Day: October 12, 2024

Source: Greg Jones 10/09/2024

Though these results became available post feasibility study, they still could be incorporated into the mine plan, noted a BMO Capital Markets report.

Lithium Ionic Corp. LTHCF encountered its thickest intercept to date via drilling at its Bandeira project in Brazil, reported BMO Capital Markets analyst Greg Jones in an Oct. 8 research note.

“These [new drill] results continue to highlight the exploration potential at the property and could potentially provide for optimization opportunities ” Jones wrote. “Lithium Ionic is one of our preferred lithium developers.”

Undervalued Stock, 40% Return

Lithium Ionic, with a share price at the time of the report of about CA$0.89, noted Jones, is trading below the peer median, at about US$40 per ton of lithium carbonate equivalent versus US$60.

BMO’s target price on the Canadian company, is CA$1.25 per share and implies a possible return of 40%.

Lithium Ionic remains rated as Outperform.

Drill Results Offer Upside

The new drill results from Bandeira contained the following highlight intercepts, reported Jones, including the thickest intercept drilled to date via hole 24-276:

• 64.7 meters (64.7m) of 1.39% lithium oxide (Li2O) from 35m, including 22m of 1.67% Li2O and 20m of 1.62% Li2O, from hole 24-276
• 13m of 1.11% Li2O, including 5m of 1.51% Li2O, from hole 24-266

Lithium Ionic perhaps could capitalize on the upside these results offer to enhance the project even though the feasibility study (FS) already has been completed, the analyst wrote. The company has options for how to do it.

It might incorporate the resources defined after the FS cutoff date and, thereby, extend the mine life. It might upgrade and incorporate near-surface Inferred resources “to smooth the production profile.” It might move the processing of higher-grade material to earlier in the mine plan.

5 Reasons to Like LTH

Jones presented the following reasons why BMO considers Lithium Ionic a preferred lithium developer.

1) Its Bandeira project requires low capital, as outlined in the FS, about US$290 million, as estimated by BMO.

2) The company could be the first to production among developers in BMO’s coverage universe, given it has a well-understood permitting process and second-mover advantage, neighbor Sigma Lithium Resources being the first.

3) The Bandeira property encompasses a large, underexplored area, meaning the potential to expand the current resource exists.

4) Lithium Ionic has a second project in development in Brazil, called Salinas, of which a preliminary economic assessment is expected by year-end 2024.

5) The company is undervalued.

Important Disclosures:

1. Lithium Ionic Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
3. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
4. Disclosures for BMO Capital Markets, Lithium Ionic Corp., October 8, 2024

Analyst’s Certification I, Greg Jones, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures Disclosure 2: BMO Capital Markets has provided investment banking services for remuneration with respect to Lithium Ionic Corp. within the past 12 months. Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Lithium Ionic Corp. within the past 12 months. Disclosure 6A: Lithium Ionic Corp. is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services Disclosure 8A: BMO Capital Markets or affiliates have beneficial ownership of 1% or more of any class of the equity securities of Lithium Ionic Corp. (a) as of the end of the month prior to the issuance date of the research report, or (b) as of the end of the second most recent month if the report issuance date is less than 10 days after the end of the prior month.

Methodology and Risks to Target Price/Valuation for Lithium Ionic Corp. Methodology: We use a NAV-based methodology to value Lithium Ionic shares consistent with other developers in the mining sector. We apply a 0.60x multiple to our calculated NAV, appropriate in our view for an early-stage development company with a low-capital project in an attractive jurisdiction and balanced by the current market environment. Risks: 1) Permitting Risk. Delays in advancing the Bandeira project through permitting in a timely manner could impact our assumed production start date and negatively impact our NAV per share estimate. 2) Financing Risk. Inability for the company to secure the financing required to advance its development plans along its anticipated timeline could impact our modelled start date, and if significant equity capital is raised it could introduce dilution to shareholders. 3) Stage of development. The Salinas project is early-stage and its ability to continue growing and improving the confidence of the resource base and defining the project economics is a key aspect to the company’s growth story, in our view. 4) Geological risk. The presence of a river over portion of the Outro Lado deposit requires further study. A river passes over a portion of the Outro Lado deposit and will not allow for open pit mining of this area. Underground mining is contemplated, and additional mine design study is required, which could adversely affect the current mineral resource estimate for this area (3.4 Mt at 1.47% Li2O). 5) Commodity price risk. Weakness in lithium and spodumene demand and commodity prices could negatively impact share price performance.

