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First Foundation Inc (NASDAQ:FFWM)
Q4 2020 Earnings Call
Jan 26, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to First Foundation's Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]

Speaking today will be Scott Kavanaugh, First Foundation's Chief Executive Officer; Kevin Thompson, Chief Financial Officer; and David DePillo, 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. In addition, 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, see the Company's filings with the Securities and Exchange Commission.

And now I'd like to turn the call over to Scott Kavanaugh.

Scott F. Kavanaugh -- Chief Executive Officer

Hello, everyone.

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 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. I hope everybody appreciated the new format. We felt like it was a little more concise and provided numbers in a little more -- in a straightforward manner.

As highlighted in the earnings report, we experienced another strong quarter which capped off a great year for First Foundation. Our earnings for the fourth quarter were $22.4 million or $0.50 per share. For the full year, earnings increased by 50% over 2019 to $84.4 million or $1.88 fully diluted earnings per share. Total revenues were $63.1 million for the quarter and $251.3 million for the year, a 19% increase over 2019.

We are pleased to report that our stockholders in 2020 enjoyed a payment of $12.5 million in the form of cash dividends, and, as we announced in our earnings report this morning, we increased our quarterly dividend for 2021 by 29%, from $0.07 to $0.09 per share. Our tangible book value per share ended the year at $13.44, a 16% increase during 2020. Combined with the dividend and the increase in market cap, we are proud to have returned $128 million to our shareholders during 2020 for a total return of 17%.

In a year that was marked with uncertainty and macroeconomic challenges, we are extremely pleased at how our team came together to serve our clients and deliver the results that we are reporting today.

Taking a look at our business lines. Our banking operations experienced strong loan growth as loan production in 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. The wealth management business saw a strong year, both in terms of new clients and positive investment returns in our portfolios. Assets increased by $403 million in 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 am very pleased about is our wealth management and trust business saw a combined pre-tax profitability of 19% for the quarter. We believe this signals that we are hitting scale for this business, and is a metric that we can continue to strive to achieve in 2021 and beyond.

In general, our business model of 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 turn to us for their banking and wealth management needs. 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. Our commitment to enhancing our technology continued as we invested in new ways to serve our clients leveraging AI, biometrics and automation. We added the ability to easily open and connect online checking account with our online savings account. We increased 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 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 of $553 million of multifamily loans in the third quarter. This was our fifth such securitization. Since 2015, we have sold $2.6 billion in loans and we are already taking steps to prepare for our sixth securitization which we expect to complete in 2021.

We also received recognition in the media and in the community for our charitable giving efforts. This included our supporting our community's nonprofit initiative which was especially meaningful this year amid 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 in 2021 and we are excited about what the initiative could mean for all non-profits we support. 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 business environment ahead position us well in 2021. Looking at 2021, we plan to expand our presence into the state of Texas. The opportunities for growth in Texas for our banking and wealth management businesses are strong. Specifically, the Dallas Metroplex is one of the largest markets for multi-family lending and the diversity of businesses there makes it a strong fit for us. It also aligns with our strategic goal of expanding in the major markets that present great opportunities for us. The Board of Directors has approved a move of our holding company to Dallas, which we expect to occur in the first half of 2021. We will continue to maintain our presence in the markets we currently serve, including existing bank and wealth management headquarters here in Irvine, California.

Before I hand it off to Kevin, I 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.

Kevin Thompson -- Executive Vice President, Chief Financial Officer

Thank you, Scott.

Earnings per diluted share of $1.88 in 2020 is a 50% increase over 2019. As a result of this momentum, our tangible book value per share increased 16% to $13.44 in the year. The full year return on assets was a strong 1.26% 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 7 basis points to 3.19% in the quarter as a result of the progress we have made in lowering deposit pricing and maintaining discipline in loan production. In addition, we recognized $1 million of net PPP fee income, which is approximately 26% of the total expected fee income in our PPP loans originated. Excluding the effects of PPP, our NIM increased to 3.13% in the quarter. Loan fundings in the quarter of $715 million were a record for First Foundation with full year fundings of $2.5 billion. The loan yield increased 10 basis points in the quarter to 4.01% as we have maintained strong underwriting discipline and saw some remix in loan fundings toward multi-family production.

