HMN Financial, Inc. (HMNF) | Investment Case

1. Company Snapshot

1.a. Company Description

HMN Financial, Inc.operates as a bank holding company for Home Federal Savings Bank that provides various retail banking products and services.The company offers various deposit accounts, such as savings, interest bearing checking, non-interest bearing checking, money market, and certificate accounts.

Its loan products include single family residential loans; commercial real estate and multi-family mortgage loans; construction loans; consumer loans, such as home equity, automobile, recreational vehicle, mobile home, and lot loans, as well as loans secured by deposit accounts, and other loans for household and personal purposes; and commercial business loans.The company offers financial planning products and services; and invests in mortgage-backed and related securities, the United States government agency obligations, and other permissible investments.It operates through 14 full service branches located in Minnesota, Wisconsin, and Iowa; and two loan origination offices in Sartell, Minnesota and La Crosse, Wisconsin.

HMN Financial, Inc.was founded in 1934 and is headquartered in Rochester, Minnesota.

Show Full description

1.b. Last Insights on HMNF

HMN Financial, Inc.'s recent performance was negatively driven by the completed acquisition by Alerus Financial Corporation, which likely led to a loss of control and autonomy for HMN Financial. The acquisition may have resulted in integration challenges, potential job losses, and changes to the company's operations and strategy. Additionally, the company's recent earnings release is not available, but the acquisition news may have overshadowed any positive developments. The company's focus on integration and potential restructuring efforts may have also contributed to the negative sentiment.

1.c. Company Highlights

Last Price	27.99
Change Percentage	-2.13%
Open	28.6
Previous Close	28.6
Market Cap ( Millions)	125
Volume	156666
Year High	29.4
Year Low	17.6
M A 50	26.1
M A 200	22.76

FCF Yield	5.59%
Dividend Yield	0.00%
ROE	5.86%
Debt / Equity	12.55%
Net Debt / EBIDTA	0.00%
Price To Book	1.13
Price Earnings Ratio	20.28
Price To FCF	17.88
Price To sales	2.87
EV / EBITDA	0

2. Transcript Summary

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3. NewsRoom

Alerus Financial Corporation Completes Acquisition of HMN Financial, Inc.

Oct -09

Source: businesswire.com

ALERUS FINANCIAL CORPORATION AND HMN FINANCIAL, INC. RECEIVE STOCKHOLDER AND REGULATORY APPROVAL TO PROCEED WITH MERGER

Sep -26

Source: globenewswire.com

Alerus Financial Corporation and HMN Financial, Inc. Receive Stockholder and Regulatory Approval to Proceed With Merger

Sep -26

Source: businesswire.com

HMN FINANCIAL INVESTOR ALERT by the Former Attorney General of Louisiana: Kahn Swick & Foti, LLC Investigates Adequacy of Price and Process in Proposed Sale of HMN Financial, Inc. - HMNF

Aug -19

Source: businesswire.com

SHAREHOLDER INVESTIGATION: The M&A Class Action Firm Investigates the Merger and Upcoming Vote on September 12, 2024, of HMN Financial, Inc. – HMNF

Aug -05

Source: globenewswire.com

SHAREHOLDER INVESTIGATION: The M&A Class Action Firm Investigates the Merger of Premier Financial Corp. - PFC

Jul -31

Source: prnewswire.com

SHAREHOLDER INVESTIGATION: The M&A Class Action Firm Investigates the Merger of Premier Financial Corp. – PFC

Jul -30

Source: globenewswire.com

HMN Financial, Inc. Announces Dividend

Jul -24

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Home Federal Savings Bank

Expected Growth: 4.5%

Growing demand for community banking services, increasing adoption of digital banking, and strategic expansion into new markets drive growth for Home Federal Savings Bank.

Eliminations

Expected Growth: 4.5%

Consolidated financial statements of HMN Financial, Inc. will experience growth driven by increased adoption of intercompany transaction elimination, enhancing transparency and accuracy in financial reporting.

7. Detailed Products

Mortgage Banking

HMN Financial, Inc. originates, sells, and services residential mortgage loans through its mortgage banking segment.

Commercial Banking

The company provides commercial banking services, including deposit accounts, treasury management, and commercial lending, to businesses and organizations.

Consumer Banking

HMN Financial offers a range of consumer banking products and services, including checking and savings accounts, credit cards, and personal loans.

Wealth Management

The company provides wealth management services, including investment and insurance products, to individuals and businesses.

Insurance

HMN Financial offers a range of insurance products, including life insurance, long-term care insurance, and annuities.

8. HMN Financial, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for HMN Financial, Inc. is medium due to the presence of alternative financial institutions and online banking services.

Bargaining Power Of Customers

The bargaining power of customers is low for HMN Financial, Inc. as customers have limited negotiating power due to the company's strong brand presence and limited alternatives.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for HMN Financial, Inc. as the company relies on a few large suppliers for its operations, giving them some negotiating power.

Threat Of New Entrants

The threat of new entrants is high for HMN Financial, Inc. due to the relatively low barriers to entry in the financial services industry and the increasing trend of fintech startups.

Intensity Of Rivalry

The intensity of rivalry is high for HMN Financial, Inc. due to the highly competitive nature of the financial services industry, with many established players and new entrants vying for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	11.07%
Debt Cost	4.77%
Equity Weight	88.93%
Equity Cost	4.77%
WACC	4.77%
Leverage	12.45%

11. Quality Control: HMN Financial, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

EFSC

A-Score: 6.5/10

Value: 6.5

Growth: 7.2

Quality: 6.9

Yield: 4.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Virginia National Bankshares

A-Score: 6.3/10

Value: 6.4

Growth: 5.6

Quality: 7.2

Yield: 7.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

Pacific Premier Bancorp

A-Score: 5.9/10

Value: 5.5

Growth: 3.7

Quality: 7.4

Yield: 8.0

Momentum: 4.0

Volatility: 6.7

1-Year Total Return ->

Mid Penn Bancorp

A-Score: 5.8/10

Value: 6.4

Growth: 3.8

Quality: 6.8

Yield: 6.0

Momentum: 4.0

Volatility: 7.7

1-Year Total Return ->

FNCB

A-Score: 5.1/10

Value: 7.5

Growth: 4.4

Quality: 6.8

Yield: 4.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

HMN Financial

A-Score: 3.9/10

Value: 3.9

Growth: 2.8

Quality: 7.5

Yield: 1.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.54%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.77%

HMN Financial, Inc. - US40424G1085

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on HMNF

1.c. Company Highlights

Lower Growth

Average Quality

Average Yield

Stable Momentum

Strong Momentum

Lower Yield

Average Growth

Expensive

More Volatile

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Home Federal Savings Bank

Expected Growth: 4.5%

Eliminations

Expected Growth: 4.5%

7. Detailed Products

Mortgage Banking

Commercial Banking

Consumer Banking

Wealth Management

Insurance

8. HMN Financial, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: HMN Financial, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.99$

Current Price

27.99$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA