Breaking

Japan 10-Year Yield Falls to Record on Outlook for BOJ Purchases
Tweet TWEET

HMN Financial, Inc. Announces First Quarter Results

  HMN Financial, Inc. Announces First Quarter Results

Business Wire

ROCHESTER, Minn. -- April 19, 2013

HMN Financial, Inc. (NASDAQ:HMNF):

First Quarter Highlights

  *Net income of $0.7 million, a decrease of $2.1 million, compared to net
    income of $2.8 million in the first quarter of 2012
  *Diluted earnings per common share of $0.06, a decrease of $0.52, compared
    to diluted earnings per common share of $0.58 in the first quarter of 2012
  *Provision for loan losses of $0, an increase of $0.1 million, compared to
    a provision for loan losses of ($0.1 million) in first quarter of 2012
  *Non-performing assets of $38.7 million, down $1.9 million from fourth
    quarter of 2012
  *Total assets decreased $26 million in first quarter of 2013

                                                  
EARNINGS SUMMARY (unaudited)                           Three Months Ended
                                                       March 31,
(dollars in thousands, except per share amounts)       2013      2012
Net income                                           $ 741        2,804
Net income available to common stockholders            265          2,343
Diluted earnings per common share                      0.06         0.58
Return on average assets                               0.48  %      1.57  %
Return on average common equity                        4.90  %      19.32 %
Book value per common share                          $ 8.07         7.81
                                                                          

HMN Financial, Inc. (HMN or the Company) (NASDAQ:HMNF), the $627 million
holding company for Home Federal Savings Bank (the Bank), today reported net
income of $0.7 million for the first quarter of 2013, a decrease of $2.1
million compared to net income of $2.8 million for the first quarter of 2012.
Net income available to common shareholders was $0.3 million for the first
quarter of 2013, a decrease of $2.0 million from the net income available to
common shareholders of $2.3 million for the first quarter of 2012. Diluted
earnings per common share for the first quarter of 2013 were $0.06, a decrease
of $0.52 from the diluted earnings per common share of $0.58 for the first
quarter of 2012. The decrease in net income between the periods was due
primarily to a $1.3 million decrease in net interest income as a result of a
decrease in interest earning assets, a $0.6 million decrease in the gain
recognized on the sales of branch offices, and a $0.2 million decrease in the
gains recognized on loan sales due to a decrease in the sale of commercial
government guaranteed loans.

President’s Statement
“We are pleased to report earnings for the first quarter of 2013 and the
continued reduction in our non-performing assets,” said Home Federal Savings
Bank President and Chief Executive Officer, Bradley Krehbiel. “We continue to
focus our efforts on improving credit quality and reducing non-performing
assets in the most cost effective manner while at the same time reducing
expenses to reflect the decreased size of our balance sheet. We believe that,
over time, our focus on these areas will be effective in generating improved
financial results.”

First Quarter Results

Net Interest Income
Net interest income was $4.9 million for the first quarter of 2013, a decrease
of $1.3 million, or 20.6%, compared to $6.2 million for the first quarter of
2012. Interest income was $6.3 million for the first quarter of 2013, a
decrease of $2.0 million, or 23.6%, from $8.3 million for the first quarter of
2012. Interest income decreased between the periods primarily because of a
$109 million decrease in the average interest-earning assets between the
periods. Average interest-earning assets decreased between the periods
primarily because of a decrease in the commercial loan portfolio, which
occurred because of limited loan demand and the Company’s focus on improving
credit quality, reducing loan concentrations, managing interest rate risk and
improving capital ratios. Interest income also decreased because of lower
average yields on loans and investment securities. The average yield earned on
interest-earning assets was 4.28% for the first quarter of 2013, a decrease of
42 basis points from the 4.70% average yield for the first quarter of 2012.

Interest expense was $1.4 million for the first quarter of 2013, a decrease of
$0.7 million, or 32.5%, compared to $2.1 million for the first quarter of
2012. Interest expense decreased primarily because of a $124 million decrease
in the average interest-bearing liabilities between the periods. The decrease
in average interest-bearing liabilities is primarily the result of a decrease
in the outstanding brokered and retail certificates of deposits between the
periods. The decrease in brokered and retail certificates of deposits between
the periods was the result of using the proceeds from loan principal payments
to fund maturing certificates. Interest expense also decreased because of the
lower average interest rates paid on money market accounts and certificates of
deposits. The decreased rates were the result of the low interest rate
environment that continued to exist during the first quarter of 2013. The
average interest rate paid on interest-bearing liabilities was 1.02% for the
first quarter of 2013, a decrease of 20 basis points from the 1.22% average
interest rate paid in the first quarter of 2012. Net interest margin (net
interest income divided by average interest earning assets) for the first
quarter of 2013 was 3.34%, a decrease of 19 basis points compared to 3.53% for
the first quarter of 2012.

