UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)
HMN FINANCIAL, INC.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
40424G108
(CUSIP Number)
Charles R. Haywood
Foley & Lardner
One IBM Plaza
330 North Wabash Avenue
Suite 3300
Chicago, Illinois 60611
(312) 755-1900
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 17, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
<PAGE>
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
LaSalle Financial Partners, Limited Partnership
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: WC, OO
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [X]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 403,600 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
403,600 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
403,600 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
9.7%
14 Type of Reporting Person
PN
<PAGE>
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Richard J. Nelson
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: Not Applicable
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [X]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 403,600 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
403,600 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
403,600 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
9.7%
14 Type of Reporting Person
IN
<PAGE>
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Peter T. Kross
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: Not Applicable
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [X]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 403,600 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
403,600 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
403,600 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
9.7%
14 Type of Reporting Person
IN
<PAGE>
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Florence Nelson
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: Not Applicable
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 0 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
0 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
0 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [X]
13 Percent of Class Represented By Amount in Row (11)
0%
14 Type of Reporting Person
IN
<PAGE>
This is Amendment No. 7 to the Schedule 13D filed jointly by
LaSalle Financial Partners, Limited Partnership (the "Partnership"),
Richard J. Nelson, Florence Nelson and Peter T. Kross (the "Group") on
July 11, 1997 (as amended, the "Original 13D"), and relates to the common
stock, $.01 par value (the "Common Stock"), of HMN Financial, Inc. (the
"Issuer"). The following items in the Original 13D are amended to read in
their entirety as follows:
Item 4. Purpose of Transaction
The Group's goal is to profit from appreciation in the market
price of the Common Stock. The Group expects to actively assert
shareholder rights, in the manner described below, with the purpose to
influence the policies of the Issuer.
The Partnership's stated purpose is to emphasize investments in
the stocks of selected thrifts, banks and savings banks which the General
Partners believe to be undervalued or that they believe to represent
"special situation" investment opportunities. The Partnership has further
described its purpose, in its private placement memorandum, as follows:
Considering the current opportunity to purchase shares
of selected thrifts and savings banks at substantial
discounts to intrinsic value as determined by the
General Partners, with significant appreciation
potential available due to merger and acquisition
activity in the banking industry, the Partnership
currently intends to concentrate its investments in
thrifts, banks and savings banks which, in the opinion
of the General Partners, possess certain buyout
characteristics. Concentrated investments may be made
in companies to allow the Partnership to influence or
to effect control over management's decisions in order
to achieve Partnership objectives.
The Partnership believes that its acquisition of the Common Stock is in
accordance with these stated purposes.
The Group intends to work with the Issuer to attempt to
influence the Board of Directors to consider all possible strategic
alternatives available to the Issuer in order to increase the market price
of the Common Stock. One way of achieving this goal is to seek out
another financial institution and attempt to implement a business
combination. The Group is interested in influencing the Issuer's Board of
Directors to explore seriously, in consultation with independent financial
advisors, this and other possible means of improving the market price of
the Common Stock, to the extent such options may not have already been
fully explored. To the extent such influence may be deemed to constitute
a "control purpose" with respect to the Securities Exchange Act of 1934,
as amended, and the regulations thereunder, the Group has such a purpose.
On October 21, 1997, Messrs. Nelson and Kross met with
management of the Issuer. Topics of discussion included the past
performance of the Issuer and methods to maximize shareholder value in the
future. At that meeting, Messrs. Nelson and Kross, on behalf of the
Group, requested that the Board of Directors of the Issuer nominate Mr.
Nelson for election to the Board at the 1998 Meeting of Stockholders and
noted that if the Board of Directors does not nominate Mr. Nelson for
election as a Board nominee, the Group most likely would nominate Mr.
Nelson and directly solicit shareholder votes for Mr. Nelson's election to
the Board. In addition, Messrs. Nelson and Kross informed management of
the Issuer that the Group was generally reviewing its options with respect
to the Issuer, and that the Group may submit for shareholder vote at the
1998 Meeting of Stockholders a proposal regarding corporate governance,
maximizing shareholder value or other matters. Messrs. Nelson and Kross
also informed the Issuer that the Partnership would shortly submit a
request for a shareholder list and associated materials. On November 15,
1998 the Issuer filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q and attached a change in the Issuer's bylaws
adopted September 23, 1997, imposing a residency requirement upon
directors of the Issuer. On November 20, 1997, the Partnership sent to
the Issuer a request for a stockholder list and associated materials. A
copy of that letter is attached as Exhibit 3.
By a letter dated January 27, 1998, the Partnership submitted to
the Issuer a notice of intent to nominate Thomas A. Burton and Howard T.