The cost of deposits decreased from 57 basis points to 41 basis points in the quarter. Our strategy of increasing core deposits has gained traction as our core deposits increased from 75% to 94% in 2020. Total deposits increased by over $1 billion in the year to an all-time high, with 39% growth in non-interest bearing accounts.

Credit metrics remained strong in all our loan portfolios, and the allowance for credit losses to loans remained essentially flat, resulting in an allowance of 50 basis points of loans. This was a result of higher balances in loans held for investment and net charge-offs, partially offset by a slight improvement in the economic scenario we utilized for the CECL calculation. Net charge-offs were only 2 basis points for the full year and non-performing assets remained low with 30 basis points of total assets. Through this cycle, First Foundation's credit performance relative to the industry has 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% in the quarter. Assets under management at FFA increased to $4.9 billion while trust assets under advisement at FFB 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 have made in our infrastructure, we are seeing growing benefits from our operational leverage and efficiencies.

I will now turn the call over to David DePillo, President of First Foundation.

David DePillo -- President

Thank you, Kevin.

It was indeed a very successful year for First Foundation. We're seeing the benefits of scale and efficiency as evidenced by the financial results we reported this morning. We were able to accomplish this all while supporting our colleagues, clients and communities during some very challenging times. In 2020, as mentioned, we originated $2.5 billion of loans, a record year for us. In the year, we maintained our focus on our core multifamily business which has performed exceptionally well throughout the pandemic as well as continued to diversify into high-quality commercial business lines. The composition of our loan originations during the year was as follows: 53%, multifamily; 37%, CRE -- excuse me, C&I 8%, single family; and 2%, other.

As of December 31, our loan portfolio consisted of 52% multifamily loans, 32% business loans, 15% consumer and single-family loans and 1% land and construction loans. It is worth mentioning that even with record originations in the fourth quarter of $715 million, we achieved a weighted average interest rate of 3.61% on originations compared to 3.67% for the third quarter. This demonstrates our ability to achieve robust volumes while still defending the yields on our portfolio.

The credit quality of our loan portfolio is strong as evidenced by low level of delinquencies and our NPA ratio declining to 30 basis points as of December 31. As we had mentioned in recent quarters, we have low exposure to industries hardest hit by the pandemic, specifically hospitality and restaurants. Forbearances are down by 54% or $30 million from $25 million since last quarter, which represents 48 basis points of our loan portfolio. There were no forbearances in our multifamily consumer or land or construction portfolios, and there is only $4.5 million of first-round forbearances and $9.6 million of second-round forbearances 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 we have seen in recent quarters. Deposit growth for the year was strong with $1 billion increase in balances in 2020. We experienced $523 million increase at the branch level and $979 million increase in specialty deposits. The growth of our deposits business during the year was also attributed to the success we experienced in attracting new affluent clients through our digital channels.

Digital banking deposits, which were launched in the fourth quarter of 2019, increased $402 million in 2020 to finish the year at $550 million. The growth in our retail, digital and specialty deposits has contributed to the success of our strategy to increase core deposits. As Kevin mentioned, our core deposits grew to 94% of total deposits in the quarter, up from 90% from last quarter and up from 75% from year-end 2019. As Scott mentioned, we are seeing the investments that we have made in our digital delivery of both our client-facing and back office operations of our offering payoff [Phonetic]. This is most apparent by looking at our efficiency ratio, which, as Kevin highlighted, continues to improve to the best levels we have seen today. But we are also starting to see the benefit of our growth strategy. Being able to offer end-to-end digital solutions to attract clients to our existing branch network and through our digital 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 clients engaged with us through our traditional branch network or digitally through a computer, smartphone or tablet. In addition, we have planned enhancements for our commercial lending platform, our business online solution, our consumer online banking and our consumer banking apps. This will help define the user experience that is uniquely catered to our clients' needs.

All the success in 2020 could not have been achieved without the great team we have at First Foundation. I am so grateful for their dedication and hard work.

At this time, we are ready to take questions, and I will hand it back to the operator.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of David Feaster of Raymond James.

David Pipkin Feaster -- Raymond James & Associates -- Analyst

Hey, good morning, everybody.

