-----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, QoAlyaJY9lc8XqIJ/BcNmPX0HRV6eTuc67xThk1ZNLWw2Tn2UBBG4avBSh4ETqgV uwZDFPVgQHQoBGdN1DaxOA== 0001157523-05-009053.txt : 20051021 0001157523-05-009053.hdr.sgml : 20051021 20051021151111 ACCESSION NUMBER: 0001157523-05-009053 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051021 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051021 DATE AS OF CHANGE: 20051021 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: 051149563 BUSINESS ADDRESS: STREET 1: 1016 CIVIC CENTER DRIVE NORTHWEST CITY: ROCHESTER STATE: MN ZIP: 55901 BUSINESS PHONE: 5075351200 MAIL ADDRESS: STREET 1: 1016 CIVIC CENTER DRIVE NW CITY: ROCHESTER STATE: MN ZIP: 55901 8-K 1 a5000167.txt HMN FINANCIAL, INC. 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): October 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 October 20, 2005, HMN Financial, Inc. (the "Company") reported its financial results for its third fiscal quarter ended September 30, 2005. See the Company's press release dated October 20, 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 October 20, 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: October 20, 2005 /s/ Jon Eberle ----------------------------- Jon Eberle, SVP/CFO/Treasurer EX-99 2 a5000167ex99.txt EXHIBIT 99 Exhibit 99 HMN Financial, Inc. Announces Third Quarter Results ROCHESTER, Minn.--(BUSINESS WIRE)--Oct. 20, 2005--HMN Financial, Inc. (HMN) (NASDAQ:HMNF): Third Quarter Highlights -- Net interest income up $1.1 million, or 15.1%, over third quarter of 2004 -- Net interest margin up 32 basis points over third quarter of 2004 -- Income tax expense up $736,000, or 63.9%, over third quarter of 2004 -- Net income of $2.3 million, down $274,000, or 10.7%, from third quarter of 2004 -- Diluted earnings per share of $0.57, down $0.07, or 10.9%, from third quarter of 2004 Year to Date Highlights -- Net interest income up $4.0 million, or 17.8%, over first nine months of 2004 -- Net interest margin up 30 basis points over first nine months of 2004 -- Income tax expense up $1.4 million, or 46.4%, over first nine months of 2004 -- Net income of $7.6 million, up $423,000, or 5.9%, over first nine months of 2004 -- Diluted earnings per share of $1.89, up $0.12, or 6.8%, over first nine months of 2004 EARNINGS SUMMARY Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2005 2004 2005 2004 --------------------- --------------------- Net income $2,276,401 2,550,201 $7,590,918 7,167,821 Diluted earnings per share 0.57 0.64 1.89 1.77 Return on average assets 0.92 1.09% 1.03 1.06% Return on average equity 10.02 12.02% 11.51 11.44% Book value per share $19.97 18.66 $19.97 18.66 HMN Financial, Inc. (HMN) (NASDAQ:HMNF), the $982 million holding company for Home Federal Savings Bank (the Bank), today reported net income of $2.3 million for the third quarter of 2005, down $274,000, or 10.7%, from net income of $2.6 million for the third quarter of 2004. Diluted earnings per common share for the third quarter of 2005 were $0.57, down $0.07, from $0.64 for the third quarter of 2004. Third Quarter Results Net Interest Income Net interest income was $8.9 million for the third quarter of 2005, an increase of $1.1 million, or 15.1%, compared to $7.8 million for the third quarter of 2004. Interest income was $15.2 million for the third quarter of 2005, an increase of $2.0 million, or 15.8%, from $13.2 million for the same period in 2004. Interest income increased because of an increase in interest rates and an increase in the average outstanding balance of interest-earning assets. Interest rates increased primarily because of the 200 basis point increase in the prime interest rate between the periods. Increases in the prime rate, which is the rate that banks charge their prime business customers, generally increase the rates on adjustable rate consumer and commercial loans in the portfolio and new loans originated. The increase in interest-earning assets was caused by the $75 million increase in the average outstanding balance of commercial loans between the periods. The yield earned on interest-earning assets was 6.45% for the third quarter of 2005, an increase of 58 basis points from the 5.87% yield for the third quarter of 2004. Interest expense was $6.3 million for the third quarter of 2005, an increase of $906,000, or 16.8%, compared to $5.4 million for the third quarter of 2004. Interest expense increased primarily because of higher interest rates paid on deposits which were caused by the 200 basis point increase in the federal funds rate between the periods. Increases in the federal funds rate, which is the rate that banks charge other banks for short term loans, generally increase the rates banks pay for deposits. Interest