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)
January 23, 1997
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 January 23, 1997 the Registrant issued the attached press
release announcing its fourth quarter and annual earnings.
Item 7. Financial Statements and Exhibits
(a) Exhibits
99. Press release, dated January 23, 1997.
<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: January 23, 1997 By: /s/ Roger. P. Weise
Roger P. Weise, Chairman
and Chief Executive Officer<PAGE>
[graphic 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 FOURTH QUARTER
- --------------------------------------------
AND ANNUAL RESULTS
- ------------------
EARNINGS SUMMARY Three Months Ended Twelve Months Ended
December 31, December 31,
--------- -------- -------------------
1996 1995 1996 1995
--------- --------- --------- ---------
Before SAIF assessment:
Income $ 1,299,101 1,437,386 $ 5,732,318 5,620,377
Earnings per share
and common share
equivalents 0.31 0.30 1.29 1.09
Net income 1,299,101 1,437,386 4,274,349 5,620,377
Earnings per share
and common share
equivalents 0.31 0.30 0.96 1.09
Return on average assets
before SAIF assessment 0.93% 1.07% 1.04% 1.07%
Return on average assets 0.93% 1.07% 0.78% 1.07%
Return on average equity
before SAIF assessment 6.06% 6.18% 6.46% 5.86%
Return on average equity 6.06% 6.18% 4.82% 5.86%
Book value per share<1> $ 18.52 17.29 $ 18.52 17.29
<1> After SAIF assessment
SPRING VALLEY, MINNESOTA, January 23, 1997 . . . HMN Financial, Inc. (HMN)
(NASDAQ:HMNF), the $555 million holding company for Home Federal Savings Bank
(the Bank), today reported net income of $1.3 million for the fourth quarter of
1996, down 7% from $1.4 million for the fourth quarter of 1995. Earnings per
share was $0.31 for the fourth quarter of 1996, up 3% from $0.30 per share for
the fourth quarter of 1995. Fourth quarter earnings per share increased for
1996 over the same quarter of 1995, even though quarterly income decreased
between the periods because HMN continued to repurchase its own common stock
during 1996, and thereby reduced the number of its outstanding shares.
more . . .
<PAGE>
Net income for the year ended December 31, 1996 was $4.3 million, down 24%
from $5.6 million for the year ended December 31, 1995. Earnings per share was
$0.96 for the year ended December 31, 1996, down 12% from $1.09 for the year
ended December 31, 1995. In September of 1996 the Federal Deposit Insurance
Corporation assessed a one time charge to all members of the Savings
Association Insurance Fund (SAIF) in order to recapitalize the SAIF. The
Bank s assessment was $2.35 million which reduced after tax earnings by $1.46
million and caused annualized earnings per share to decrease by $0.33 per
share.
HMN Financial, Inc. s Chairman, Roger P. Weise, stated that earnings per
share for the year ended December 31, 1996 without the SAIF assessment would
have been $1.29, an increase of $0.20, or 18%, over $1.09 for the year ended
December 31, 1995. The increase in earnings per share between the years,
excluding the SAIF assessment, is the combined result of the 1996 stock
repurchase program and an increase in gain on the sale of securities recognized
during 1996.
Net interest income was $3.94 million for the fourth quarter of 1996, an
increase of $62,000, or 1.6% compared to $3.88 million for the fourth quarter
of 1995. Throughout 1996, HMN has been repurchasing 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 on the balance sheet with additional advances or deposits. As
HMN has increased in total assets, its net interest earning assets actually
decreased, however when the impact of changing interest rates on interest-
earning assets and interest-bearing liabilities is taken into account, net
interest income for the fourth quarter of 1996 increased over the fourth
quarter of 1995 by $62,000. Net interest income for the year ended December
31, 1996 was $15.7 million, a decrease of $100,000, or 1%, from $15.8 million
for the year ended December 31, 1995. Comparing the year ended December 31,
1996 to the year ended December 31, 1995, the impact of a decrease in net
interest-earning assets and changing interest rates caused a net decrease in
interest income between the two years.
Non-interest income was $324,000 for the fourth quarter of 1996, a
decrease of $97,000, or 23%, compared to $421,000 for the fourth quarter of
1995. The decrease was principally due to a $212,000 decrease in securities
gains between the two periods and was partially offset by a $23,000 increase in
fees and services charges, a $19,000 increase in gain on the sale of loans and
a $73,000 increase in other income. Non-interest income was $1.9 million for
the year ended December 31, 1996, an increase of $924,000, or 93%, compared to
$1.0 million for the year ended December 31, 1995. The increase was
principally due to an increase of $614,000 on securities gains, a $35,000
increase in fees and service charges and a $339,000 increase in other income.