Scott F. Kavanaugh -- Chief Executive Officer

Good morning, David.

David Pipkin Feaster -- Raymond James & Associates -- Analyst

First of all, I like the new format a lot. I think you guys did a great job, and congrats on the expansion into Texas. It's exciting and makes a ton of strategic sense. I'm just curious if you could kind of give us a roadmap, maybe a timeline for the expansion just regarding the infrastructure necessary from both a location and personnel perspective, and maybe any impacts you expect on your growth trajectory, just appetites for even M&A to potentially accelerate the buildout.

Scott F. Kavanaugh -- Chief Executive Officer

Yes, we're always looking at M&A. The one thing I would say is 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, I think if you've been looking at the press, many companies of all different kinds have moved to the Dallas Metroplex area and continue to announce. So I think it's a great expansion for us. 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'll be holding our Annual Shareholder Meeting, which I think is in May in Dallas.

So, we're really optimistic about it. I think there is a great opportunity just to enhance geographically, our expansion in loans, deposits. One of the things I want to do, David, is also get our trust Texas trust powers, and you can't really do that till you have a branch out there, at least one branch. So we're already sending our facilities person, Mark Gordon, out there to try 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.

David DePillo -- President

I would say, David, for financial modeling purposes, we really haven't included much benefit or expense load in 2021 and are really looking at this as -- 2021 as a positioning year actually for [Indecipherable] teams start deploying them years beyond. So it's really for us a long-term strategy of diversification.

David Pipkin Feaster -- Raymond James & Associates -- Analyst

Okay. That's helpful. And then just -- just any thoughts on growth near-term? And maybe -- I mean, 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's great to see the C&I strength in the quarter. And maybe just expectations for growth as we're looking out to 2021.

David DePillo -- President

Sure. So, from the multifamily side, I think what we saw was a strong pullback in 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. There still is a significant pent-up demand in the market for both purchase and refi. We've seen the purchase market come back, so people who are -- who have operated, call it, close to a year in this environment -- we are one of the most locked down, or the most locked down states in the union. However, people who have navigated very well on the strength of the product has brought the confidence back. So we -- our expectation is 2021 trajectory should mirror what we saw in the fourth quarter which is continued strong demand, and we don't necessarily see that dissipating anytime in 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 probably higher than it's been since the -- we've seen in quite some time.

On the C&I side, it's very interesting. It's a tale of the haves and have-nots. We've been focusing on businesses that have been very successful or repositioned themselves through the pandemic and have insulated themselves. We've tended to go a little bit upstream to companies that are a little bit larger that have access to capital and supported by balance sheets and I think that served us very well, and it's certainly proved itself out in the numbers. And we're going to continue to stay diversified and disciplined, but our expectation on the C&I side is, consistent growth is 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 our customer base. So we're adding some additional resources around that. Equipment finance is back to levels that we saw pre-pandemic and continues to grow. So, I would say we're hitting on all cylinders on the production side. And we just don't see anything near-term -- especially, and the fact that with -- appears to be easing restrictions in California as far as the rest of the country on some of the -- the shutdowns and lockdowns, our expectations are -- couldn't potentially get better from here as well.

Scott F. Kavanaugh -- Chief Executive Officer

Hi, David. It's our municipal financing division. We launched that a little over a year ago. It's done incredibly well. And we're very thankful that we got the talent that we have there, and frankly -- there is -- frankly, I don't care whether it's the trust business, assets under management, pipelines, loans, deposits. I feel like our pipelines are just so robust right now that I'm very optimistic for 2021.

David Pipkin Feaster -- Raymond James & Associates -- Analyst

That's great. That's great color. And then, just want to talk about your rate sensitivity. The interest rate environment has really played right into your hands as you've historically been pretty liability sensitive. I'm just curious how that may change 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.

Kevin Thompson -- Executive Vice President, Chief Financial Officer

I guess -- this is Kevin. I can start off. And you're right, the sensitivity has changed somewhat in this rate environment as that has for many banks. We are, 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 in reality as you have different types of yield curves and the dynamics, and we model that as well. From an academic perspective, we are a little less liability sensitive as a result of some of the changes in mix. We are still somewhat liability sensitive, but we monitor this very closely and really manage the balance sheet in a very flexible way in order to take advantage of different interest rate environments.

