HMN Financial, Inc. (HMNF) Stock Analysis

Why this analysis is different

• A 9-signal quantitative MoonshotScore built from filings, insider activity, and market data — computed from the numbers, not from opinion.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

HMN Financial, Inc. (HMNF) Financial Services Profile

HMN Financial, Inc., through Home Federal Savings Bank, delivers retail banking services in the Midwest, offering deposit accounts and diverse loan products. With a market capitalization of $125M and a P/E ratio of 20.28, the company emphasizes community banking with 14 branches and a dividend yield of 1.29%.

What Is the Investment Thesis for HMNF?

HMN Financial, Inc. presents an investment opportunity within the regional banking sector, characterized by its community-focused approach and diverse range of financial products. With a market capitalization of $125M and a P/E ratio of 20.28, the company demonstrates stable profitability, supported by a 13.8% profit margin. Key value drivers include the company's ability to maintain a strong net interest margin and effectively manage its loan portfolio. Growth catalysts include expanding its loan origination activities and leveraging its branch network to increase deposit volumes. Potential risks involve sensitivity to interest rate fluctuations and competition from larger regional and national banks. The company's dividend yield of 1.29% offers a modest income stream for investors.

Based on FMP financials and quantitative analysis

HMNF Key Highlights

• Market capitalization of $125M indicates a smaller but established regional bank.
• P/E ratio of 20.28 suggests the company is reasonably valued compared to its earnings.
• Profit margin of 13.8% demonstrates the company's ability to generate profit from its operations.
• Gross margin of 100.0% reflects the nature of the banking industry, where revenue is primarily derived from interest and fees.
• Dividend yield of 1.29% provides a modest income stream for investors.

Who Are HMNF's Competitors?

HMNF is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are HMNF's Key Strengths?

• Established presence in local markets.
• Strong customer relationships.
• Diverse range of banking products and services.
• Conservative lending practices.

What Are HMNF's Weaknesses?

• Limited geographic reach compared to larger banks.
• Reliance on traditional banking services.
• Potential sensitivity to interest rate fluctuations.
• Smaller market capitalization limits access to capital.

What Could Drive HMNF Stock Higher?

• Expansion of loan origination activities to increase interest income.
• Implementation of technology upgrades to improve customer experience and operational efficiency.
• Efforts to increase deposit volumes through targeted marketing campaigns.
• Potential acquisitions of smaller banks to expand geographic footprint.

What Are the Key Risks for HMNF?

• Financial-distress signal — its Altman Z-Score of 0.31 sits in the distress zone (elevated bankruptcy risk).
• Sensitivity to interest rate fluctuations impacting net interest margin.
• Competition from larger national banks and credit unions.
• Economic downturn leading to increased loan defaults.
• Cybersecurity threats and data breaches.
• Regulatory compliance costs and changes in banking regulations.

What Are the Growth Opportunities for HMNF?

• Expansion of Loan Origination Activities: HMN Financial can drive growth by expanding its loan origination activities, particularly in commercial real estate and multi-family mortgage loans. The market for commercial real estate lending is projected to grow as businesses invest in new facilities and expansions. By leveraging its expertise and local market knowledge, HMN Financial can capture a larger share of this market, increasing its loan portfolio and generating higher interest income. The timeline for this growth is ongoing, with continuous efforts to build relationships with local businesses and developers.
• Increased Deposit Volumes: HMN Financial can focus on increasing deposit volumes through targeted marketing campaigns and enhanced customer service initiatives. The market for deposit accounts is competitive, but HMN Financial can differentiate itself by offering competitive interest rates and personalized banking services. By attracting new customers and retaining existing ones, the company can increase its deposit base, providing a stable source of funding for its lending activities. This strategy can be implemented over the next 1-2 years, with ongoing monitoring of deposit growth and customer satisfaction.
• Strategic Investments in Technology: HMN Financial can invest in technology to improve its operational efficiency and enhance the customer experience. This includes implementing online and mobile banking platforms, as well as investing in data analytics to better understand customer needs and preferences. By leveraging technology, HMN Financial can attract younger customers and compete more effectively with larger banks that have already made significant investments in this area. This investment can be phased in over the next 3-5 years, starting with the implementation of basic online banking features and gradually expanding to more advanced capabilities.
• Geographic Expansion: HMN Financial can explore opportunities for geographic expansion into adjacent markets. This could involve opening new branches or acquiring existing banks in areas with strong economic growth and favorable demographics. By expanding its geographic footprint, HMN Financial can diversify its revenue streams and reduce its reliance on its existing markets. This expansion could be considered over the next 5-7 years, with careful evaluation of potential markets and acquisition targets.
• Financial Planning Services: HMN Financial can grow its financial planning services. The market for financial planning is growing as individuals seek advice on retirement planning, investment management, and estate planning. By offering comprehensive financial planning services, HMN Financial can attract new customers and generate additional fee income. This service can be expanded over the next 2-3 years, with the hiring of qualified financial advisors and the development of tailored financial planning products.

