SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
July 18, 1996
HMN FINANCIAL, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 0-24100 41-1777397
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
101 North Broadway, Spring Valley, Minnesota 55975
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507) 346-7345
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
On July 18, 1996, the Registrant issued the attached press
release announcing quarterly earnings.
Item 7. Financial Statements and Exhibits
(a) Exhibits
99. Press release, July 18, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
HMN FINANCIAL, INC.
Date: July 18, 1996 By: /s/ Roger P. Weise
------------------------
Roger P. Weise, Chairman
President and
Chief Executive Officer
Exhibit 99
[logo of open winged eagle]
HMN FINANCIAL, INC.
101 North Broadway
P.O. Box 231
Spring Valley, MN 55975-0231
Phone (507) 346-7345
Fax (507) 346-1111
NEWS RELEASE CONTACT: James B. Gardner,
Executive Vice President
HMN Financial, Inc.
(507) 346-7345
FOR IMMEDIATE RELEASE
HMN FINANCIAL, INC. ANNOUNCES QUARTERLY RESULTS
- -----------------------------------------------
EARNINGS SUMMARY Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1996 1995 1996 1995
-------- -------- -------- --------
Net income $1,533,084 1,405,472 $3,119,775 2,768,898
Earnings per common share
and common share equivalent 0.34 0.27 0.67 0.52
Return on average assets 1.13% 1.07% 1.15% 1.07%
Return on average common equity 6.77% 5.82% 6.84% 5.70%
Book value per share $ 17.73 16.38 $ 17.73 16.38
SPRING VALLEY, MINNESOTA, July 18, 1996 . . . HMN Financial, Inc.
(HMN) (NASDAQ:HMNF), the $555 million holding company for Home Federal
Savings Bank (the Bank), today reported net income of $1.5 million for the
second quarter of 1996, up 9% from $1.4 million for the second quarter of
1995. Earnings per share were $0.34 for the second quarter of 1996, up
26% from $0.27 per share for the second quarter of 1995. Return on
average assets was 1.13% and return on average equity was 6.77% for the
second quarter of 1996, an increase of 6% and 16%, respectively, from the
second quarter of 1995. Book value per share was $17.73, up 8%, from
$16.38 for the second quarter of 1995. Net income for the six months
ended June 30, 1996 was $3.1 million, up 13% from $2.8 million for the six
months ended June 30, 1995. Earnings per share were $0.67 for the six
months ended June 30, 1996, up 29% from $0.52 per share for the same
period in 1995. Return on average assets was 1.15% and return on average
equity was 6.84% for the six months ended June 30, 1996, an increase of 7%
and 20%, respectively, from the same period in 1995.
HMN Financial, Inc.'s Chairman, Roger P. Weise, said that he was
pleased with the increased earnings per share for both the quarter and the
six month period ended June 30, 1996. The increased earnings per share is
primarily due to an increase in earnings coupled with the repurchase of
HMN's own common stock from the open market.
Net income for the second quarter of 1996 compared to the second
quarter of 1995 increased by $128,000, or 9.1%, principally due to an
increase of $274,000 in net security gains which was partially offset by
an increase of $121,000 in compensation and benefit expenses. Net income
for the six month period ended June 30, 1996 compared to the same period
of 1995 increased by $351,000, or 12.7%, principally due to an increase of
$781,000 in net security gains which was partially offset by an increase
of $267,000 in compensation and benefit expenses.
Net interest income was $4.0 million for both the second quarter of
1996 and the second quarter of 1995. Net interest income for the six
months ended June 30, 1996 was $7.91 million, a decrease of $56,000, or
0.7%, from $7.97 million for the six months ended June 30, 1995. HMN has
been purchasing its own stock in the open market at an average price that
is less than its current book value. The balance sheet impact of the
stock repurchase program has been to reduce equity and replace it with
additional advances or deposit growth. As HMN has increased in total
assets its average interest-earning assets have increased at a slower pace
than its average outstanding interest-bearing liabilities. Therefore,
interest expense has increased at a more rapid pace than interest income.
The more rapid increase in liabilities coupled with changing interest
rates caused net interest income for the second quarter of 1996 to be the
same as the second quarter of 1995. It was also the principal cause for
the decrease in net interest income when comparing the six months ended
June 30, 1996 to the same period of 1995.
Non-interest income was $485,000 for the second quarter of 1996, an
increase of $304,000, or 168%, compared to $181,000 for the second quarter
of 1995. The increase was principally due to a $274,000 increase in gain
on the sale of securities, a $104,000 increase in other income and was
partially offset by a $76,000 decrease in gain on sale of loans. Non-
interest income for the six months ended June 30, 1996 was $1.2 million,
an increase of $901,000, or 316%, compared to $285,000 for the six months
ended June 30, 1995. The increase was principally due to a $781,000
increase in gain on the sale of securities, a $184,000 increase in other
income and was partially offset by a $70,000 decrease in gain on sale of
loans.
