HMN Financial, Inc. Announces Fourth Quarter Results And Annual Meeting

A reconciliation of the allowance for loan losses for the fourth quarters of 2012 and 2011 is summarized as follows:

(Dollars in thousands)		2012			2011
Balance at September 30,		$20,462			$25,690
Provision		0			7,609
Charge offs:
Commercial real estate		0			(6,710	)
Commercial business		(468	)		(4,787	)
Consumer		(150	)		(41	)
One-to-four family		(63	)		(58	)
Recoveries		1,827			2,185
Balance at December 31,		21,608			$23,888
General allowance		$16,795			$17,254
Specific allowance		4,813			6,634
		$21,608			$23,888

The following table summarizes the amounts and categories of non-performing assets in the Bank’s portfolio and loan delinquency information as of the end of the two most recently completed quarters and December 31, 2011.

			December 31,					September 30,					December 31,
(Dollars in thousands)			2012					2012					2011
Non-Performing Loans:
One-to-four family real estate		$	2,492				$	2,992				$	4,435
Commercial real estate			25,543					27,707					22,658
Consumer			300					317					699
Commercial business			1,640					3,566					6,201
Total			29,975					34,582					33,993
Foreclosed and Repossessed Assets:
One-to-four family real estate			1,595					320					352
Commercial real estate			9,000					12,297					16,264
Total non-performing assets		$	40,570				$	47,199				$	50,609
Total as a percentage of total assets			6.21		%			7.33		%			6.40		%
Total non-performing loans		$	29,975				$	34,582				$	33,993
Total as a percentage of total loans receivable, net			6.60		%			7.29		%			6.10		%
Allowance for loan losses to non-performing loans			72.09		%			59.17		%			70.27		%
Delinquency Data:
Delinquencies (1)
30+ days		$	2,739				$	5,077				$	3,226
90+ days			0					0					0
Delinquencies as a percentage of
loan and lease portfolio (1)
30+ days			0.57		%			0.98		%			0.55		%
90+ days			0.00		%			0.00		%			0.00		%
(1) Excludes non-accrual loans.

The following table summarizes the number and types of commercial real estate loans (the largest category of non-performing loans) that were non-performing as of the end of the two most recently completed quarters and December 31, 2011.

					Principal					Principal					Principal
					Amount of					Amount of					Amount of
					Loans at					Loans at					Loans at
(Dollars in thousands)		# of			December 31,		# of			September 30,		# of			December 31,
Property Type		relationships			2012		relationships			2012		relationships			2011
Developments/land		9		$	24,339		12		$	26,415		10		$	17,465
Shopping centers/retail		2			386		2			396		2			1,315
Restaurants/bar		1			547		1			565		1			616
Office buildings		2			128		2			184		1			2,325
Other buildings		1			143		1			147		3			937
		15		$	25,543		18		$	27,707		17		$	22,658

The decrease in the non-performing commercial real estate loans from September 30, 2012 is due primarily to a $1.1 million development loan that was reclassified as accruing during the fourth quarter of 2012 and because additional principal payments were received on various other non-performing commercial real estate loans during the quarter.

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