expense also increased because of the $38 million increase in the average outstanding balance of deposits and advances between the periods due to an increase in transaction accounts and brokered deposits. The average interest rate paid on interest-bearing liabilities was 2.82% for the third quarter of 2005, an increase of 29 basis points from the 2.53% paid for the third quarter of 2004. Net interest margin (net interest income divided by average interest earning assets) for the third quarter of 2005 was 3.79%, an increase of 32 basis points, compared to 3.47% for the third quarter of 2004. Provision for Loan Losses The provision for loan losses was $952,000 for the third quarter of 2005, an increase of $177,000, or 22.8%, from $775,000 for the third quarter of 2004. The provision for loan losses increased primarily because commercial loan charge offs during the quarter exceeded previously reserved amounts. The increase in the provision related to charge offs was partially offset by a decrease in commercial loan growth in the third quarter of 2005 when compared to the same period in 2004. Total non-performing assets were $4.7 million at September 30, 2005, a decrease of $7.8 million, or 62.7%, from $12.5 million at June 30, 2005. Non-performing loans decreased $8.3 million, foreclosed and repossessed assets increased $520,000, and $2.7 million in loans were charged off during the quarter. The decrease in non-performing assets relates primarily to $8.0 million in commercial real estate loans that were classified as non-accruing in the previous quarter that are no longer classified due to the sale of the properties. Total non-performing assets decreased $231,000, or 4.7%, from $4.9 million at December 31, 2005. Non-Interest Income and Expense Non-interest income was $1.7 million for the third quarter of 2005, an increase of $132,000, or 8.3%, from $1.6 million for the same period in 2004. Gains on sales of loans increased $275,000 due primarily to the $232,000 increase in the gain recognized on the sale of government guaranteed commercial loans in the third quarter of 2005 when compared to the same period in 2004. Other non-interest income decreased $119,000 primarily because of increased losses on the sale of repossessed mobile homes in the third quarter of 2005. Non-interest expense was $5.5 million for the third quarter of 2005, an increase of $669,000, or 13.7%, from $4.9 million for the same period of 2004. Compensation expense increased $351,000 between the periods because of the increased number of employees and because of annual payroll cost increases. Occupancy expense increased $128,000 primarily because of the additional corporate office space occupied in the first quarter of 2005 and because of increased amortization expense on various software upgrades that were implemented between the periods. Data processing costs increased by $46,000 primarily because of increased activity between the periods and an increase in the fees and services provided by the third party service center. Other operating expenses increased $130,000 primarily because of increased costs on foreclosed commercial properties during the third quarter of 2005 when compared to the same period in 2004. Income tax expense was $1.9 million for the third quarter of 2005, an increase of $736,000, or 63.9%, compared to $1.2 million for the same period of 2004. Income tax expense increased $374,000 due to an increase in taxable income and $297,000 due to an increase in the effective tax rate because of changes in state tax law that were retroactive to January 1, 2005. Return on Assets and Equity Return on average assets for the third quarter of 2005 was 0.92%, compared to 1.09% for the third quarter of 2004. Return on average equity was 10.02% for the third quarter of 2005, compared to 12.02% for the same period of 2004. Book value per common share at September 30, 2005 was $19.97, compared to $18.95 at September 30, 2004. Nine Month Period Results Net Income Net income was $7.6 million for the nine-month period ended September 30, 2005, an increase of $423,000, or 5.9%, compared to $7.2 million for the nine-month period ended September 30, 2004. Diluted earnings per common share for the nine-month period in 2005 were $1.89, up $0.12, or 6.8%, from $1.77 for the same period in 2004. Net Interest Income Net interest income was $26.4 million for the first nine months of 2005, an increase of $4.0 million, or 17.8%, from $22.4 million for the same period in 2004. Interest income was $44.2 million for the nine-month period ended September 30, 2005, an increase of $6.3 million, or 16.5%, from $37.9 million for the same period in 2004. Interest income increased primarily because of an increase in 