-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LVHGQA1rdZPZzOQz/ULotZHI9yqx235cpYcQd+Eb0b3Cl707dMlIb/GHT+u50d2G Fgv5ly9KMkQ3+/0iDn9rNQ== 0001157523-05-003887.txt : 20050427 0001157523-05-003887.hdr.sgml : 20050427 20050427133246 ACCESSION NUMBER: 0001157523-05-003887 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050421 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050427 DATE AS OF CHANGE: 20050427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HMN FINANCIAL INC CENTRAL INDEX KEY: 0000921183 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 411777397 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24100 FILM NUMBER: 05775651 BUSINESS ADDRESS: STREET 1: 1016 CIVIC CENTER DRIVE NORTHWEST CITY: ROCHESTER STATE: MN ZIP: 55901 BUSINESS PHONE: 5075351200 8-K 1 a4874666.txt HMN FINANCIAL 8-K UNITED STATES 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 21, 2005 HMN Financial, Inc. ------------------- (Exact name of registrant as specified in its chapter) Delaware 0-24100 41-1777397 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1016 Civic Center Drive Northwest PO Box 6057 Rochester, Minnesota 55903-6057 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (507) 535-1200 __________________________________________________________ (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On April 21, 2005, HMN Financial, Inc. (the "Company") reported its financial results for its first fiscal quarter ended March 31, 2005. See the Company's press release dated April 21, 2005, which is furnished as Exhibit 99 and incorporated by reference in this Current Report on Form 8-K. Item 9.01. Financial Statements and Exhibits (c) Exhibits (the following exhibits are furnished to the SEC) Exhibit Number Description -------------- ----------- 99 Press release dated April 21, 2005 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 hereunto duly authorized. HMN Financial, Inc. (Registrant) Date: April 22, 2005 /s/ Jon Eberle Jon Eberle, SVP/CFO/Treasurer EX-99 2 a4874666ex99.txt EXHIBIT 99 PRESS RELEASE Exhibit 99 HMN Financial, Inc. Announces First Quarter Results ROCHESTER, Minn.--(BUSINESS WIRE)--April 21, 2005--HMN Financial, Inc. (HMN) (NASDAQ:HMNF): First Quarter Highlights -- Net income of $2.8 million, up $695,000, or 32.8% over first quarter of 2004 -- Diluted earnings per share up $0.18, or 34.6%, over first quarter of 2004 -- Net interest income up $1.8 million, or 14.9%, over first quarter of 2004 -- Net interest margin up 33 basis points over first quarter of 2004 -- Gain on sales of loans down $119,000, or 28.9%, from first quarter of 2004 - -0- *T EARNINGS SUMMARY Three Months Ended March 31, 2005 2004 ------------------------ Net income $ 2,815,064 2,120,461 Diluted earnings per share 0.70 0.52 Return on average assets 1.18 % 0.96 % Return on average equity 13.22 % 10.21 % Book value per share $ 19.17 18.23 *T HMN Financial, Inc. (HMN) (NASDAQ:HMNF), the $991 million holding company for Home Federal Savings Bank (the Bank), today reported net income of $2.8 million for the first quarter of 2005, up $695,000, or 32.8%, from net income of $2.1 million for the first quarter of 2004. Diluted earnings per common share for the first quarter of 2005 were $0.70, up $0.18, or 34.6%, from $0.52 for the first quarter of 2004. First Quarter Results Net Interest Income Net interest income was $8.7 million for the first quarter of 2005, an increase of $1.4 million, or 19.8%, compared to $7.2 million for the first quarter of 2004. Interest income was $14.2 million for the first quarter of 2005, an increase of $1.8 million, or 14.9%, from $12.4 million for the first quarter of 2004. Interest income increased primarily because of an increase in the average interest-earning assets and because of a change in the mix of assets between the periods. The increase in interest-earning assets was caused primarily by the $109 million increase in the commercial loans between the periods. The increase in interest income on commercial loans was partially offset by lower interest income on the single-family loan and investment portfolios due to a decrease in the outstanding balances and lower interest rates of these portfolios in the first quarter of 2005 when compared to the same period in 2004. The yield earned on interest-earning assets was 6.21% for the first quarter of 2005, an increase of 30 basis points from the 5.91% yield for the first quarter of 2004. Interest expense was $5.5 million for the first quarter of 2005, an increase of $406,000, or 7.9%, compared to $5.1 million for the first quarter of 2004. Interest expense increased because of the $116 million in deposit growth that was experienced between the periods. The increase in interest expense caused by the