Scott F. Kavanaugh -- Chief Executive Officer

The one thing I would add also, David, is that we have $100 million of home loan bank advances that mature in April sometime, and our position is that that will retire bond maturity, and I think at that point -- 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 at kind of repositioning the deposit side, and I think you're going to continue to see that into 2021.

David DePillo -- President

There is -- on the asset side, there's probably a few things that have affected our -- our relative duration on those and then shortened up, certainly, from historical levels. One is, our portfolios are now starting to season, as you probably noted, from 2015 through 2018, '19 our growth rates were compounded at 30%, 40%, and that was relatively on seasoned products. In an interest rate environment where it was actually increasing PAM, now that we're kind of plateauing and we're in -- our growth rates closer to, call it, 10%, 12% on the loan portfolio, our CPR against that is relatively increased, so the duration of those assets has shortened as well as a little more focus and emphasis on C&I has also shortened the duration of the portfolio. So we're kind of seeing the benefits on both sides and that kind of plays into Kevin's comment of our interest rate sensitivity that's come in from historical levels.

Scott F. Kavanaugh -- Chief Executive Officer

And the last thing I'll add is, our shift to more core deposits benefits our interest rate profile as well with that relationship-based approach.

David Pipkin Feaster -- Raymond James & Associates -- Analyst

Got you. Kind of taking that all together, it sounds like probably further room for modest core NIM expansion exclusive of PPP.

David DePillo -- President

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, we're effectively going to be deploying that liquidity. Some of that, as Scott mentioned, is paying down higher cost of deposits in the way of brokered as well as we still have a few home loan rent advances that are maturing. They're 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 through the first quarter in the form of additional fundings and paydown of other borrowings will probably have a near-term impact. And then it will be the gradual effect of declining rates as we reprice going forward. Assuming asset yields stay where they are at, we should have some positive impact going forward on NIM.

Kevin Thompson -- Executive Vice President, Chief Financial Officer

And all this will depend of course on the performance of the yield curve and how prepayments -- how we interact with those over the next few years.

David Pipkin Feaster -- Raymond James & Associates -- Analyst

Of course. Thanks, everybody.

Scott F. Kavanaugh -- Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Matthew Clark with Piper Sandler.

Matthew Timothy Clark -- Piper Sandler & Co. -- Analyst

Hi. Good morning, all.

Scott F. Kavanaugh -- Chief Executive Officer

Hi.

Matthew Timothy Clark -- Piper Sandler & Co. -- Analyst

Can you update us on the remaining amount of net PPP fees that are left, just to close a loop on the margin outlook?

Kevin Thompson -- Executive Vice President, Chief Financial Officer

Yes. We started off with net PPP fees that were being deferred about $4 million, and there is about $2 million left at this point.

Matthew Timothy Clark -- Piper Sandler & Co. -- Analyst

Okay. Great. And, on the wealth management pre-tax margins, they were up again nicely to 21% or so. What's the outlook for those margins this year? Can we continue to grind higher or do you think we're going to stabilize at this level?

Scott F. Kavanaugh -- Chief Executive Officer

I think we can grind a little bit higher, but I think historically and largely, it's going to be impacted by increases in assets under management. And we've done a lot of things where you've got some new systems in place and that's reduced our need for employee infrastructure. We're still going to need to add an occasional person here or there, but I think with some of that technology that we'll save on the overhead there. But I think it can still -- it still has room to get a little bit higher, but I wouldn't say tremendously higher.

Matthew Timothy Clark -- Piper Sandler & Co. -- Analyst

Okay. And then just on reserves at 50 basis points, assuming the macro model doesn't change, should we expect to stabilize here? Do you think they could drift a little bit lower?

David DePillo -- President

We kind of model around 50 basis points. We've, as you've seen, we've kind of vacillated between 48 basis points and 50 basis points. Quite honestly, the only probably larger effect we have are really these securities adjustments that we have from quarter to quarter. Business tend to have a little more market sensitivities than our loans do. The models continue to get better. We are increasing our qualitative reserves during the quarter. By and large, given 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 as kind of the low end and then do our best to justify continually to reserve at that level. Some of it also is mix related too. As we do more C&I, that could have an impact on driving that slightly higher, but I would say all in all 50 basis points is probably about where I would model it out today.

