they're at.
Should have.
Some positive impact.
Forward on them and all of this will depend on of course on the performance of the yield curve and how prepayments.
How we interact with those over the next few years.
And of course.
Hi, everybody.
Thank you.
Your next question comes from the line of Matthew Clark of Piper Sandler.
Hi, good morning, all.
Alright.
Can you update us on the remaining amount of net PPP fees that are left just to close the loop on the margin outlook.
Yes, we started off with net PPP fees that were being deferred or about $4 million and there's about $2 million left at this point.
Okay.
Great.
And.
On the wealth management pre tax margins they were up.
And nicely to 21% or so what's the outlook for those margin. This year can we continue to grind higher or do you think we kind of stabilize at this level.
I think we can grind a little bit higher but yes.
I think historically.
And largely it's going to be impacted.
By increases and assets under management and we've done a lot of things we've.
<unk> got some new systems in place and.
That's reduced our need for.
Employee infrastructure.
We're still going to need to add and occasional person here or there, but I think.
And with some of that technology that will save.
On the overhead there.
But I think he can still it still has room to get a little bit higher, but I wouldnt say tremendously higher.
Okay, and then just on reserves at 50 basis points, assuming the macro model doesn't change.
Should we expect.
And to stabilize here or do you think it could drift a little bit lower.
We kind of model around 50.
And as you've seen we've kind of vacillated between 48 and 50.
Quite honestly.
The only.
Probably larger effect, we have a really the securities adjustments that we have from quarter to quarter, because those tend to have a little more market sensitivity than our loans to.
The models continue to get better.
We are increasing and our.
Qualitative reserves during the quarter.
By and large and the fact that we still got a pandemic going on and we're trying to be relatively conservative but.
We kind of model around 50 basis points is kind of a low and and then do our best to.
To justify continuing and need to reserve at that level.
Some of it also was mix related to assets, we do more C&I that could have an impact on driving that slightly higher but I would say all in all 50 is probably about where I would model it out today.
Okay, Great and last one for me.
And the other fee income anything unusual there this quarter that might come out next quarter for the runway.
There were a few unusual items, we are experiencing higher prepayment fees. So we were about.
Two two.
And this quarter versus $1 1 million last quarter.
And then we also had a benefit from our MSR mortgage servicing right valuation by 300000.
I would say on and there wasn't much.
I would say on the treatment phase.
Because there's good velocity and the market.
Well that will probably be consistent.
At least for the next several quarters I would agree and then.
For the year, but.
That's the good part about having.
A little bit of call protection on these loans.
Yes, okay. Thank you.
Your next question comes from the line of Steve Moss with B Riley Securities.
Hey, good morning, guys.
David.
And good quarter here.
Just in terms of <unk>.
Our originations for 'twenty and 'twenty, one just wanted to tie that and will further David do we think about it.
Close to the $2 $5 billion number we saw for this year or maybe a bit higher.
Yes, I would say two five is probably our low and right now we are.
Our expectations are we should have some increase from there.
As you know, we typically talk about one $8 billion to $2 billion now we're talking about $2 $5 billion plus is kind of a benchmark, but I would say since the pipelines.
We are starting out strong and we probably won.
Knock on wood have.
For ease up on the market that we saw at the end of the first quarter and the second quarter and kind of do the math that two five should be kind of at the low end of our expectations.
And.
And if that makes sense, yes.
Yes.
Yes, it does.
And then in terms of.
Expense growth for.
For full year, 'twenty, one and just kind of curious as to.
And any changes or updated thoughts for you guys may have around expenses.
We've kind of modeled a little bit higher than.
Each year so.
We're probably looking at.
Make sure I don't.
The math is probably about.
5% growth on expenses.
And Thats about right, yes, that's about right and we do merit increases right at the beginning of the year for our employees. So we average about 3% from merit increases will have some additional costs associated with additional fundings from those variable costs moving employees new employees throughout the year, but still experienced and some benefits.
From the efficiencies we put in place.
Okay great.
Thank you very much that's all for me thanks.
Thanks, Steve.
Your next question comes from the line of Gary Tenner of D. A Davidson.
Thanks, Good morning.
On the hey on the topic of loan growth for 2021, and I guess for 2022 and defense.
The mix has been pretty stable in terms of production and the last couple of years with commercial business, 37%.
As you move to Texas for extensive Texas.
It would seem to me that maybe it would initially be maybe easier to grow multifamily and that market. So how do you think of kind of the mix maybe developing initially with that move.