additional deposits was partially offset by a decrease in the average interest rate paid on deposits. The decrease in the average interest rate between the periods was primarily the result of lower interest rates paid on certificates of deposit. The average interest rate paid on interest-bearing liabilities was 2.56% for the first quarter of 2005, a decrease of 2 basis points from the 2.58% paid for the first quarter of 2004. Net interest margin (net interest income divided by average interest earning assets) for the first quarter of 2005 was 3.79%, an increase of 33 basis points, compared to 3.46% for the first quarter of 2004. Provision for Loan Losses The provision for loan losses was $636,000 for the first quarter of 2005, a decrease of $183,000, compared to $819,000 for the first quarter of 2004. The provision for loan losses for the first quarter of 2005 decreased despite the $14 million of additional loan growth experienced in the quarter when compared to the same period in 2004. The increase in the provision related to the additional loan growth was entirely offset by a decrease in the provision due to fewer commercial loan risk rating downgrades in the first quarter of 2005 when compared to the same period of 2004. Total non-performing assets were $4.9 million at March 31, 2005, an increase of $52,000, from $4.9 million at December 31, 2004. Non-Interest Income and Expense Non-interest income was $1.4 million for the first quarter of 2005, a decrease of $110,000, or 7.1%, from $1.5 million for the first quarter of 2004. Non-interest income decreased $119,000 because of lower gains on sales of loans due to the decreased mortgage loan activity in the first quarter of 2005 when compared to the same period in 2004. Mortgage loan activity slowed in the first quarter of 2005 due to the increase in mortgage interest rates from the first quarter of 2004. Fees and service charges increased $34,000 between the periods primarily due to increased business banking and debit card activity. Other non-interest income decreased $29,000 primarily because of decreased revenues from the sale of uninsured investment products. Non-interest expense was $5.3 million for the first quarter of 2005, an increase of $364,000, or 7.4%, from $4.9 million for the first quarter of 2004. Compensation expense increased $246,000 primarily because of increases in health insurance costs and because of annual payroll cost increases. Occupancy expense increased $111,000 due to the additional corporate office facilities occupied in the first quarter of 2005 and because of an increase in amortization expense as a result of various software upgrades between the periods. Data processing costs increased $47,000 due to increases in the services provided by the Bank's third party processor between the periods. Income tax expense increased $446,000 between the periods due to increased taxable income and an increased effective tax rate. The effective tax rate increased primarily because of changes in state tax allocations and a decrease in tax exempt income as a percentage of income. Return on Assets and Equity Return on average assets for the first quarter of 2005 was 1.18%, compared to 0.96% for the first quarter of 2004. Return on average equity was 13.22% for the first quarter of 2005, compared to 10.21% for the same quarter in 2004. Book value per common share at March 31, 2005 was $19.17, compared to $18.23 at March 31, 2004. President's Statement "Earnings continue to improve as a result of our asset growth and the change in the mix of our loans and deposits," said HMN President, Michael McNeil. "We believe that our strategy of becoming a diversified full service provider of financial products and services will continue to have a positive effect on our core earnings." General Information HMN Financial, Inc. and Home Federal Savings Bank are headquartered in Rochester, Minnesota. The Bank operates nine full service offices in southern Minnesota located in Albert Lea, Austin, LaCrescent, Rochester, Spring Valley and Winona and two full service offices in Iowa located in Marshalltown and Toledo. Home Federal Savings Bank also operates loan origination offices located in St. Cloud and Rochester, Minnesota and West Des Moines, Iowa. Eagle Crest Capital Bank, a division of Home Federal Savings Bank, operates branches in Edina and 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 include, but are not limited to those relating to HMN's financial expectations for earnings and revenues. A number of factors could cause actual results to differ materially from HMN's assumptions and expectations. These factors include possible legislative changes and adverse economic, business and competitive developments such as