Matthew Timothy Clark -- Piper Sandler & Co. -- Analyst

Okay. Great. And last one from me. In other fee income, anything unusual there this quarter that might come out next quarter [Indecipherable]?

Kevin Thompson -- Executive Vice President, Chief Financial Officer

There were a few unusual items. We are experiencing higher prepayment fees. So we were about $2.2 million this quarter versus $1.1 million last quarter. And then, we also had a benefit from our MSR or mortgage servicing rights valuation of about $300,000.

Scott F. Kavanaugh -- Chief Executive Officer

I would say it wasn't much...

David DePillo -- President

I would say on the [Indecipherable] because there is good velocity in the market, that will probably be consistent, at least for the next several quarters...

Scott F. Kavanaugh -- Chief Executive Officer

Yeah, I would agree.

David DePillo -- President

And then maybe for the year. But this -- the good part about having a little bit of call protection on these loans.

Matthew Timothy Clark -- Piper Sandler & Co. -- Analyst

Yeah. Okay. Thank you.

Operator

Your next question comes from the line of Steve Moss of B. Riley Securities.

Stephen M. Moss -- B. Riley FBR -- Analyst

Good morning, guys.

Scott F. Kavanaugh -- Chief Executive Officer

Good morning, Steve.

Stephen M. Moss -- B. Riley FBR -- Analyst

Good quarter here. And I guess just in terms of originations for 2021, just want to cut out a little further, David. Do you think about it staying close to the $2.5 billion number we saw for this year or maybe a bit higher?

David DePillo -- President

Yeah, I would say $2.5 billion is probably our low end right now. Our expectations are we should have some increase from there. As you know, we typically talk about $1.8 billion to $2 billion. Now we're talking about $2.5 billion plus as kind of a benchmark. But I would say, since pipelines are starting off strong and we probably won't, knock on wood, have a freeze-up of the market that we saw at the end of the first quarter and the second quarter, you can kind of do the math that $2.5 billion should be kind of the low end of our expectations, if that makes sense.

Stephen M. Moss -- B. Riley FBR -- Analyst

Yeah. Yes, it does. And then in terms of just expense growth for full year '21, just kind of curious as to -- any changes or updated thoughts you guys may have around expenses.

David DePillo -- President

We kind of model a little bit higher than -- each year. So, we're probably looking at -- make sure I don't screw up the math -- probably about 5% growth on expenses. I think that's about right.

Kevin Thompson -- Executive Vice President, Chief Financial Officer

Yeah, that's about right. We do merit increases right at the beginning of the year for employees who we average about 3%, around merit increases will have some additional costs associated with additional funding some of those variable costs.

Scott F. Kavanaugh -- Chief Executive Officer

New employees...

Kevin Thompson -- Executive Vice President, Chief Financial Officer

Yeah, new employees, throughout the year, but still experiencing some benefits from efficiencies we've put it in place.

Stephen M. Moss -- B. Riley FBR -- Analyst

Okay. Great. Well, thank you very much. That's all from me.

Scott F. Kavanaugh -- Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Gary Tenner of D.A. Davidson.

Gary Tenner -- D.A. Davidson -- Analyst

Thanks. Good morning.

Scott F. Kavanaugh -- Chief Executive Officer

Good morning.

Gary Tenner -- D.A. Davidson -- Analyst

On the -- on the topic of loan growth for '21 and I guess for 2022 in a sense, the mix has been pretty stable in terms of production the last couple of years with commercial business, 37%. As you move to Texas or expand to Texas, it would seem to me that maybe it would -- it would initially be maybe easier to grow multifamily in that market. So how do you think of kind of the mix maybe developing initially with that move?

David DePillo -- President

Yeah. I mean, real estate lending is usually easier to build. However, our expectations are, we would have a diversified offering consistent to what we're doing in all our other states. The amount that we would expect near-term probably wouldn't have much in the way of adjusting our mix, and the fact that because we have such of a large base to start on, but yeah, I would say would probably initially start with real estate and then start layering in C&I and consumer as we go along. But I wouldn't expect it to have a dramatic change in our funding mix.