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HINGHAM, Mass., Oct. 11, 2024 (GLOBE NEWSWIRE) — HINGHAM INSTITUTION FOR SAVINGS HIFS, Hingham, Massachusetts announced results for the quarter ended September 30, 2024.

Earnings

Net income for the quarter ended September 30, 2024 was $5,846,000 or $2.68 per share basic and $2.66 per share diluted, as compared to $3,297,000 or $1.53 per share basic and $1.50 per share diluted for the same period last year. The Bank’s annualized return on average equity for the third quarter of 2024 was 5.52%, and the annualized return on average assets was 0.54%, as compared to 3.25% and 0.31% for the same period last year. Net income per share (diluted) for the third quarter of 2024 increased by 77% compared to the same period in 2023.

Core net income for the quarter ended September 30, 2024, which represents net income excluding the after-tax gain on equity securities, both realized and unrealized, and the after-tax gain on the disposal of fixed assets, was $3,163,000 or $1.45 per share basic and $1.44 per share diluted, as compared to $2,895,000 or $1.35 per share basic and $1.32 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the third quarter of 2024 was 2.99% and the annualized core return on average assets was 0.29%, as compared to 2.85% and 0.27% for the same period last year. Core net income per share (diluted) for the third quarter of 2024 increased by 9% over the same period in 2023.

Net income for the nine months ended September 30, 2024 was $16,816,000 or $7.73 per share basic and $7.67 per share diluted, as compared to $20,056,000 or $9.33 per share basic and $9.14 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first nine months of 2024 was 5.35%, and the annualized return on average assets was 0.52%, as compared to 6.70% and 0.64% for the same period in 2023. Net income per share (diluted) for the first nine months of 2024 decreased by 16% over the same period in 2023.

Core net income for the nine months ended September 30, 2024, which represents net income excluding the after-tax gain on securities, both realized and unrealized, and the after-tax gain on the disposal of fixed assets, was $7,558,000 or $3.47 per share basic and $3.45 per share diluted, as compared to $12,686,000 or $5.90 per share basic and $5.78 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the first nine months of 2024 was 2.41%, and the annualized core return on average assets was 0.23%, as compared to 4.24% and 0.41% for the same period in 2023. Core net income per share (diluted) for the first nine months of 2024 decreased by 40% over the same period in 2023.

See Page 10 for a reconciliation between Generally Accepted Accounting Principles (“GAAP”) net income and non-GAAP core net income. GAAP requires that gains and losses on equity securities, net of tax, realized and unrealized, be recognized in the Consolidated Statements of Income. In calculating core net income, the Bank did not make any adjustments other than those relating to after-tax gain on equity securities, realized and unrealized, and the after-tax gain on disposal of fixed assets.

Balance Sheet

Total assets were $4.450 billion at September 30, 2024, representing a 1% annualized decline year-to-date and 2% growth from September 30, 2023.

Net loans were $3.863 billion at September 30, 2024, representing a 2% annualized decline year-to-date and 1% growth from September 30, 2023. Origination activity was concentrated in the Boston and Washington D.C. markets and remained focused on stabilized multifamily commercial real estate and multifamily construction. The Bank continues to evaluate new opportunities in the San Francisco market, where interest in acquisitions and refinancing activity from the Bank’s customers began to pick up in 2024. In the third quarter of 2024, the Bank continued to experience loan prepayments more consistent with historic trends, including continued significant turnover in the Bank’s construction portfolio. As noted below, asset quality remained strong and finding high-quality loan assets remains a core business objective of the Bank.