Provision for Loan Losses
The provision for loan losses was $0 for the first quarter of 2013, an
increase of $0.1 million compared to ($0.1 million) for the first quarter of
2012. The provision for loan losses remained low in the first quarter of 2013
primarily because the decrease in the required reserves for certain risk rated
commercial loans was entirely offset by additional specific reserves on
certain development loans. These additional reserves were the result of a
decrease in the estimated value of the underlying collateral supporting these
loans. Total non-performing assets were $38.7 million at March 31, 2013, a
decrease of $1.9 million, or 4.6%, from $40.6 million at December 31, 2012.
Non-performing loans decreased $1.2 million and foreclosed and repossessed
assets decreased $0.7 million during the first quarter of 2013. The
non-performing loan and foreclosed and repossessed asset activity for the
first quarter of 2013 was as follows:

                                                             
(Dollars in                                                   
thousands)
Non-performing loans                     Foreclosed and
                                         repossessed assets
January 1, 2013           $ 29,975       January 1, 2013            $ 10,595
Classified as               861          Transferred from             0
non-performing                           non-performing loans
Charge offs                 (346   )     Other payments               (68    )
                                         received
Principal payments          (1,355 )     Real estate sold             (628   )
received
Classified as               (373   )     Net gain on sale of          136
accruing                                 assets
Transferred to real        0           Write downs                 (117   )
estate owned
March 31, 2013            $ 28,762      March 31, 2013             $ 9,918  
                                                             

A reconciliation of the Company’s allowance for loan losses for the first
quarters of 2013 and 2012 is summarized as follows:

                                    
(Dollars in thousands)   2013         2012
Balance at January 1,    $ 21,608     $ 23,888
Provision                    0              (128   )
Charge offs:
Consumer                     (46    )       (265   )
Commercial business          0              (8     )
Commercial real estate       (337   )       (2,630 )
Recoveries                  716          567    
Balance at March 31,       $ 21,941      $ 21,424 
                                          
General allowance          $ 13,614       $ 13,913
Specific allowance          8,327        7,511  
                           $ 21,941      $ 21,424 
                                    

The following table summarizes the amounts and categories of non-performing
assets in the Bank’s portfolio and loan delinquency information as of the end
of the two most recently completed quarters.

                                                       
                                            March 31,       December 31,
(Dollars in thousands)                     2013          2012
Non-Performing Loans:
One-to-four family real estate              $ 2,127           $ 2,492
Commercial real estate                        24,590            25,543
Consumer                                      334               300
Commercial business                           1,711             1,640
Total                                         28,762            29,975
                                                                             
Foreclosed and Repossessed Assets:
One-to-four family real estate                1,114             1,595
Commercial real estate                        8,804             9,000
Total non-performing assets                 $ 38,680          $ 40,570
Total as a percentage of total assets         6.17      %       6.21         %
Total non-performing loans                  $ 28,762          $ 29,975
Total as a percentage of total loans          6.62      %       6.60         %
receivable, net
Allowance for loan loss to                    76.29     %       72.09        %
non-performing loans
                                                                             
Delinquency Data:
Delinquencies ^(1)
30+ days                                    $ 3,613           $ 2,739
90+ days (2)                                  4                 7,423
Delinquencies as a percentage of
Loan and lease portfolio ^(1)
30+ days                                      0.76      %       0.57         %
90+ days                                      0.00      %       1.55         %
                                                                   

^(1) Excludes non-accrual loans.
^(2) Loans delinquent for 90 days and over are generally non-accruing and are
included in the Company’s non-performing asset total unless they are well
secured and in the process of collection.

The following table summarizes the number and types of commercial real estate
loans (the largest category of non-performing loans) that were non-performing
as of the end of the two most recently completed quarters.