Scott F. Kavanaugh -- Chief Executive Officer

The one thing I will say about multifamily and the metropolitan area is it's a little more fragmented in lending patterns than it is here in California. Currently, I think, JPMorgan Chase does not even lends in metroplex. So we're hoping that that may be a small benefit to being in the marketplace. As you know, they are a very formidable lender out here in the States in California.

Stephen M. Moss -- B. Riley FBR -- Analyst

Great. And then -- sorry. Actually that was my only other question. Everything else was answered. Thank you.

Scott F. Kavanaugh -- Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of David Chiaverini of Wedbush Securities.

David Chiaverini -- Wedbush Securities -- Analyst

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? Are we talking one to two branches per year for the next couple of years? Just talk about the pace of growth there.

Scott F. Kavanaugh -- Chief Executive Officer

I think initially it's going to be one, and we may put another one. Right now, we're trying to 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, I mean, we only have 21 branches total. So it's not like we're going to be branch heavy in the State of Texas. We're still going to continue to work on our digital channel and those types of things.

David DePillo -- President

Which is a great point, Scott. We have experienced some decent deposit growth already in the State of Texas through our digital delivery channel. I don't have the statistics in front of us, but I think it's one of our larger, major metro markets from gathering deposits digitally. So this will be more of a support de novo bricks and mortar around that digital account.

Scott F. Kavanaugh -- Chief Executive Officer

One thing I'll say, 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 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 had been in these markets for years, and we think we can have somebody bring in a fair amount of production off that. But I am hugely optimistic. I'm with Dave when Dave says this year, I wouldn't count on much of it affecting either our balance sheet or revenue, but I think in the outer years, 2022 and 2023, I think it can have a pretty substantial impact.

David Chiaverini -- Wedbush Securities -- Analyst

And will there be much in terms of tax savings? Clearly, Texas is more tax-friendly than California. Can you talk about that?

Kevin Thompson -- Executive Vice President, Chief Financial Officer

The tax savings, we will definitely realize as we have loan production within Texas. That's what really drive this and will be subject to the state tax rates of Texas which are much better than California where most of our loan production is today.

David DePillo -- President

Just to give you a little bit of update, we have $27.5 million with our 588 clients already in Texas under our digital channel currently.

David Chiaverini -- Wedbush Securities -- Analyst

Great. And you also mentioned about getting the -- after you get at least one branch up and running, you'll be able to do -- have the Texas trust powers. Can you talk about what capability that brings for you guys when compare that to California trust?

Scott F. Kavanaugh -- Chief Executive Officer

Yeah, sure. So, as you know, we actually have three trust powers right now. We have Hawaii, Nevada and California. And the population in the State of Texas is massive. Frankly, our Nevada Trust, the assets represent about 40% of the total assets, around 40% of the total assets that are under advisement for the Trust Department. So we're seeing a lot of -- I mean, we continue to work with CPAs and attorneys and the drafting of documents, but I will say that through First Foundation Advisors and their relationship with Charles Schwab, we've been able to capitalize the -- Charles 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. So I think we can gain a fair amount of traction there as we started to see here in California and Nevada.

David Chiaverini -- Wedbush Securities -- Analyst

Great. Thanks very much.

Operator

This concludes our allotted time for today's question-and-answer session. I will now turn the call back to Mr. Kavanaugh for closing remarks.

Scott F. Kavanaugh -- Chief Executive Officer

Thank you, everyone. I'm 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'm pleased to see the investments in technology pay off. Everyone on the team is working hard to deliver an excellent client experience, and we are committed to producing strong results for shareholders. We believe we've built a valuable franchise and look forward to the year ahead.

As a reminder, our earnings report and investor presentation can be found on our Investor Relations website. Thank you again for participating in today's call. Have a great remainder of your day.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Scott F. Kavanaugh -- Chief Executive Officer

Kevin Thompson -- Executive Vice President, Chief Financial Officer

David DePillo -- President

David Pipkin Feaster -- Raymond James & Associates -- Analyst

Matthew Timothy Clark -- Piper Sandler & Co. -- Analyst

Stephen M. Moss -- B. Riley FBR -- Analyst

Gary Tenner -- D.A. Davidson -- Analyst

David Chiaverini -- Wedbush Securities -- Analyst

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