Retail and business deposits were $1.977 billion at September 30, 2024, representing 8% annualized growth year-to-date and 3% growth from September 30, 2023. Non-interest-bearing deposits, included in retail and business deposits, were $358.0 million at September 30, 2024, representing 7% annualized growth year-to-date and stable from September 30, 2023.

Growth in non-interest bearing and money market balances in the first nine months of 2024 reflected the Bank’s focus on developing and deepening deposit relationships with new and existing commercial and non-profit customers. Investments in new relationship managers over the last nine months continued to contribute to deposit growth in the third quarter of 2024. The Bank continues to recruit actively for talented commercial bankers in Boston, Washington, and San Francisco, particularly as respected competitors have exited these markets or merged with larger regional banks.

The stability of the Bank’s balance sheet, as well as full and unlimited deposit insurance through the Bank’s participation in the Massachusetts Depositors Insurance Fund, continues to be appealing to customers in times of uncertainty.

Wholesale funds, which includes Federal Home Loan Bank borrowings, brokered deposits, and Internet listing service deposits were $2.015 billion at September 30, 2024, representing a 10% annualized decline year-to-date and 1% growth from September 30, 2023. In the first nine months of 2024, the Bank continued to manage its wholesale funding mix to optimize the cost of funds while taking advantage of the inverted yield curve by adding lower rate longer term liabilities. Wholesale deposits, which include brokered and Internet listing service time deposits, were $482.2 million at September 30, 2024, representing a 1% annualized decline year-to-date and a 2% decline from September 30, 2023. Borrowings from the Federal Home Loan Bank totaled $1.531 billion at September 30, 2024, representing a 13% annualized decline from December 31, 2023, and 1% growth from September 30, 2023. As of September 30, 2024, the Bank maintained an additional $815.5 million in immediately available borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, in addition to $368.1 million in cash and cash equivalents.

Book value per share was $193.42 as of September 30, 2024, representing 3% annualized growth year-to-date and 4% growth from September 30, 2023. This growth is not consistent with the Bank’s long-term objectives. In addition to the increase in book value per share, the Bank declared $2.52 in dividends per share since September 30, 2023.

On September 25, 2024, the Bank declared a regular cash dividend of $0.63 per share. This dividend will be paid on November 13, 2024 to stockholders of record as of November 4, 2024. This was the Bank’s 123rd consecutive quarterly dividend.

The Bank has also generally declared special cash dividends in each of the last twenty-nine years, typically in the fourth quarter, but did not declare a special dividend in 2023. The Bank sets the level of the special dividend based on the Bank’s capital requirements and the prospective return on other capital allocation options, particularly the incremental return on capital from new loan originations. This may result in special dividends, if any, significantly above or below the regular quarterly dividend. Future regular and special dividends will be considered by the Board of Directors on a quarterly basis.

Operational Performance Metrics

The net interest margin for the quarter ended September 30, 2024 increased 11 basis points to 1.07%, as compared to 0.96% in the quarter ended June 30, 2024. This was the second consecutive quarter of continued expansion. This improvement was the result of an increase in the yield on earning assets combined with a decline in the cost of interest-bearing liabilities. The six basis points increase in the yield on earning assets was driven primarily by a higher yield on loans, as the Bank continued to originate loans at higher rates and reprice existing loans. The cost of interest-bearing liabilities fell three basis points, as the Bank began to reduce rates later in the third quarter and continued to take advantage of the inverted yield curve by adding lower rate FHLB advances and brokered deposits. The net interest margin in the final month of the third quarter of 2024 was 1.14% annualized.