What Opportunities Does HMNF Have?

• Expansion into adjacent markets.
• Increased adoption of online and mobile banking.
• Growth in demand for financial planning services.
• Strategic acquisitions of smaller banks.

What Threats Does HMNF Face?

• Competition from larger national banks.
• Increasing regulatory burden.
• Economic downturn impacting loan quality.
• Cybersecurity risks.

What Are HMNF's Competitive Advantages?

• Established presence in local markets provides a competitive advantage.
• Strong customer relationships built over decades of service.
• Knowledge of local market conditions and customer needs.
• Conservative lending practices mitigate risk and ensure stability.

What Does HMNF Do?

Founded in 1934 and headquartered in Rochester, Minnesota, HMN Financial, Inc. operates as the bank holding company for Home Federal Savings Bank. The bank provides a range of retail banking products and services tailored to individuals and businesses within its operating footprint. These offerings include various deposit accounts such as savings, interest-bearing and non-interest-bearing checking, money market accounts, and certificates of deposit. On the lending side, HMN Financial provides single-family residential loans, commercial real estate and multi-family mortgage loans, construction loans, and a variety of consumer loans including home equity, auto, recreational vehicle, mobile home, and lot loans. They also offer loans secured by deposit accounts and commercial business loans. In addition to traditional banking services, HMN Financial offers financial planning products and services. The company strategically invests in mortgage-backed and related securities, U.S. government agency obligations, and other permissible investments to manage its asset portfolio and generate income. HMN Financial operates 14 full-service branches located across Minnesota, Wisconsin, and Iowa, along with two loan origination offices in Sartell, Minnesota, and La Crosse, Wisconsin. This regional focus allows the company to maintain close relationships with its customers and adapt to the specific needs of the communities it serves. The company's profit margin is 13.8% and gross margin is 100.0%.

What Products and Services Does HMNF Offer?

• Provides savings accounts to individuals and businesses.
• Offers interest-bearing and non-interest-bearing checking accounts.
• Provides money market accounts for higher interest earning potential.
• Offers certificates of deposit (CDs) with fixed interest rates.
• Originates single-family residential loans for homebuyers.
• Provides commercial real estate and multi-family mortgage loans.
• Offers construction loans for building projects.
• Provides consumer loans for various purposes like auto, RV, and home equity.

How Does HMNF Make Money?

• Generates revenue through interest income from loans.
• Earns fees from various banking services, such as account maintenance and transaction fees.
• Invests in securities, such as mortgage-backed securities and government obligations, to generate investment income.
• Manages risk by diversifying its loan portfolio and adhering to regulatory requirements.

What Industry Does HMNF Operate In?

HMN Financial operates within the regional banking sector, which is characterized by intense competition and evolving regulatory landscapes. The industry is influenced by factors such as interest rate movements, economic growth, and technological advancements. Regional banks like HMN Financial face competition from larger national banks, credit unions, and online lenders. The market is seeing a trend towards consolidation, with smaller banks merging to achieve economies of scale and enhance their competitive position. HMN Financial's focus on community banking and its presence in specific geographic markets differentiate it within this competitive environment.

Who Are HMNF's Key Customers?

• Individuals seeking personal banking services.
• Small businesses requiring commercial loans and deposit accounts.
• Real estate developers seeking financing for construction projects.
• Consumers needing loans for vehicles, homes, and other purposes.

ROE 6%Key Financial Metrics

Return on equity for HMN Financial, Inc. stands at 5.9%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 0.5%, showing how much profit it generates from its asset base. HMNF trades at a trailing price-to-earnings ratio of 20.28, above the Financial Services sector average of ~18x. Its free cash flow yield is 5.6%, a gauge of the cash the business throws off relative to its market value. A current ratio of 0.06 means current liabilities exceed short-term assets, a liquidity point worth watching. Its earnings yield is 4.9%, the inverse of the P/E and a quick read on earnings relative to price.

How HMN Financial, Inc. Is Valued

HMN Financial, Inc. carries a market capitalization of $125M, placing it in the micro-cap category. Relative to its peer group, HMNF's quantitative score of 49/100 is roughly in line with the peer average of 48/100.

F-Score 6/9Financial Health

HMN Financial, Inc.'s Piotroski F-Score is 6/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 0.31 places it in the distress zone, a signal of elevated financial risk.

HMNF Financials

HMNF Latest News

HMNF Analyst Consensus

HMNF MoonshotScore

HMN Financial, Inc. Financial Services Stock: Key Questions Answered

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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