Yes, I mean.
Real estate lending is usually easier to build.
However, our expectations are and we would have a diversified offering consistent to what we're doing and and all our other states.
The amount that we would expect near term probably we wouldn't have much it and the way of adjusting our mix and the fact that.
Because we have such.
A large base to start on.
But yes, I would say it would probably initially start with.
Real estate, and then start layering and C&I and consumer as we go on.
And I wouldn't expect it to have a dramatic change and our funding mix.
And one thing on well say about multifamily and the metroplex areas.
A little more fragmented.
And lending patterns and it is here in California.
Currently I think J P. Morgan Chase does not even landed and the metroplex.
So we're hoping.
That may be a small benefit to.
For being in the marketplace as you know they are very formidable.
Lender out here in this day and.
And California.
Great and then.
Sorry.
Actually that was my only other question so everything else was answered thank you.
Thanks Kerry thank you.
Your next question comes from the line of David <unk> of Wedbush Securities.
Hi, Thanks. Good morning couple of questions for you I guess first on that last point about Texas, how aggressive do you guys plan to be in terms of the de Novo expansion there or are we talking one to two branches per year for the next couple of years, just just talk about the pace of growth there.
I think initially it's going to be one and we may put another one right now we're trying to.
On.
Pick a pick a location that we think will be.
A reasonable location.
That would probably be in the areas, where most of the companies seem to be moving to so that could be like Westlake Southlake Plano.
Some of those areas.
As you know, we only have 21 branches.
Total so it's not like we're going to be branch heavy.
And the state taxes.
Still going to continue to work on our digital channel and and those types of things.
Great point Scott.
Have experience some decent deposit growth already.
And the state of Texas for our digital delivery channel.
And so six in front of us, but I think it's one of our larger.
Major metro markets firm from gathering deposits and digitally so this will be more of a support and although bricks and motor around that and one thing I'll say is I think anytime we've ever expanded into a new marketplace for us I think we've always done a good job of making sure that we have proven people.
And that understand the marketplace.
And I don't think this is going to be any different than anywhere else.
We're going to look to try to hire people that.
Has been and these markets for years and.
And we think we can help somebody bring and a fair amount of production.
Off that but I am hugely optimistic on with day, one when Dave says.
This year I wouldn't count on much of it affecting either our balance sheet or revenue, but I think and the outer years 2022, and 2023 I think it can have a pretty substantial.
Tangible impact.
And will there be much in terms of tax savings clearly, Texas is more tax friendly and California can you talk about that.
The tax savings, we will definitely realize as we have loan production within Texas, Thats, what really drives it and what will be subject to the state tax.
Rates of Texas, which are much better than California, where most of our loan production is today.
Yes, just to give you a little bit of up to $27 5 million.
588 clients already.
And Texas under our digital channel.
Currently.
Great and you also mentioned about getting the after you get at least one branch up and running youll be able to do.
And have the Texas Trust powers can you talk about what capability that brings for you guys and compare that to California trusts.
Yes, sure. So as you know we actually have three trust powers right now we have Hawaii.
Nevada, and California and.
And.
And the population and the state of Texas is massive.
And frankly, our Nevada Trust.
Assets represent about 40% of the total assets around 40% of the total assets that are under advisement for the Trust Department.
So.
Where we're seeing a lot of.
I mean, we continue to work with CPA and attorneys and.
And the drafting of document, but I will say that through first foundation and advisers and their relationship with Charles Schwab and we've been able to capitalize.
Schwab.
Does have trust powers, but they're a lot more simple and we're willing to handle and do handle much more complex cases.
I think we can gain a fair amount of traction there as we started to see.
Here in California, and Nevada.
Great. Thanks very much.
Yes.
This concludes our allotted time for today's question and answer session I will now turn the call back to Mr. Kaufman on for closing remarks.
Thank you everyone I am so proud of what we accomplished in 2020 and I'm very excited about the year ahead, there are great opportunities related to our geographic expansion and I am pleased to see the investments and technology pay offs.
Everyone on the team is working hard to deliver and excellent client experience and we are committed to producing strong results for shareholders.
We believe we built a valuable franchise and look forward to the year ahead.
And as a reminder, our earnings report.
And investor presentation can be found on our Investor Relations website.
Again for participate participating in today's call have a great remainder of your day.
Thank you that does conclude first foundation's fourth quarter 2020 earnings Conference call you may now disconnect.
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