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 $94 million increase in the average outstanding balance of commercial loans between the periods. The yield earned on interest-earning assets was 6.30% for the first nine months of 2005, an increase of 43 basis points from the 5.87% yield for the same period in 2004. Interest expense was $17.8 million for the nine-month period ended September 30, 2005, an increase of $2.3 million, or 14.6%, from the $15.6 million for the same period in 2004. Interest expense increased primarily because of higher interest rates paid on deposits which were caused by the 200 basis point increase in the federal funds rate between the periods. Increases in the federal funds rate, which is the rate that banks charge other banks for short term loans, generally increases the rates banks pay for deposits. Interest expense also increased because of the $67 million increase in the average outstanding balance of deposits and advances between the periods due to an increase in transaction accounts and brokered deposits. The average interest rate paid on interest-bearing liabilities was 2.69% for the first nine-months of 2005, an increase of 15 basis points from the 2.54% paid for the same period of 2004. Net interest margin (net interest income divided by average interest earning assets) for the first nine months of 2005 was 3.76%, an increase of 30 basis points, compared to 3.46% for the same period of 2004. Provision for Loan Losses The provision for loan losses was $2.5 million for the nine-month period of 2005, an increase of $454,000, or 22.2%, from $2.0 million for the same nine-month period in 2004. The provision for loan losses increased primarily because of increased commercial loan charge offs during the period. The increase in the provision related to loan charge offs was partially offset by a decrease in commercial loan growth in the first nine months of 2005 when compared to the same period in 2004. Total non-performing assets were $4.7 million at September 30, 2005, a decrease of $231,000, or 4.73%, from $4.9 million at December 31, 2004. Non-performing loans decreased $1.4 million, foreclosed and repossessed assets increased $1.1 million, and $3.0 million in loans were charged off during the first nine months of 2005. Loans charged off during the period included commercial loans of $2.6 million, consumer loans of $195,000, and mortgage loans of $231,000. Non-Interest Income and Expense Non-interest income was $4.7 million for the first nine months of 2005, a decrease of $83,000, or 1.7%, from $4.8 million for the same period in 2004. Gains on sales of loans decreased $26,000 primarily due to decreased mortgage loan activity in the first nine months of 2005 when compared to the same period of 2004. Other non-interest income decreased $63,000 primarily because of increased losses on the sale of repossessed mobile homes in 2005. Non-interest expense was $16.4 million for the first nine months of 2005, an increase of $1.6 million, or 10.5%, from $14.8 million for the same period in 2004. Compensation expense increased $800,000 because of the increased number of employees and because of annual payroll cost increases. Occupancy expense increased $409,000 primarily because of the additional corporate office space occupied in the first quarter of 2005 and because of increased amortization expense on various software upgrades that were implemented between the periods. Data processing costs increased by $109,000 primarily because of increased activity and an increase in fees and services provided by the third party service center. Other operating expenses increased $242,000 primarily because of increased costs on foreclosed and repossessed assets during the first nine months of 2005 when compared to the same period in 2004. Income tax expense was $4.6 million for the first nine months of 2005, an increase of $1.4 million, or 46.4%, compared to $3.2 million for the same period of 2004. Income tax expense increased $962,000 due to an increase in taxable income and $297,000 due to an increase in the effective tax rate because of changes in state tax law that were retroactive to January 1, 2005. Return on Assets and Equity Return on average assets for the nine-month period ended September 30, 2005 was 1.03%, compared to 1.06% for the same period in 2004. Return on average equity was 11.51% for the nine-month period ended September 30, 2005, compared to 11.44% for the same period in 2004. President's Statement "HMN's core earnings continue to improve," said HMN President Michael McNeil. "I am pleased that our growth, along with the change in the mix of our assets and liabilities, has allowed us to achieve record nine-month earnings of $7.6 million in 2005 despite the increased provision for income taxes." 