Key credit and operational metrics remained strong in the third quarter of 2024. At September 30, 2024, non-performing assets totaled 0.04% of total assets, compared to 0.03% at December 31, 2023 and 0.00% at September 30, 2023. Non-performing loans as a percentage of the total loan portfolio totaled 0.04% at both September 30, 2024 and December 31, 2023, as compared to 0.01% at September 30, 2023. The Bank did not record any charge-offs in the first nine months of 2024 or 2023. All non-performing assets and loans cited above were and are residential, owner-occupant loans.

The Bank did not have any delinquent or non-performing commercial real estate loans as of September 30, 2024, December 31, 2023, or September 30, 2023. The Bank did not own any foreclosed property as of September 30, 2024, December 31, 2023 or September 30, 2023.

The efficiency ratio, as defined on page 5 below, fell to 62.19% for the third quarter of 2024, as compared to 68.57% in the prior quarter and 62.55% for the same period last year. Operating expenses as a percentage of average assets rose to 0.68% for the third quarter of 2024, as compared to 0.67% for the prior quarter and the same period last year. As the efficiency ratio can be significantly influenced by the level of net interest income, the Bank utilizes these paired figures together to assess its operational efficiency over time. During periods of significant net interest income volatility, the efficiency ratio in isolation may over or understate the underlying operational efficiency of the Bank. The Bank remains focused on reducing waste through an ongoing process of continuous improvement and standard work that supports operational leverage, positioning the Bank to operate more efficiently in future.

Chairman Robert H. Gaughen Jr. stated, “Returns on equity and assets in the third quarter of 2024 were significantly lower than our long-term performance, reflecting the challenge from the increase in short-term interest rates over the last twenty-four months and a historically long and deep inversion of the yield curve. These conditions have posed a significant – albeit ultimately temporary – challenge to our business model. Our core business has been particularly challenged during this period and our investment operations have been critical to sustaining some growth in book value per share in this environment. As our assets continue to reprice higher and our liabilities, including both deposits and wholesale funding, reprice lower, conditions have become somewhat more favorable for our model.

While this market environment has been extraordinarily challenging, the Bank’s business model has been built over time to compound shareholder capital through economic cycles. During all such periods, we remain focused on careful capital allocation, defensive underwriting and disciplined cost control – the building blocks for compounding shareholder capital through all stages of the economic cycle. These remain constant, regardless of the macroeconomic environment in which we operate. I believe that over the past twenty-four months we have retained this focus and it will serve us well as our business emerges from this period.”

The Bank’s quarterly financial results are summarized in this earnings release, but shareholders are encouraged to read the Bank’s quarterly report on Form 10-Q, which is generally available several weeks after the earnings release. The Bank expects to file Form 10-Q for the quarter ended September 30, 2024 with the Federal Deposit Insurance Corporation (FDIC) on or about November 6, 2024.

Incorporated in 1834, Hingham Institution for Savings is one of America’s oldest banks. The Bank maintains offices in Boston, Nantucket, Washington, D.C., and San Francisco.

The Bank’s shares of common stock are listed and traded on The NASDAQ Stock Market under the symbol HIFS.

The Bank believes the presentation of the following non-GAAP financial measures provide useful supplemental information that is essential to an investor’s proper understanding of results of operations and financial condition of the Bank. Management uses these measures in its analysis of the Bank’s performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks.

The table below presents the reconciliation between net income and core net income, a non-GAAP measurement that represents net income excluding the after-tax gain on equity securities and the after-tax gain on disposal of fixed assets.

(1) The equity securities are held in a tax-advantaged subsidiary corporation. The income tax effect of the gain on equity securities, net, was calculated using the effective tax rate applicable to the subsidiary.

The table below presents the calculation of the efficiency ratio, a non-U.S. GAAP performance measure that management uses to assess operational efficiency which represents total operating expenses, divided by the sum of net interest income and total other income, excluding gain on equity securities, net and gain on disposal of fixed assets.

CONTACT:  Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761