Non-interest expense was $1.98 million for the second quarter of
1996, an increase of $147,000, or 8%, from $1.84 million for the second
quarter of 1995. The majority of the increase in non-interest expense
between the two quarters was due to a $121,000, or 12.4%, increase in
compensation and benefits and was the result of adding new employees,
normal merit and salary increases and the impact of the Recognition and
Retention Plan adopted in June of 1995. Non-interest expense for the six
months ended June 30, 1996 was $3.967 million, an increase of $318,000, or
8.7%, from $3.649 million for the six months ended June 30, 1995. The
principal cause for the increase in non-interest expense between the two
periods was due to a $267,000, or 13.8%, increase in compensation and
benefits expense and was the result of adding new employees, normal merit
and salary increases and the impact of the Recognition and Retention Plan
adopted in June of 1995.
During July of 1996, HMN completed the purchase of 246,060 shares of
its own stock in the open market.
HMN Financial, Inc. and Home Federal Savings Bank are headquartered
in Spring Valley, MN. The Bank operates seven offices in southern
Minnesota.
(Three pages of selected consolidated financial information are
included with this release.)
***END***
<PAGE>
HMN FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
--------------- --------------
<S> <C> <C>
Cash and cash equivalents $ 5,942,504 4,334,694
Securities available for sale:
Mortgage-backed and related
securities (amortized cost
$151,722,163 and $158,517,548) 148,705,801 158,416,201
Other marketable securities
(amortized cost $41,173,928
and $32,247,959) 40,441,555 31,903,566
------------ ------------
189,147,356 190,319,767
------------ ------------
Securities held to maturity:
Mortgage-backed and related securities
(estimated market value
$13,952,026 and $13,931,879) 13,834,625 13,744,063
Other marketable securities
(estimated market value $996,540
and $3,224,263) 999,343 3,227,729
------------ ------------
14,833,968 16,971,792
------------ ------------
Loans receivable, net 331,649,722 314,850,684
Federal Home Loan Bank stock, at cost 5,157,900 3,801,900
Real estate, net 153,122 279,851
Premises and equipment, net 3,547,124 3,645,536
Accrued interest receivable 3,425,342 3,381,507
Deferred income taxes 635,326 0
Prepaid expenses and other assets 486,959 362,928
------------ ------------
Total assets $ 554,979,323 537,948,659
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 363,194,751 373,539,468
Federal Home Loan Bank advances 101,053,053 68,876,978
Accrued interest payable 1,717,330 1,562,347
Advance payments by borrowers for
taxes and insurance 517,502 550,990
Accrued expenses and other liabilities 1,233,906 1,732,193
------------ ------------
Total liabilities 467,716,542 446,261,976
------------ ------------
Commitments and contingencies
Stockholders' equity:
Serial preferred stock: authorized 500,000
shares; issued and outstanding none 0 0
Common stock ($.01 par value): authorized
7,000,000 shares; issued 6,085,775 shares 60,858 60,858
Additional paid-in capital 59,348,005 59,285,581
Retained earnings, subject to certain
restrictions 53,490,813 50,371,038
Net unrealized loss on securities
available for sale (2,231,697) (265,358)
Unearned employee stock ownership plan
shares (5,137,310) (5,336,150)
Unearned compensation restricted
stock awards (933,605) (1,050,305)
Treasury stock, shares at cost
1,164,575 and 783,850 (17,334,283) (11,378,981)
------------- ------------
Total stockholders' equity 87,262,781 91,686,683
------------ ------------
Total liabilities and stockholders'
equity $554,979,323 537,948,659
============ ============
</TABLE>
<PAGE>
HMN FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Loans receivable $6,409,310 5,727,836 12,548,056 11,182,650
Securities available for sale:
Mortgage-backed and related 2,527,670 2,598,254 5,301,360 5,255,555
Other marketable 580,897 828,629 985,741 1,377,378
Securities held to maturity:
Mortgage-backed and related 256,754 163,004 523,777 292,827
Other marketable 32,405 125,210 75,853 250,963
Cash equivalents 62,086 132,915 165,804 272,511
Other 74,648 59,919 138,630 112,368
--------- --------- ---------- ----------
Total interest income 9,943,770 9,635,767 19,739,221 18,744,252
--------- --------- ---------- ----------
Interest expense:
Deposits 4,720,966 4,630,653 9,539,249 8,917,227
Federal Home Loan Bank
advances 1,227,662 1,025,995 2,289,523 1,860,776
--------- --------- ---------- ----------