shrinking interest margins; deposit outflows; reduced demand for financial services and loan products; changes in accounting policies and guidelines, changes in monetary and fiscal policies of the federal government, and changes in tax laws. Additional factors that may cause actual results to differ from HMN's assumptions and expectations include those set forth in HMN's most recent filings with the Securities and Exchange Commission. All forward-looking statements are qualified by, and should be considered in conjunction with, such cautionary statements. (Three pages of selected consolidated financial information are included with this release.) HMN FINANCIAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets - ---------------------------------------------------------------------- March 31, December 31, 2005 2004 - ---------------------------------------------------------------------- (unaudited) Assets Cash and cash equivalents...................$ 39,340,351 34,298,394 Securities available for sale: Mortgage-backed and related securities (amortized cost $9,058,730 and $9,509,377)............................ 8,470,270 9,150,871 Other marketable securities (amortized cost $92,084,357 and $95,097,051).......................... 90,979,999 94,521,512 ------------ ------------ 99,450,269 103,672,383 ------------ ------------ Loans held for sale......................... 1,510,373 2,711,760 Loans receivable, net....................... 813,244,220 783,213,262 Accrued interest receivable................. 4,482,087 3,694,133 Real estate, net............................ 1,058,859 140,608 Federal Home Loan Bank stock, at cost....... 8,697,600 9,292,800 Mortgage servicing rights, net.............. 3,137,081 3,231,242 Premises and equipment, net................. 12,486,865 12,464,265 Investment in limited partnerships.......... 160,548 168,258 Goodwill.................................... 3,800,938 3,800,938 Core deposit intangible, net................ 305,153 333,617 Prepaid expenses and other assets........... 2,371,321 2,638,681 Deferred tax asset.......................... 1,280,600 1,012,700 ------------ ------------ Total assets............................$991,326,265 960,673,041 ============ ============ Liabilities and Stockholders' Equity Deposits....................................$727,814,985 698,902,185 Federal Home Loan Bank advances............. 170,900,000 170,900,000 Accrued interest payable.................... 1,943,401 1,314,356 Customer escrows............................ 980,756 762,737 Accrued expenses and other liabilities...... 5,198,659 5,022,927 ------------ ------------ Total liabilities....................... 906,837,801 876,902,205 ------------ ------------ Commitments and contingencies Stockholders' equity: Serial preferred stock ($.01 par value): Authorized 500,000 shares; issued and outstanding none.................... 0 0 Common stock ($.01 par value): Authorized 11,000,000; issued shares 9,128,662........................... 91,287 91,287 Additional paid-in capital.................. 57,779,389 57,875,595 Retained earnings, subject to certain restrictions............................... 93,380,666 91,408,028 Accumulated other comprehensive income (loss)..................................... (1,095,317) (604,446) Unearned employee stock ownership plan shares..................................... (4,495,943) (4,544,300) Unearned compensation restricted stock awards..................................... (302,408) 0 Treasury stock, at cost 4,721,168 and 4,708,798 shares........................... (60,869,210) (60,455,328) ------------ ------------ Total stockholders' equity.............. 84,488,464 83,770,836 ------------ ------------ Total liabilities and stockholders' equity..$991,326,265 960,673,041 ============ ============ HMN FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Income (unaudited) - ---------------------------------------------------------------------- Three Months Ended March 31, 2005 2004 - ---------------------------------------------------------------------- Interest income: Loans receivable............................$13,333,019 11,491,264 Securities available for sale: Mortgage-backed and related............. 89,768 118,864 Other marketable........................ 641,756 683,407 Cash equivalents............................ 52,269 26,298 Other....................................... 79,528 36,422 ----------- ----------- Total interest income................... 14,196,340 12,356,255 ----------- ----------- Interest expense: Deposits.................................... 3,702,631 2,930,034 Federal Home Loan Bank advances............. 1,822,691 2,188,955 ----------- ----------- Total interest expense................... 