                                                             
                                       Principal                       Principal
                                        Amount                          Amount
(Dollars in                             of Loans                        of Loans
thousands)                              at                              at
                      # of              March 31,     # of              December
                                                                        31,
Property Type       relationships   2013        relationships   2012
Developments/land     10                $  23,854     9                 $  24,339
Shopping              1                    69         2                    386
centers/retail
Restaurants/bar       1                    526        1                    547
Office buildings      0                    0          2                    128
Other buildings       1                 141      1                 143
                      13              $  24,590   15              $  25,543
                                                                           

The following table summarizes the number of lending relationships and
industry of commercial business loans that were non-performing as of the end
of the two most recently completed quarters.

                                                                    
                                               Principal                       Principal
                                               Amount                          Amount
(Dollars in thousands)                         of Loans                        of Loans
                                               at                              at
                             # of              March 31,     # of              December
                                                                               31,
Industry Type              relationships   2013        relationships   2012
Construction/development     7                 $  1,007      6                 $  1,074
Retail                       2                    406        2                    239
Restaurant                   1                    124        1                    129
Other                        3                 174      3                 198
                             13              $  1,711    12              $  1,640
                                                                               

Non-Interest Income and Expense
Non-interest income was $1.9 million for the first quarter of 2013, a decrease
of $0.8 million, or 30.7%, from $2.7 million for the first quarter of 2012.
Gain on sale of branch office decreased $0.6 million as a gain was realized on
the sale of the Toledo, Iowa branch in the first quarter of 2012. Gain on
sales of loans decreased $0.2 million between the periods due to a $0.3
million decrease in the gains recognized on the sale of commercial government
guaranteed loans between the periods that was partially offset by a $0.1
million increase in the gains recognized on the sale of single family loans.
The increase in the gains recognized on single family loans was due to an
increase in loan originations and sales as a result of the low interest rate
environment that continued to exist during the first quarter of 2013. Fees and
service charges decreased $40,000 between the periods primarily because of a
decrease in debit card and overdraft charges. Other non-interest income
decreased $25,000 between the periods primarily because of a decrease in
rental income realized on other real estate owned. Loan servicing fees
increased $16,000 between the periods because of an increase in the number of
single family loans that are being serviced for others.

Non-interest expense was $6.0 million for the first quarter of 2013, a
decrease of $0.2 million, or 3.3%, from $6.2 million for the first quarter of
2012. Compensation expense decreased $0.2 million primarily because of a
decrease in the number of employees between the periods. Other non-interest
expense decreased $57,000 between the periods primarily because of decreased
expenses related to non-performing assets. Deposit insurance expense increased
$48,000 between the periods primarily because of an increase in FDIC insurance
rates between the periods. The gain on real estate owned decreased $58,000
between the periods because fewer properties were sold. Occupancy expense
decreased $32,000 primarily because of a decrease in rent and depreciation
expense as a result of having fewer branch facilities.

Income tax expense was $25,000 for the first quarter of 2013, an increase of
$25,000 from the first quarter of 2012 when no income tax expense was
recorded. In the second quarter of 2010, the Company recorded a deferred tax
asset valuation reserve against its entire deferred tax asset balance and the
Company continued to maintain a valuation reserve against the entire deferred
tax asset balance at March 31, 2013. Since the valuation reserve is
established against the entire deferred tax asset balance, no regular income
tax expense was recorded for the first quarter of 2013. The income tax expense
that was recorded in the first quarter of 2013 relates to alternative minimum
tax amounts that are due since only a portion of the outstanding net operating
loss carry forwards can be used to offset current income under the current
alternative minimum tax rules.

Net Income Available to Common Shareholders
The net income available to common shareholders was $0.3 million for the first
quarter of 2013, a decrease of $2.0 million from the $2.3 million income
available to common shareholders in the first quarter of 2012. The net income
available to common shareholders decreased primarily because of the change in
the net income between the periods. The Company has deferred the last nine
quarterly dividend payments, beginning with the February 15, 2011 dividend
payment, on its Fixed Rate, Series A, Cumulative Perpetual Preferred Stock
that was originally issued to the United States Treasury Department as part of
the TARP Capital Purchase Program (the “Preferred Stock”). The deferred
dividend payments have been accrued for payment in the future and are being
reported for the deferral period as a preferred dividend requirement that is
deducted from income for financial statement purposes to arrive at the net
income available to common shareholders.