The increase in income was partially offset by a $63,000 decrease in gain on
the sale of loans.
Non-interest expense was $2.1 million for the fourth quarter of 1996, an
increase of $232,000, or 12%, compared to $1.9 million for the fourth quarter
of 1995. The majority of
more . . .
<PAGE>
the increase in non-interest expense between the two quarters was due to a
$97,000 increase in compensation and benefits which was the result of adding
new employees, normal merit and salary increases; a $90,000 increase in
occupancy costs related to depreciation and the addition of a new office in
Edina, Minnesota; and a $114,000 increase in other expenses. The increased
quarterly expenses were partially offset by a $44,000 decrease in Federal
deposit insurance premiums and a decrease of $21,000 in advertising expenses.
Non-interest expense was $10.5 million for the year ended December 31, 1996, an
increase of $3.0 million, or 41%, compared to $7.5 million for the year ended
December 31, 1995. The principal causes for the increase in non-interest
expense between the two years was a one time charge of $2.35 million to
replenish the SAIF; a $431,000 increase in compensation and benefits which 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; a
$128,000 increase in occupancy related to adding another office and remodeling
other offices; and a $137,000 increase in other expenses.
During the fourth quarter of 1996, HMN opened a new mortgage banking
office located in Edina, Minnesota. This office will purchase loans from third
party originators and resell the loans in the secondary market or place the
loans in the Bank s mortgage portfolio.
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>
December 31, December 31,
1996 1995
------------- --------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 10,583,717 4,334,694
Securities available for sale:
Mortgage-backed and related securities
(amortized cost $134,474,167
and $158,517,548) 133,355,278 158,416,201
Other marketable securities
(amortized cost $42,360,499
and $32,247,959) 42,474,810 31,903,566
----------- -----------
175,830,088 190,319,767
----------- -----------
Securities held to maturity:
Mortgage-backed and related securities
(estimated market value $1,904,993
and $13,931,879) 1,805,744 13,744,063
Other marketable securities
(estimated market value $1,000,550
and $3,224,263) 999,812 3,227,729
----------- -----------
2,805,556 16,971,792
----------- -----------
Loans held for sale 739,316 0
Loans receivable, net 349,022,236 314,850,684
Federal Home Loan Bank stock, at cost 5,434,000 3,801,900
Real estate, net 20,610 279,851
Premises and equipment, net 3,581,497 3,645,536
Accrued interest receivable 3,415,152 3,381,507
Prepaid expenses and other assets 3,299,427 362,928
----------- -----------
Total assets $ 554,731,599 537,948,659
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Deposits $ 362,476,944 373,539,468
Federal Home Loan Bank advances 106,078,589 68,876,978
Accrued interest payable 1,542,773 1,562,347
Advance payments by borrowers for
taxes and insurance 518,911 550,990
Accrued expenses and other liabilities 2,014,938 1,732,193
----------- -----------
Total liabilities 472,632,155 446,261,976
----------- -----------
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 59,428,768 59,285,581
Retained earnings, subject to
certain restrictions 54,645,387 50,371,038
Net unrealized loss on
securities available for sale (598,045) (265,358)
Unearned employee stock ownership
plan shares (4,938,520) (5,336,150)
Unearned compensation restricted
stock awards (793,289) (1,050,305)
Treasury stock, at cost 1,651,615
and 783,850 shares (25,705,715) (11,378,981)
----------- -----------
Total stockholders' equity 82,099,444 91,686,683
----------- -----------
Total liabilities and
stockholders' equity $ 554,731,599 537,948,659
=========== ===========
</TABLE>
<PAGE>
HMN FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
1996 1995 1996 1995
----------------------- -----------------------
<S> <C> <C> <C> <C>
Interest Income:
Loans receivable $ 6,711,707 6,182,799 25,721,042 23,375,334
Securities available for sale:
Mortgage-backed and related 2,296,748 2,549,428 10,027,438 10,294,057
Other marketable 768,923 604,645 2,424,628 2,857,883
Securities held to maturity:
Mortgage-backed and related 45,293 248,354 765,120 746,100
Other marketable 14,345 55,443 104,448 389,381
Cash equivalents 178,506 63,624 494,129 412,259