5,525,322 5,118,989 ----------- ----------- Net interest income...................... 8,671,018 7,237,266 Provision for loan losses..................... 636,000 819,000 ----------- ----------- Net interest income after provision for loan losses............................. 8,035,018 6,418,266 ----------- ----------- Non-interest income: Fees and service charges.................... 602,597 568,550 Mortgage servicing fees..................... 292,980 287,232 Gain on sales of loans...................... 293,316 412,369 Earnings (losses) in limited partnerships... (7,710) (6,617) Other....................................... 245,548 274,749 ----------- ----------- Total non-interest income................ 1,426,731 1,536,283 ----------- ----------- Non-interest expense: Compensation and benefits................... 2,774,104 2,528,478 Occupancy................................... 995,254 884,602 Deposit insurance premiums.................. 27,906 18,705 Advertising................................. 83,908 87,546 Data processing............................. 237,488 190,565 Amortization of mortgage servicing rights, net of valuation adjustments............... 239,033 253,449 Other....................................... 932,692 962,574 ----------- ----------- Total non-interest expense............... 5,290,385 4,925,919 ----------- ----------- Income before income tax expense......... 4,171,364 3,028,630 Income tax expense............................ 1,356,300 910,500 ----------- ----------- Income before minority interest.......... 2,815,064 2,118,130 Minority interest............................. 0 (2,331) ----------- ----------- Net income...............................$ 2,815,064 2,120,461 =========== =========== Basic earnings per share......................$ 0.74 0.54 =========== =========== Diluted earnings per share....................$ 0.70 0.52 =========== =========== HMN FINANCIAL, INC. AND SUBSIDIARIES Selected Consolidated Financial Information (unaudited) - ---------------------------------------------------------------------- SELECTED FINANCIAL DATA: Three Months Ended (dollars in thousands, except per share March 31, data) 2005 2004 - ---------------------------------------------------------------------- I. OPERATING DATA: Interest income......................$ 14,196 12,356 Interest expense..................... 5,525 5,119 Net interest income.................. 8,671 7,237 II. AVERAGE BALANCES: Assets (1).......................... 968,508 886,623 Loans receivable, net............... 800,369 703,126 Mortgage-backed and related securities (1)..................... 9,292 13,140 Interest-earning assets (1)......... 927,330 841,282 Interest-bearing liabilities........ 876,576 798,366 Equity (1).......................... 86,345 83,526 III. PERFORMANCE RATIOS: (1) Return on average assets (annualized)....................... 1.18 % 0.96 % Interest rate spread information: Average during period............ 3.65 3.33 End of period.................... 3.53 3.29 Net interest margin................. 3.79 3.46 Ratio of non-interest expense to average total assets (annualized).. 2.22 2.23 Return on average equity (annualized)....................... 13.22 10.21 Efficiency.......................... 52.44 56.15 ----------------------------- March 31, Dec 31, March 31, 2005 2004 2004 ----------------------------- IV. ASSET QUALITY : Total non-performing assets.........$ 4,934 4,882 4,073 Non-performing assets to total assets............................. 0.50% 0.51% 0.45% Non-performing loans to total loans receivable, net.................... 0.43 0.55 0.47 Allowance for loan losses...........$ 9,394 8,996 7,557 Allowance for loan losses to total loans receivable, net.............. 1.16% 1.15% 1.05% Allowance for loan losses to non- performing loans................... 267.99 207.30 222.20 V. BOOK VALUE PER SHARE: Book value per share................$ 19.17 18.95 18.23 ----------------------------- 3 Months Year 3 Months Ended Ended Ended Mar 31, Dec 31, Mar 31, 2005 2004 2004 ----------------------------- VI. CAPITAL RATIOS : Stockholders' equity to total assets, at end of period........... 8.52% 8.72% 9.13% Average stockholders' equity to average assets (1)................. 8.92 9.17 9.42 Ratio of average interest-earning assets to average interest-bearing liabilities (1).................... 105.79 105.38 105.38 ----------------------------- March 31, Dec 31, March 31, 2005 2004 2004 ----------------------------- VII. EMPLOYEE DATA: Number of full time equivalent employees.......................... 202 208 200 (1) Average balances were calculated based upon amortized cost without the market value impact of SFAS 115. CONTACT: HMN Financial, Inc., Rochester Michael McNeil, 507-535-1202 -----END PRIVACY-ENHANCED MESSAGE-----