Under the terms of the certificate of designations for the Preferred Stock,
dividend payments may be deferred, but the dividend is cumulative and
compounds quarterly during the deferral period. In addition, if the Company
fails to pay dividends for six quarters, whether or not consecutive, the
holders of the Preferred Stock have the right to appoint two representatives
to the Company’s board of directors. On February 8, 2013, the Treasury sold
the Preferred Stock to unaffiliated third party investors in a private
transaction. The Company has been advised that the current holders of
substantially all of the Preferred Stock have entered into agreements with the
Federal Reserve Board pursuant to which they have each agreed not to take
action, influence over the management or policies of the Company or the Bank,
including exercise of any right to elect any representative to the Company’s
board of directors. Further, while dividends on the Preferred Stock are in
arrears, no dividend may be paid on the common stock of the Company. Under the
terms of the Company’s and Bank’s Supervisory Agreements with their federal
banking regulators, neither the Company nor the Bank may declare or pay any
cash dividends, or purchase or redeem any capital stock, without prior notice
to, and consent of these regulators.

Return on Assets and Equity
Return on average assets for the first quarter of 2013 was 0.48%, compared to
1.57% for the first quarter of 2012. Return on average equity was 4.90% for
the first quarter of 2013, compared to 19.32% for the first quarter of 2012.
Book value per common share at March 31, 2013 was $8.07, compared to $7.81 at
March 31, 2012.

General Information
HMN Financial, Inc. and Home Federal Savings Bank are headquartered in
Rochester, Minnesota. Home Federal Savings Bank operates eight full service
offices in Minnesota located in Albert Lea, Austin, Eagan, La Crescent,
Rochester (2), Spring Valley and Winona; one full service office in Iowa
located in Marshalltown; one loan origination office in Sartell, Minnesota;
and two Private Banking offices in Rochester, Minnesota.

Safe Harbor Statement
This press release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
often identified by such forward-looking terminology as “expect,” “intend,”
“look,” “believe,” “anticipate,” “estimate,” “project,” “seek,” “may,” “will,”
“would,” “could,” “should,” “trend,” “target,” and “goal” or similar
statements or variations of such terms and include, but are not limited to,
those relating to increasing our core deposit relationships, reducing
non-performing assets, reducing expense and generating improved financial
results; the adequacy and amount of available liquidity and capital resources
to the Bank; the Company’s liquidity and capital requirements; our
expectations for core capital and our strategies and potential strategies for
improvement thereof; changes in the size of the Bank’s loan portfolio; the
recovery of the valuation allowance on deferred tax assets; the amount and mix
of the Bank’s non-performing assets and the appropriateness of the allowance
therefor; future losses on non-performing assets; the amount of
interest-earning assets; the amount and mix of brokered and other deposits
(including the Company’s ability to renew brokered deposits); the availability
of alternate funding sources; the payment of dividends; the future outlook for
the Company; the amount of deposits that will be withdrawn from checking and
money market accounts and how the withdrawn deposits will be replaced; the
projected changes in net interest income based on rate shocks; the range that
interest rates may fluctuate over the next twelve months; the net market risk
of interest rate shocks; the future outlook for the issuer trust preferred
securities held by the Bank; and the Bank’s compliance with regulatory
standards generally (including the Bank’s status as “well-capitalized”), and
supervisory agreements, individual minimum capital requirements or other
supervisory directives or requirements to which the Company or the Bank are or
may become expressly subject, specifically, and possible responses of the OCC
and FRB and the Bank and the Company to any failure to comply with any such
regulatory standard, agreement or requirement. A number of factors could cause
actual results to differ materially from the Company’s assumptions and
expectations. These include but are not limited to the adequacy and
marketability of real estate and other collateral securing loans to borrowers;
federal and state regulation and enforcement, including restrictions set forth
in the supervisory agreements between each of the Company and Bank and the OCC
and FRB; possible legislative and regulatory changes, including changes in the
degree and manner of regulatory supervision, the ability of the Company and
the Bank to establish and adhere to plans and policies relating to, among
other things, capital, business, non-performing assets, loan modifications,
documentation of loan loss allowance and concentrations of credit that are
satisfactory to the OCC and FRB, as applicable, in accordance with the terms
of the Company and Bank supervisory agreements and to otherwise manage the
operations of the Company and the Bank to ensure compliance with other
requirements set forth in the supervisory agreements; the ability of the
Company and the Bank to obtain required consents from the OCC and FRB, as
applicable, under the supervisory agreements or other directives; the ability
of the Bank to comply with its individual minimum capital requirement and
other applicable regulatory capital requirements; enforcement activity of the
OCC and FRB in the event of our non-compliance with any applicable regulatory
standard, agreement or requirement; adverse economic, business and competitive
developments such as shrinking interest margins, reduced collateral values,
deposit outflows, changes in credit or other risks posed by the Company’s loan
and investment portfolios, changes in costs associated with alternate funding
sources, including changes in collateral advance rates and policies of the
Federal Home Loan Bank, technological, computer-related or operational
difficulties, results of litigation, and reduced demand for financial services
and loan products; changes in accounting policies and guidelines, or monetary
and fiscal policies of the federal government or tax laws; international
economic developments; the Company’s access to and adverse changes in
securities markets; the market for credit related assets; or other significant
uncertainties. Additional factors that may cause actual results to differ from
the Company’s assumptions and expectations include those set forth in the
Company’s most recent filings on Forms 10-K and 10-Q with the Securities and
Exchange Commission. All forward-looking statements are qualified by, and
should be considered in conjunction with, such cautionary statements. For
additional discussion of the risks and uncertainties applicable to the
Company, see the “Risk Factors” sections of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2012 and Part II, Item 1A of its
Quarterly Reports on Form 10-Q. We undertake no duty to update any of the
forward-looking statements after the date of this press release.