Other 95,067 75,100 327,520 253,170
---------- ---------- ---------- ----------
Total interest income 10,110,589 9,779,393 39,864,325 38,328,184
---------- ---------- ---------- ----------
Interest expense:
Deposits 4,668,781 4,875,158 18,949,937 18,578,744
Federal Home Loan Bank
advances 1,504,838 1,029,305 5,243,853 3,976,353
---------- ---------- ---------- ----------
Total interest expense 6,173,619 5,904,463 24,193,790 22,555,097
---------- ---------- ---------- ----------
Net interest income 3,936,970 3,874,930 15,670,535 15,773,087
Provision for loan losses 75,000 75,000 300,000 300,000
---------- ---------- ---------- ----------
Net interest income after
provision for loan
losses 3,861,970 3,799,930 15,370,535 15,473,087
---------- ---------- ---------- ----------
Non-interest income:
Fees and service charges 105,061 82,167 359,249 324,492
Securities gains, net 67,840 279,671 1,029,638 415,955
Gain on sales of loans 22,326 3,027 39,306 102,368
Other 128,628 56,040 494,507 155,434
---------- ---------- ---------- ----------
Total non-interest income 323,855 420,905 1,922,700 998,249
---------- ---------- ---------- ----------
Non-interest expense:
Compensation and benefits 1,210,524 1,113,918 4,591,367 4,160,248
Occupancy 230,393 140,027 825,609 697,602
Federal deposit insurance
premiums 163,214 207,679 799,890 810,432
SAIF assessment 0 0 2,351,563 0
Advertising 78,729 99,820 308,464 312,366
Data processing 120,900 117,200 489,045 476,402
Provision for real estate losses 2,000 9,327 2,000 9,327
Other 341,238 226,726 1,140,948 1,003,682
---------- ---------- ---------- ----------
Total non-interest expense 2,146,998 1,914,697 10,508,886 7,470,059
---------- ---------- ---------- ----------
Income before income taxes 2,038,827 2,306,138 6,784,349 9,001,277
Income tax expense 739,726 868,752 2,510,000 3,380,900
---------- ---------- ---------- ----------
Net income $ 1,299,101 1,437,386 4,274,349 5,620,377
========== ========== ========== ==========
Earnings per common share and
common share equivalents $ 0.31 0.30 0.96 1.09
========== ========== ========== ==========
</TABLE>
<PAGE>
HMN FINANCIAL, INC. AND SUBSIDIARIES
Selected Consolidated Financial Information
(unaudited)
<TABLE>
<CAPTION>
Selected Financial Data: Three Months Ended Twelve Months Ended
(dollars in thousands, Dec 31, Dec 31, Dec 31, Dec 31,
except per share data) 1996 1995 1996 1995
------------------- -------------------
<S> <C> <C> <C> <C>
I. OPERATING DATA:
Interest income $ 10,111 9,779 39,864 38,328
Interest expense 6,174 5,904 24,194 22,555
Net interest income 3,937 3,875 15,670 15,773
II. AVERAGE BALANCES:
Assets <1> 557,225 530,705 550,509 525,845
Loans receivable, net 336,349 307,849 324,958 290,243
Mortgage-backed and
related securities <1> 140,335 161,292 158,561 162,393
Interest earnings assets <1> 548,057 522,731 541,638 518,165
Interest bearing liabilities 465,612 433,556 455,645 424,886
Equity <1><2> 85,351 92,212 88,736 95,911
III.PERFORMANCE RATIOS: <1>
Return on average assets
(annualized)<1> 0.93% 1.07% 0.78% 1.07%
Interest rate spread information:
Average during period<1> 2.06 2.02 2.05 2.09
End of period<1> 2.17 2.10 2.17 2.10
Net interest margin<1> 2.86 2.94 2.89 3.04
Ratio of operating expense to
average total assets<1> 1.53 1.43 1.91 1.42
Return on average equity
(annualized)<1> 6.06 6.18 4.82 5.86
</TABLE>
<TABLE>
<CAPTION>
Dec 31, Dec 31,
1996 1995
---------------------
<S> <C> <C>
IV.ASSET QUALITY:
Total non-performing assets $ 338 850
Non-performing assets to
total assets 0.07% 0.16%
Non-performing loans to total
loans receivable, net 0.10 0.17
Allowance for loan losses $ 2,341 2,191
Allowance for loan losses
to total assets 0.42% 0.41%
Allowance for loan losses to
total loans receivable, net 0.67 0.71
Allowance for loan losses to
non-performing loans 691.84 409.13
V. BOOK VALUE PER SHARE:
Book value per share excluding
net unrealized loss on
securities available for sale $ 18.65 17.34
Book value per share 18.52 17.29
</TABLE>
<TABLE>
<CAPTION>
Year Year
Ended Ended
Dec 31, Dec 31,
1996 1995
-----------------------
<S> <C> <C>
VI. CAPITAL RATIOS
Stockholders' equity to total
assets, at end of period 14.80% 17.04%
Average stockholders' equity
to average assets <1><2> 16.12 18.24
Ratio of average interest-
earning assets to average
interest-bearing liabilities<1>118.87 121.95
<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 869,785 shares of common stock during 1996.
</FN>
</TABLE>