Total interest
expense 5,948,628 5,656,648 11,828,772 10,778,003
--------- --------- ---------- ----------
Net interest
income 3,995,142 3,979,119 7,910,449 7,966,249
Provision for loan losses 75,000 75,000 150,000 150,000
--------- --------- ---------- ----------
Net interest income
after provision
for loan losses 3,920,142 3,904,119 7,760,449 7,816,249
--------- --------- ---------- ----------
Non-interest income:
Fees and service charges 81,855 79,342 159,371 153,133
Securities gains (losses),
net 268,487 (5,190) 769,037 (11,867)
Gain on sales of loans 1,135 76,951 7,084 76,951
Other 133,533 30,007 250,922 66,864
--------- --------- ---------- ----------
Total non-interest
income 485,010 181,110 1,186,414 285,081
--------- --------- ---------- ----------
Non-interest expense:
Compensation and
benefits 1,099,123 977,992 2,205,118 1,937,821
Occupancy 195,363 186,298 392,145 365,857
Federal deposit
insurance premiums 214,864 198,474 424,656 396,947
Advertising 79,354 66,650 152,039 138,138
Data processing 120,743 120,902 249,196 243,682
Other 274,789 287,016 543,902 566,220
--------- --------- ---------- ----------
Total non-interest
expense 1,984,236 1,837,332 3,967,056 3,648,665
--------- --------- ---------- ----------
Income before income
tax expense 2,420,916 2,247,897 4,979,807 4,452,665
Income tax expense 887,832 842,425 1,860,032 1,683,768
--------- --------- ---------- ----------
Net income $1,533,084 1,405,472 3,119,775 2,768,897
========= ========= ========== ==========
Earnings per common share
and common share equivalents $ 0.34 0.27 0.67 0.52
========= ========= ========== ==========
</TABLE>
<PAGE>
HMN FINANCIAL, INC. AND SUBSIDIARIES
Selected Consolidated Financial Information
(unaudited)
<TABLE>
<CAPTION>
Selected Financial Data:
(dollars in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------------------- --------------------
<S> <C> <C> <C> <C>
I. OPERATING DATA:
Interest income $ 9,944 9,636 19,739 18,744
Interest expense 5,949 5,657 11,829 10,778
Net interest income 3,995 3,979 7,910 7,966
II. AVERAGE BALANCES:
Assets (1) 547,513 527,280 543,787 519,700
Loans receivable, net 320,832 282,430 315,979 278,053
Mortgage-backed and
related securities (1) 166,897 162,898 170,292 165,406
Interest earnings
assets (1) 537,290 522,704 534,012 513,000
Interest bearing
liabilities 450,704 425,754 446,148 416,968
Equity (1)(2) 91,082 96,877 91,697 97,971
III.PERFORMANCE RATIOS: (1)
Return on average assets
(annualized) 1.13% 1.07% 1.15% 1.07%
Interest rate spread information:
Average during period 2.11 2.06 2.09 2.16
End of period 2.23 2.11 2.23 2.11
Net interest margin 2.98 3.05 2.97 3.13
Ratio of operating expense
to average total assets 1.46 1.40 1.47 1.42
Return on average equity
(annualized) 6.77 5.82 6.84 5.70
</TABLE>
<TABLE>
<CAPTION>
June 30, Dec 31, June 30,
1996 1995 1995
-----------------------------
<S> <C> <C> <C>
IV.ASSET QUALITY:
Total non-performing assets $ 523 850 369
Non-performing assets to total assets 0.09% 0.16% 0.07%
Non-performing loans to total loans
receivable, net 0.11 0.17 0.10
Allowance for loan losses $ 2,339 2,191 2,042
Allowance for loan losses to total assets 0.42% 0.41% 0.38%
Allowance for loan losses to total loans
receivable, net 0.71 0.70 0.71
Allowance for loan losses to
nonperforming loans 668.75 409.13 706.55
V. BOOK VALUE PER SHARE:
Book value per share excluding net
unrealized loss on securities
available for sale(3) $ 18.19 17.34 16.56
Book value per share(3) 17.73 17.29 16.38
</TABLE>
<TABLE>
<CAPTION>
Six Months Twelve Months Six Months
Ended Ended Ended
June 30, 1996 Dec. 31, 1995 June 30, 1995
-------------------------------------------
<S> <C> <C> <C>
VI. CAPITAL RATIOS
Stockholders' equity or
retained earnings to total
assets, at end of period 15.72% 17.04% 17.91%
Average stockholders' equity
or average retained earnings
to average assets (1)(2) 16.86 18.24 18.85%
Ratio of average interest-
earning assets to average
interest-bearing
liabilities(1) 119.69 121.95 123.03%
<FN>
<F1>
Average balances were calculated based upon amortized cost without the
market value impact of SFAS 115.
<F2>
Average equity and average equity/average asset ratio decreasing due
in part by a repurchase of 568,336 shares of common stock in the second
half of 1995 and an additional repurchase of 380,725 shares of
common stock in the first half of 1996.
<F3>
On June 21, 1995 84,486 shares of restricted common stock were awarded
to directors and officers and are included as outstanding shares for
book value calculations.
</FN>
</TABLE>