HMN FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

                                                           
                                                March 31,     December 31,
(Dollars in thousands)                         2013          2012
                                                  (unaudited)
Assets
Cash and cash equivalents                       $ 72,995          83,660
Securities available for sale:
Mortgage-backed and related securities
(amortized cost $8,090 and $9,825)                8,586           10,421
Other marketable securities
(amortized cost $82,773 and $75,759)              82,438         75,470    
                                                  91,024         85,891    
                                                                  
Loans held for sale                               2,210           2,584
Loans receivable, net                             434,634         454,045
Accrued interest receivable                       1,971           2,018
Real estate, net                                  9,918           10,595
Federal Home Loan Bank stock, at cost             4,063           4,063
Mortgage servicing rights, net                    1,783           1,732
Premises and equipment, net                       7,019           7,173
Prepaid expenses and other assets                 1,469          1,566     
Total assets                                    $ 627,086        653,327   
                                                                  
                                                                  
Liabilities and Stockholders’ Equity
Deposits                                        $ 487,645         514,951
Federal Home Loan Bank advances                   70,000          70,000
Accrued interest payable                          173             247
Customer escrows                                  1,365           830
Accrued expenses and other liabilities            6,850          6,465     
Total liabilities                                 566,033        592,493   
Commitments and contingencies
Stockholders’ equity:
Serial preferred stock ($.01 par value):
Authorized 500,000 shares; issued shares          25,481          25,336
26,000
Common stock ($.01 par value):
Authorized 11,000,000; issued shares              91              91
9,128,662
Additional paid-in capital                        51,691          51,795
Retained earnings, subject to certain             47,386          47,004
restrictions
Accumulated other comprehensive loss, net         (195     )      (49       )
of tax
Unearned employee stock ownership plan            (2,949   )      (2,997    )
shares
Treasury stock, at cost 4,722,418 and             (60,452  )      (60,346   )
4,705,073 shares
Total stockholders’ equity                        61,053         60,834    
Total liabilities and stockholders’ equity      $ 627,086        653,327   
                                                                  


HMN FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(unaudited)

                                                        Three Months Ended
                                                          March 31,
(Dollars in thousands)                                  2013      2012
Interest income:                                                    
Loans receivable                                         $ 6,028       7,796
Securities available for sale:
Mortgage-backed and related                                94          193
Other marketable                                           139         249
Cash equivalents                                           33          27
Other                                                      29         10    
Total interest income                                      6,323      8,275 
                                                                       
Interest expense:
Deposits                                                   557         1,217
Federal Home Loan Bank advances                            835        845   
Total interest expense                                     1,392      2,062 
Net interest income                                        4,931       6,213
Provision for loan losses                                  0          (128  )
Net interest income after provision for loan losses        4,931      6,341 
                                                                       
Non-interest income:
Fees and service charges                                   789         829
Loan servicing fees                                        248         232
Gain on sales of loans                                     678         909
Gain on sale of branch office                              0           552
Other                                                      159        184   
Total non-interest income                                  1,874      2,706 
                                                                       
