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)
April 17, 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 April 17, 1997 the Registrant issued the attached press
release announcing its first quarter earnings.
Item 7. Financial Statements and Exhibits
(a) Exhibits
99. Press release, dated April 17, 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: April 17, 1997 By: /s/ Roger P. Weise
Roger P. Weise, Chairman
and Chief Executive Officer
HMN FINANCIAL, INC.
101 North Broadway
Spring Valley, Minnesota 55975
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 March 31,
---------------------------
1997 1996
----------- -----------
Net income $1,474,480 1,586,691
Earnings per common share
and common share equivalent 0.38 0.33
Return on average assets 1.09% 1.18%
Return on average common equity 7.43% 6.91%
Book value per share $18.71 17.54
SPRING VALLEY, MINNESOTA, April 17, 1997 . . . HMN Financial, Inc. (HMN)
(NASDAQ:HMNF), the $553 million holding company for Home Federal Savings Bank
(the Bank), today reported net income of $1.5 million for the first quarter of
1997, down 7.1%, from $1.6 million for the first quarter of 1996. Earnings per
common share were $0.38 for the first quarter of 1997, up 15.2% from $0.33 for
the first quarter of 1996. Return on average assets was 1.09%, down from 1.18%
in the first quarter of 1996. Return on average equity was 7.43% for the first
quarter of 1997 compared to 6.91% for the same quarter in 1996. Book value per
share was $18.71 at March 31, 1997, an increase of $1.17, or 6.7%, from March
31, 1996. The 15.2% increase in earnings per share for the first quarter of
1997 was primarily due to HMN's repurchase of its common stock during 1996 and
1997.
Net income for the first quarter of 1997 decreased by $112,000 compared to
the first quarter of 1996 due primarily to a $132,000 increase in non-interest
expense. The increase in non-interest expense was principally due to an
increase in HMNs work force related to opening a mortgage banking office in
Eden Prairie, Minnesota, annual compensation
... more
<PAGE>
increases in the Bank, increased occupancy costs related to the mortgage
banking office and increased depreciation due to retail bank office remodeling.
Net interest income was $3.9 million for both the first quarter of 1997
and the first quarter of 1996. Net interest income for the two periods
remained similar despite an increase of $7.2 million in interest earning assets
due to a decrease in the net interest margin. Net average interest-earning
assets for the first quarter of 1997 were $74.1 million, a decrease of $15.0
million, or 16.8%, from $89.1 million for the same quarter in 1996. Throughout
1996 and into 1997, HMN has been repurchasing its own common 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 interest-bearing liabilities. During the same
period, HMN also started to invest in non-interest earning assets such as
mortgage servicing rights. As a result of these actions, even as HMN increased
in total assets, its net interest-earning assets actually decreased, which in
turn caused net interest margin to decline from the first quarter of 1996 to
the first quarter of 1997.
Non-interest income was $698,000 for the first quarter of 1997 a slight
decrease from $701,000 of non-interest income for the first quarter of 1996.
Due to changes in market conditions securities gains, net decreased by $230,000
and were partially offset by increased fee income of $19,000, increased gains
recognized on the sale of loans of $148,000, and a $60,000 increase in income
generated from a mortgage servicing partnership.
As of March 31, 1997 HMN transferred $1.3 million of securities classified
as held to maturity to available for sale because it no longer has the intent
to hold the securities to maturity. After the transfer all of HMN's securities
were classified as available for sale.
As previously announced, HMN completed its stock program in January 1997
with the purchase of 224,334 shares of common stock from the open market.
HMN Financial, Inc. and Home Federal Savings Bank are headquartered in
Spring Valley, Minnesota. The Bank operates seven offices in southern
Minnesota and a mortgage banking office in Eden Prairie, 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>
ASSETS March 31, December 31,
1997 1996
----------- ------------
<S> <C> <C>
Cash and cash equivalents $ 12,754,058 10,583,717
Securities available for sale:
Mortgage-backed and related securities
(amortized cost $126,570,616
and $134,474,167) 123,924,773 133,355,278
Other marketable securities
(amortized cost $56,174,663
and $42,360,499) 56,223,639 42,474,810
----------- -----------
180,148,412 175,830,088
----------- -----------
Securities held to maturity:
Mortgage-backed and related securities
(estimated market value $0
and $1,904,993) 0 1,805,744
Other marketable securities
(estimated market value $0
and $1,000,550) 0 999,812
----------- -----------
0 2,805,556
----------- -----------
Loans held for sale 1,060,571 739,316
Loans receivable, net 341,104,076 349,022,236
Federal Home Loan Bank stock, at cost 5,627,100 5,434,000
Real estate, net 105,578 20,610
Premises and equipment, net 3,961,454 3,581,497