Stewart for election to the Board of Directors of the Issuer at the 1998
Annual Meeting of Stockholders of the Issuer (the "Annual Meeting"), to be
held April 28, 1998. A copy of that letter is attached as Exhibit 4. On
that same day, Messrs. Nelson and Kross discussed their notice of intent
to nominate with management of the Issuer. Mr. Nelson and Mr. Kross
continued to have discussions with management of the Issuer regarding the
election of Mr. Burton and Mr. Stewart, including discussions regarding
the Issuer's accepting one of Mr. Burton or Mr. Stewart as a candidate and
expanding the Board of Directors by one seat. The Issuer rejected all of
Mr. Nelson's and Mr. Kross's suggestions and refused to nominate either
Mr. Burton or Mr. Stewart for election to the Board of Directors.
The Partnership and the Issuer also continued to discuss making
available to the Partnership stockholder list materials. Certain of those
materials were provided to the Partnership. On March 27, 1998, the
Partnership sent to the Issuer another request for a stockholder list and
associated materials. A copy of that letter is attached as Exhibit 5. On
March 2, 1998 the Partnership sent a letter to the Issuer regarding the
Issuer's response to the Partnership's demand that the Issuer provide the
Partnership with a list of Non-Objecting Beneficial Owners (a "NOBO"
list). A copy of that letter is attached as Exhibit 6. By letter dated
March 3, 1998, the Partnership withdrew its notice of intent to nominate
Mr. Stewart for election to the Board of Directors. A copy of that letter
is attached as Exhibit 7. By letter dated March 3, 1998, the Partnership
inquired regarding obtaining a current NOBO list. A copy of that letter
is attached as Exhibit 8.
The Partnership and the Issuer held discussions regarding
whether the record date for the Annual Meeting had been set as March 2 or
March 3, 1997. By letter dated March 4, 1998, the Partnership's counsel
communicated with Issuer's counsel regarding certain transactions. A copy
of that letter is attached as Exhibit 9. After further discussions
between the Partnership and the Issuer, the Issuer re-set the record date
for April 1, 1998. A copy of a letter, dated March 4, 1998 from the
Issuer's counsel to the Partnership's counsel regarding the record date
and stockholder list materials is attached as Exhibit 10. By letter dated
March 6, 1998, the Partnership's counsel responded to that letter. A copy
of that letter is attached as Exhibit 11. On March 5, 1998, the
Partnership filed with the Securities and Exchange Commission a letter it
may send to stockholders of the Issuer. By letter dated March 6, 1998,
the Issuer's counsel stated certain positions of the Issuer regarding the
Partnership's actions. A copy of that letter is attached as Exhibit 12.
The Partnership disputes statements and conclusions made by the Issuer in
that letter.
On March 10, 1998, the Partnership filed a complaint against the
Issuer in the Delaware Court of Chancery. The complaint demanded access
to stocklist materials pursuant to Section 220 of the Delaware General
Corporation Law. By letter delivered March 10, 1998, subsequent to the
filing of the Partnership's complaint, the Issuer responded to the
Partnership's earlier demands for stocklist materials. A copy of that
letter is attached as Exhibit 13. The Issuer and the Partnership
subsequently negotiated regarding delivery of stocklist materials to the
Partnership and possibilities for resolving disputes between the Issuer
and the Partnership. By letter dated March 11, 1998, the Issuer provided
certain stockholder list materials to the Partnership. A copy of that
letter is attached as Exhibit 14. By letter dated March 13, 1998, the
Issuer refused to consider enlarging the Board of Directors and adding Mr.
Burton as an additional director. A copy of that letter is attached as
Exhibit 15. On March 19, 1998, the Delaware Court of Chancery entered an
order, pursuant to a stipulation between the Partnership and the Issuer.
Pursuant to that order and stipulation the Issuer delivered to the
Partnership the stockholder list materials demanded by the Partnership and
the Issuer agreed to deliver certain stockholder list materials to the
Partnership on a regular and timely basis. By letter dated March 17,
1998, the Partnership withdrew its notice of intent to nominate Mr. Burton
for election to the Board of Directors. A copy of that letter is attached
as Exhibit 16.
The above-stated purpose to control is unrelated to the Office
of Thrift Supervision ("OTS") regulations. Specifically, the Group is
aware that regulations promulgated by the OTS contain separate standards
with regard to acquisition of "control" of a federally chartered savings
institution, such as the Issuer's subsidiary bank. Those regulations
require OTS approval for acquisition of control under certain conditions.
Some of the provisions are based in part on numerical criteria. One of
the provisions creates a rebuttable presumption of control where a person
acquires more than 10 percent of the voting stock of a savings association
and other conditions are met. Another provision creates a rebuttable
presumption of control where a person acquires proxies to elect one-third
or more of the savings association's board of directors and other
conditions are met. The Group intends to comply with all OTS regulations.