Non-interest expense:
Compensation and benefits                                  3,199       3,413
Gain on real estate owned                                  (19   )     (77   )
Occupancy                                                  850         882
Deposit insurance                                          318         270
Data processing                                            330         337
Other                                                      1,361      1,418 
Total non-interest expense                                 6,039      6,243 
Income before income tax expense                           766         2,804
Income tax expense                                         25         0     
Net income                                                 741         2,804
Preferred stock dividends and discount                     (476  )     (461  )
Net income available to common shareholders              $ 265        2,343 
Other comprehensive loss, net of tax:
Unrealized holding losses arising during the period      $ (146  )     (180  )
Other comprehensive loss, net of tax                       (146  )     (180  )
Comprehensive income attributable to common              $ 119        2,163 
shareholders
Basic earnings per common share                         $ 0.07       0.60  
Diluted earnings per common share                       $ 0.06       0.58  
                                                                             


HMN FINANCIAL, INC. AND SUBSIDIARIES
Selected Consolidated Financial Information
(unaudited)
                            Three Months Ended              
SELECTED FINANCIAL            March 31,
DATA:
(Dollars in thousands,     2013          2012                     
except per share data)
I. OPERATING DATA:                          
Interest income             $ 6,323            8,275
Interest expense              1,392            2,062
Net interest income           4,931            6,213
                                                                             
II. AVERAGE BALANCES:
Assets ^(1)                   624,855          716,807
Loans receivable, net         441,721          546,112
Securities available          90,862           105,257
for sale ^(1)
Interest-earning assets       598,912          708,275
^(1)
Interest-bearing              556,200          680,435
liabilities
Equity ^(1)                   61,363           58,357
                                                                             
III. PERFORMANCE
RATIOS: ^(1)
Return on average             0.48       %     1.57        %
assets (annualized)
Interest rate spread
information:
Average during period        3.27             3.48
End of period                 3.23             3.47
Net interest margin           3.34             3.53
Ratio of operating
expense to average
total assets                  3.92             3.50
(annualized)
Return on average             4.90             19.32
equity (annualized)
Efficiency                   88.75         70.00          
                              March 31,        December          March 31,
                                               31,
                             2013          2012           2012
IV. ASSET QUALITY:
Total non-performing        $ 38,680           40,570            46,608
assets
Non-performing assets         6.17       %     6.21        %     6.60      %
to total assets
Non-performing loans to
total loans receivable,       6.62             6.60              6.14
net
Allowance for loan          $ 21,941           21,608            21,424
losses
Allowance for loan            3.50       %     3.31        %     3.03      %
losses to total assets
Allowance for loan
losses to total loans         5.05             4.76              3.98
receivable, net
Allowance for loan
losses to                     76.29            72.09             64.90
non-performing loans
                                                                             
V. BOOK VALUE PER
COMMON SHARE:
Book value per common       $ 8.07          8.02           7.81
share
                              Three                              Three
                              Months                             Months
                              Ended            Year Ended        Ended
                             Mar 31,       Dec 31,        Mar 31,
                              2013             2012              2012
VI. CAPITAL RATIOS:
Stockholders’ equity to
total assets, at end of       9.74       %     9.31        %     8.42      % 
period
Average stockholders’
equity to average             9.82             8.81              8.14
assets ^(1)
Ratio of average
interest-earning assets       107.68           105.73            104.09
to
average
interest-bearing
liabilities ^(1)
Tier 1 or core capital        10.24            9.68              8.50        
^(2)
Risk-based capital           16.38         15.52          12.55
                              March 31,        December          March 31,
                                               31,
                             2013          2012           2012
VII. EMPLOYEE DATA:
Number of full time           188              194               197
equivalent employees
                                                               

(1) Average balances were calculated based upon amortized cost without the
market value impact of ASC 320.
(2) OCC has established an individual minimum capital requirement (IMCR) for
the Bank. An IMCR requires a bank to establish and maintain levels of capital
greater than those generally required for a bank to be classified as
“well-capitalized.” Effective December31, 2011, the Bank was required to
establish, and subsequently maintain, core capital at least equal to 8.5% of
adjusted total assets. The Bank’s core capital ratio was in excess of this
requirement at March 31, 2013.

Contact:

HMN Financial, Inc.
Bradley Krehbiel, 507-252-7169
President/CEO
 
Press spacebar to pause and continue. Press esc to stop.