Accrued interest receivable 2,917,906 3,415,152
Deferred income taxes 46,038 0
Prepaid expenses and other assets 5,295,539 3,299,427
----------- -----------
Total assets $ 553,020,732 554,731,599
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 364,122,660 362,476,944
Federal Home Loan Bank advances 105,721,447 106,078,589
Accrued interest payable 1,476,598 1,542,773
Advance payments by borrowers for
taxes and insurance 799,372 518,911
Accrued expenses and other liabilities 2,129,007 2,014,938
----------- -----------
Total liabilities 474,249,084 472,632,155
----------- -----------
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 59,491,535 59,428,768
Retained earnings, subject to
certain restrictions 56,119,867 54,645,387
Net unrealized loss on securities
available for sale (1,506,685) (598,045)
Unearned employee stock ownership
plan shares (4,842,460) (4,938,520)
Unearned compensation restricted
stock awards (736,115) (793,289)
Treasury stock, at cost 1,875,949
and 1,651,615 shares (29,815,352) (25,705,715)
----------- -----------
Total stockholders' equity 78,771,648 82,099,444
----------- -----------
Total liabilities and stockholders'
equity $ 553,020,732 554,731,599
=========== ===========
</TABLE>
<PAGE>
HMN FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---------------------------
<S> <C> <C>
Interest Income:
Loans receivable $ 6,908,242 6,138,747
Securities available for sale:
Mortgage-backed and related
securities 2,189,210 2,773,690
Other marketable securities 585,242 404,845
Securities held to maturity:
Mortgage-backed and related
securities 33,400 267,023
Other marketable securities 10,032 43,448
Cash equivalents 82,160 103,718
Other 94,961 63,981
---------- ----------
Total interest income 9,903,247 9,795,452
---------- ----------
Interest expense:
Deposits 4,572,798 4,818,284
Federal Home Loan Bank advances 1,451,400 1,061,861
---------- ----------
Total interest expense 6,024,198 5,880,145
---------- ----------
Net interest income 3,879,049 3,915,307
Provision for loan losses 75,000 75,000
---------- ----------
Net interest income after
provision for loan losses 3,804,049 3,840,307
---------- ----------
Non-interest income:
Fees and service charges 96,412 77,516
Securities gains (losses), net 270,917 500,550
Gain on sales of loans 153,450 5,949
Other 177,515 117,389
---------- ----------
Total non-interest income 698,294 701,404
---------- ----------
Non-interest expense:
Compensation and benefits 1,315,987 1,105,995
Occupancy 241,147 196,782
Federal deposit insurance premiums 58,977 209,792
Advertising 78,137 72,685
Data processing 124,529 128,453
Provision for real estate losses 2,000 0
Other 293,665 269,113
---------- ----------
Total non-interest expense 2,114,442 1,982,820
---------- ----------
Income before income tax expense 2,387,901 2,558,891
Income tax expense 913,421 972,200
---------- ----------
Net income $ 1,474,480 1,586,691
========== ==========
Earnings per common share and
common share equivalents $ 0.38 0.33
========== ==========
</TABLE>
<PAGE>
HMN FINANCIAL, INC. AND SUBSIDIARIES
Selected Consolidated Financial Information
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
Selected Financial Data: March 31, March 31,
(dollars in thousands, 1997 1996
except per share date) -----------------------
<S> <C> <C>
I. OPERATING DATA:
Interest income $ 9,903 9,795
Interest expense 6,024 5,880
Net interest income 3,879 3,915
II. AVERAGE BALANCES:
Assets <F1> 549,725 540,061
Loans receivable, net 344,925 311,126
Mortgage-backed and related
securities <F1> 173,239 173,687
Interest earnings assets <F1> 537,929 530,733
Interest bearing liabilities 463,787 441,592
Equity <F1><F2> 80,534 92,312
III.PERFORMANCE RATIOS: <F1>
Return on average assets
(annualized)<F1> 1.09% 1.18%
Interest rate spread information:
Average during period<F1> 2.20 2.08
End of period<F1> 2.25 1.96
Net interest margin<F1> 2.92 2.97
Ratio of operating expense to
average total assets<F1> 1.56 1.48
Return on average equity
(annualized)<F1> 7.43 6.91
March 31, Dec 31, March 31,
1997 1996 1996
----------------------------------
IV.ASSET QUALITY:
Total non-performing assets $ 436 361 740
Non-performing assets to
total assets 0.08% 0.07% 0.14%
Non-performing loans to total
loans receivable, net 0.10 0.10 0.15
Allowance for loan losses $2,423 2,341 2,264
Allowance for loan losses to
total assets 0.44% 0.42% 0.42%
Allowance for loan losses to
total loans receivable, net 0.71 0.67 0.74
Allowance for loan losses to
non-performing loans 742.11 691.84 486.31
V. BOOK VALUE PER SHARE:
Book value per share excluding
net unrealized loss on securities
available for sale $19.07 18.65 17.73
Book value per share 18.71 18.52 17.54
Three Three
Months Year Months
Ended Ended Ended
March 31, Dec 31, March 31,
1997 1996 1996
-------------------------------------
VI. CAPITAL RATIOS
Stockholders' equity to total
assets, at end of period 14.24% 14.80% 16.77%
Average stockholders' equity
to average assets <F1><F2> 14.65 16.12 17.09
Ratio of average interest-
earning assets to average
interest-bearing
liabilities<F1> 115.99 118.87 120.19
<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 and
224,334 shares repurchased during the first quarter of 1997.
</FN>
</TABLE>