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. 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 or 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. HMN FINANCIAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets - ---------------------------------------------------------------------- September 30, December 31, 2005 2004 (unaudited) - ---------------------------------------------------------------------- Assets Cash and cash equivalents................... $27,462,839 34,298,394 Securities available for sale: Mortgage-backed and related securities (amortized cost $7,920,015 and $9,509,377)............................. 7,481,261 9,150,871 Other marketable securities (amortized cost $92,099,344 and $95,097,051)....... 91,030,938 94,521,512 ------------- ------------ 98,512,199 103,672,383 ------------- ------------ Loans held for sale......................... 4,058,132 2,711,760 Loans receivable, net....................... 815,163,631 783,213,262 Accrued interest receivable................. 4,513,397 3,694,133 Real estate, net............................ 1,229,894 140,608 Federal Home Loan Bank stock, at cost....... 8,809,500 9,292,800 Mortgage servicing rights, net.............. 2,817,520 3,231,242 Premises and equipment, net................. 12,177,193 12,464,265 Investment in limited partnerships.......... 147,548 168,258 Goodwill.................................... 3,800,938 3,800,938 Core deposit intangible..................... 248,224 333,617 Prepaid expenses and other assets........... 1,905,066 2,638,681 Deferred tax asset.......................... 1,458,100 1,012,700 ------------- ------------ Total assets............................$982,304,181 960,673,041 ============= ============ Liabilities and Stockholders' Equity Deposits....................................$714,711,074 698,902,185 Federal Home Loan Bank advances............. 170,900,000 170,900,000 Accrued interest payable.................... 2,142,442 1,314,356 Customer Escrows............................ 993,944 762,737 Accrued expenses and other liabilities...... 5,538,649 5,022,927 ------------- ------------ Total liabilities....................... 894,286,109 876,902,205 ------------- ------------ Commitments and contingencies Stockholders' equity: Serial preferred stock: ($.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.................. 57,931,170 57,875,595 Retained earnings, subject to certain restrictions............................... 96,393,416 91,408,028 Accumulated other comprehensive loss........ (912,561) (604,446) Unearned employee stock ownership plan shares..................................... (4,399,289) (4,544,300) Unearned compensation restricted stock awards..................................... (249,341) 0 ------------- ------------ Treasury stock, at cost 4,720,168 and 4,708,798 shares........................... (60,836,610) (60,455,328) ------------- ------------ Total stockholders' equity.............. 88,018,072 83,770,836 ------------- ------------ Total liabilities and stockholders' equity..$982,304,181 960,673,041 ============= ============ HMN FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Income (unaudited) - ---------------------------------------------------------------------- Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 - ---------------------------------------------------------------------- Interest income: Loans receivable.....$14,385,320 12,242,408 41,487,679 35,220,089 Securities available for sale: Mortgage-backed and related..... 78,645 81,341 252,701 292,633 Other marketable. 645,871 730,727 1,941,809 2,180,525 Cash equivalents..... 114,872 40,410 342,812 106,750 Other................ 13,525 61,196 182,285 139,016 ------------ ----------- ----------- ----------- Total interest income.......... 15,238,233 13,156,082 44,207,286 37,939,013 ------------ ----------- ----------- ----------- Interest expense: Deposits............. 4,456,305 3,190,799 12,358,727 9,015,152 Federal Home Loan Bank advances....... 1,836,269 2,195,801 5,485,461 6,550,436 ------------ ----------- ----------- ----------- Total interest expense.......... 6,292,574 5,386,600 17,844,188 15,565,588 ------------ ----------- ----------- ----------- Net interest income........... 8,945,659 7,769,482 26,363,098 22,373,425 Provision for loan losses............... 952,000 775,000 2,495,000 2,041,000 ------------ ----------- ----------- ----------- Net interest income after provision for loan losses...... 7,993,659 6,994,482 23,868,098 20,332,425 ------------ ----------- ----------- ----------- Non-interest income: Fees and service charges............. 