The Group intends to continue to evaluate the Issuer and its
business prospects and intends to consult with management of the Issuer,
other shareholders of the Common Stock or other persons to further its
objectives. The Group may make further purchases of shares of the Common
Stock or may dispose of any or all of its shares of the Common Stock at
any time. At present, and except as disclosed herein, the Group has no
specific plans or proposals that relate to, or could result in, any of the
matters referred to in paragraphs (a) through (j), inclusive, of Item 4 of
Schedule 13D. The Group intends to continue to explore the options
available to it. The Group may, at any time or from time to time, review
or reconsider its position with respect to the Issuer and may formulate
plans with respect to matters referred to in Item 4 of Schedule 13D.
Item 7. Material to be Filed as Exhibits
No. Description
1 Joint Filing Agreement*
2 Professional Account Agreement, dated March 6, 1996,
between the Partnership and each of the subsidiaries of The
Bear Stearns Companies Inc.*
3 Letter from Richard J. Nelson to the Issuer, dated November
20, 1997.*
4 Letter from Peter T. Kross to the Issuer, dated January 27,
1998.*
5 Letter from Richard J. Nelson to the Issuer, dated February
26, 1998.*
6 Letter from Richard J. Nelson to the Issuer, dated March 2,
1998.*
7 Letter from Richard J. Nelson to the Issuer, dated March 3,
1998.*
8 Letter from Richard J. Nelson to the Issuer, dated March 3,
1998.*
9 Letter from Phillip M. Goldberg to David M. Vander Haar,
dated March 4, 1998.*
10 Letter from David M. Vander Haar to Phillip M. Goldberg,
dated March 4, 1998.*
11 Letter from Phillip M. Goldberg to David M. Vander Haar,
dated March 6, 1998.*
12 Letter from David M. Vander Haar to Richard J. Nelson,
dated March 6, 1998.*
13 Letter from the Issuer to Richard J. Nelson, dated March 9,
1998.*
14 Letter from the Issuer to Richard J. Nelson, dated March
11, 1998.*
15 Letter from the Issuer to Richard J. Nelson, dated March
13, 1998.*
16 Letter from Richard J. Nelson to the Issuer, dated March
17, 1998.
*Filed previously with the Securities and Exchange Commission as part of
the Original 13D.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Date: April 17, 1998
LaSALLE FINANCIAL PARTNERS, LIMITED PARTNERSHIP
By: LaSALLE CAPITAL MANAGEMENT, INC.
a General Partner
By: /s/ Richard J. Nelson
Richard J. Nelson, President
/s/ Richard J. Nelson
Richard J. Nelson
/s/ Peter T. Kross
Peter T. Kross
/s/ Florence Nelson
Florence Nelson
EXHIBIT 16
LA SALLE FINANCIAL PARTNERS, L. P.
Suite 405
259 E. Michigan Avenue
Kalamazoo, Michigan 49007
Telephone (616) 344-4993
Facsimile (616) 344 4994
April 17, 1998
Mr. Roger P. Weise
HMN Financial, Inc.
101 North Broadway
Spring Valley, MN 55975
Dear Mr. Weise:
La Salle Financial Partners, L. P. believes that the HMN Financial, Inc.
board of directors has engaged in delaying tactics and improper actions
designed to further entrench incumbent members of the board. The
Partnership further believes that the HMN Financial board has abused and
manipulated the election process by:
1. Amending the bylaws by inserting an inequitable residency
requirement, requiring that every nominee to the company's board of
directors reside in a county in which a full-service branch of HMN is
located, thereby excluding from board membership qualified and experienced
individuals residing outside of the HMN market area;
2. Misrepresenting to the Partnership that HMN did not have in its
possession a non-objecting beneficial owners shareholders list, and
producing the list to the Partnership only after the Partnership learned
of the HMN deception two months after the request was made;
3. Causing the Partnership to file a complaint in Delaware Chancery
Court against the board of directors of HMN Financial to ensure delivery
of shareholder information as required by law; and
4. Revising the voting record date for the 1998 annual meeting, due
to non-compliance of federal law, by failing to provide proper notice of
the original record date.
Please be advised, therefore, that La Salle Financial Partners, Limited
Partnership, hereby withdraws its notice of intent to nominate Thomas A.
Burton for election to the Board of Directors of HMN Financial, Inc., at
the 1998 Annual Meeting of Shareholders.
Sincerely,
LA SALLE FINANCIAL PARTNERS, L. P.
By: LaSalle Capital Management, Inc.,
/s/ Richard J. Nelson
By: Richard J. Nelson
President