706,337 741,704 1,994,291 2,014,905 Mortgage servicing fees................ 305,417 291,709 901,760 869,789 Securities gains, net 0 2,451 0 3,812 Gain on sales of loans............... 624,947 349,214 1,242,436 1,268,445 Earnings (losses) in limited partnerships (6,500) (6,500) (20,710) (19,617) Other................ 90,957 210,155 604,711 667,952 ------------ ----------- ----------- ----------- Total non-interest income........... 1,721,158 1,588,733 4,722,488 4,805,286 ------------ ----------- ----------- ----------- Non-interest expense: Compensation and benefits............ 2,781,366 2,430,026 8,340,048 7,540,268 Occupancy............ 1,042,417 914,382 3,079,131 2,670,154 Deposit insurance premiums............ 34,679 23,600 97,204 70,099 Advertising.......... 101,775 116,195 291,448 291,591 Data processing...... 278,880 233,254 761,719 652,540 Amortization of mortgage servicing rights, net of valuation adjustments......... 256,763 239,806 766,885 795,439 Other................ 1,053,536 923,135 3,025,033 2,783,471 ------------ ----------- ----------- ----------- Total non-interest expense.......... 5,549,416 4,880,398 16,361,468 14,803,562 ------------ ----------- ----------- ----------- Income before income tax expense.......... 4,165,401 3,702,817 12,229,118 10,334,149 Income tax expense.... 1,889,000 1,152,700 4,638,200 3,168,700 ------------ ----------- ----------- ----------- Income before minority interest 2,276,401 2,550,117 7,590,918 7,165,449 Minority interest..... 0 (84) 0 (2,372) ------------ ----------- ----------- ----------- Net income........ $2,276,401 2,550,201 7,590,918 7,167,821 ============ =========== =========== =========== Basic earnings per share................ $0.59 0.66 1.98 1.85 ============ =========== =========== =========== Diluted earnings per share................ $0.57 0.64 1.89 1.77 ============ =========== =========== =========== HMN FINANCIAL, INC. AND SUBSIDIARIES Selected Consolidated Financial Information (unaudited) - ---------------------------------------------------------------------- SELECTED FINANCIAL DATA: Three Months Ended Nine Months Ended (Dollars in thousands, except per September 30, September 30, share data) 2005 2004 2005 2004 - ---------------------------------------------------------------------- I. OPERATING DATA: Interest income............... $15,238 13,156 44,207 37,939 Interest expense.............. 6,292 5,387 17,844 15,566 Net interest income........... 8,946 7,769 26,363 22,373 II. AVERAGE BALANCES: Assets (1).................... 983,244 934,248 981,123 906,937 Loans receivable, net......... 807,046 752,281 804,585 720,835 Mortgage-backed and related securities (1)............... 8,266 10,287 8,790 11,644 Interest-earning assets (1)... 937,400 891,608 937,715 863,534 Interest-bearing liabilities.. 884,155 846,297 885,675 819,168 Equity (1).................... 90,129 84,391 88,205 83,726 III. PERFORMANCE RATIOS: (1) Return on average assets (annualized)................ 0.92% 1.09% 1.03% 1.06% Interest rate spread information: Average during period..... 3.63 3.34 3.61 3.33 End of period............. 3.51 3.33 3.51 3.33 Net interest margin.......... 3.79 3.47 3.76 3.46 Ratio of operating expense to average total assets (annualized)................ 2.24 2.08 2.23 2.18 Return on average equity (annualized)................ 10.02 12.02 11.51 11.44 Efficiency................... 52.03 52.15 52.63 54.47 ---------------------------- Sept 30, Dec 31, Sept 30, 2005 2004 2004 ---------------------------- IV. ASSET QUALITY: Total non-performing assets.. $4,651 4,882 3,719 Non-performing assets to total assets................ 0.47% 0.51% 0.39% Non-performing loans to total loans receivable, net....... 0.37% 0.55% 0.38% Allowance for loan losses.... $8,633 8,996 8,471 Allowance for loan losses to total assets................ 0.88% 0.94% 0.89% Allowance for loan losses to total loans receivable, net 1.06 1.15 1.11 Allowance for loan losses to non-performing loans........ 289.51 207.30 291.04 V. BOOK VALUE PER SHARE: Book value per share......... $19.97 18.95 18.66 ---------------------------- Nine Nine Months Year Months Ended Ended Ended Sept 30, Dec 31, Sept 30, 2005 2004 2004 ---------------------------- VI. CAPITAL RATIOS: Stockholders' equity to total assets, at end of period.... 8.96% 8.72% 8.67% Average stockholders' equity to average assets (1)....... 8.99 9.17 9.23 Ratio of average interest- earning assets to........... average interest-bearing liabilities (1)........... 105.88 105.38 105.42 ---------------------------- Sept 30, Dec 31, Sept 30, 2005 2004 2004 ---------------------------- VII. EMPLOYEE DATA: Number of full time equivalent employees........ 206 208 199 - ---------------------------------------------------------------------- (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-----