##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission file number: 0-24100.
 HMN FINANCIAL, INC.
  Delaware
    
    41-1777397(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)1016 Civic Center Drive Northwest, PO Box 6057
    
    55901Rochester, Minnesota
    
    (Zip Code)(Address of Principal Executive Offices)
 (507) 535-1200
    o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    4General
    
    
    4Market Area
    
    
    4Lending Activities
    
    
    5Origination, Purchases and Sales of Mortgage-Backed and Related Securities
    
    
    12Classified Assets and Delinquencies
    
    
    14Investment Activities
    
    
    15Sources of Funds
    
    
    19Service Corporations of the Bank
    
    
    22Competition
    
    
    22Other Corporations Owned by HMN
    
    
    23Employees
    
    
    23Regulation and Supervision
    
    
    23Executive Officers
    
    
    28Item 1A. Risk Factors
    
    
    29Item 1B. Unresolved Staff Comments
    
    
    35Item 2. Properties
    
    
    35Item 3. Legal Proceedings
    
    
    35Item 4. Submission of Matters to a Vote of Security Holders
    
    
    36PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    36Item 6. Selected Financial Data
    
    
    37Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    37Item 7A. Quantitative and Qualitative Disclosure About Market Risk
    
    
    38Item 8. Financial Statements and Supplementary Data
    
    
    38Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    38Item 9A. Controls and Procedures
    
    
    38Item 9B. Other Information
    
    
    40PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    40Item 11. Executive Compensation
    
    
    40Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    40Item 13. Certain Relationships and Related Transactions
    
    
    40Item 14. Principal Accountant Fees and Services
    
    
    41PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    42Signatures
    
    
    43Index to Exhibits
    
    
    44EX-13EX-21EX-23EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



Forward-Looking Statements
  3




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##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 
 General
   
 Market Area
      4




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##### Table of Contents



Lending Activities
 General.
 5




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##### Table of Contents



2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Dollars in thousands)
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentFixed rate LoansReal estate:One-to-four family:GEM
    
    $
    8,962
    
    
    
    0.97
    %
    
    $
    11,854
    
    
    
    1.34
    %
    
    $
    13,335
    
    
    
    1.70
    %
    
    $
    14,812
    
    
    
    1.84
    %
    
    $
    16,133
    
    
    
    2.01
    %Other
    
    
    79,728
    
    
    
    8.62
    
    
    
    80,663
    
    
    
    9.14
    
    
    
    62,184
    
    
    
    7.92
    
    
    
    55,700
    
    
    
    6.94
    
    
    
    59,937
    
    
    
    7.48Total one-to-four family
    
    
    88,690
    
    
    
    9.59
    
    
    
    92,517
    
    
    
    10.48
    
    
    
    75,519
    
    
    
    9.62
    
    
    
    70,512
    
    
    
    8.78
    
    
    
    76,070
    
    
    
    9.49Multi-family
    
    
    4,703
    
    
    
    0.50
    
    
    
    5,952
    
    
    
    0.68
    
    
    
    6,238
    
    
    
    0.80
    
    
    
    6,007
    
    
    
    0.75
    
    
    
    6,444
    
    
    
    0.80Commercial
    
    
    91,835
    
    
    
    9.93
    
    
    
    69,276
    
    
    
    7.84
    
    
    
    100,562
    
    
    
    12.80
    
    
    
    89,905
    
    
    
    11.19
    
    
    
    51,390
    
    
    
    6.41Construction or development
    
    
    29,344
    
    
    
    3.17
    
    
    
    16,519
    
    
    
    1.87
    
    
    
    6,640
    
    
    
    0.84
    
    
    
    12,919
    
    
    
    1.61
    
    
    
    27,557
    
    
    
    3.44Total real estate loans
    
    
    214,572
    
    
    
    23.19
    
    
    
    184,264
    
    
    
    20.87
    
    
    
    188,959
    
    
    
    24.06
    
    
    
    179,343
    
    
    
    22.33
    
    
    
    161,461
    
    
    
    20.14Consumer loans:Savings
    
    
    277
    
    
    
    0.03
    
    
    
    358
    
    
    
    0.04
    
    
    
    814
    
    
    
    0.10
    
    
    
    605
    
    
    
    0.07
    
    
    
    454
    
    
    
    0.06Automobile
    
    
    1,333
    
    
    
    0.15
    
    
    
    1,730
    
    
    
    0.20
    
    
    
    3,093
    
    
    
    0.39
    
    
    
    5,462
    
    
    
    0.68
    
    
    
    9,496
    
    
    
    1.18Home equity
    
    
    22,961
    
    
    
    2.48
    
    
    
    20,249
    
    
    
    2.29
    
    
    
    21,181
    
    
    
    2.70
    
    
    
    19,289
    
    
    
    2.40
    
    
    
    20,019
    
    
    
    2.50Mobile home
    
    
    1,316
    
    
    
    0.14
    
    
    
    1,699
    
    
    
    0.19
    
    
    
    2,052
    
    
    
    0.26
    
    
    
    2,299
    
    
    
    0.29
    
    
    
    2,896
    
    
    
    0.36Land/Lot loans
    
    
    1,956
    
    
    
    0.21
    
    
    
    2,616
    
    
    
    0.30
    
    
    
    1,426
    
    
    
    0.18
    
    
    
    1,234
    
    
    
    0.15
    
    
    
    818
    
    
    
    0.10Other
    
    
    3,087
    
    
    
    0.33
    
    
    
    2,007
    
    
    
    0.23
    
    
    
    2,192
    
    
    
    0.28
    
    
    
    2,569
    
    
    
    0.32
    
    
    
    3,134
    
    
    
    0.39Total consumer loans
    
    
    30,930
    
    
    
    3.34
    
    
    
    28,659
    
    
    
    3.25
    
    
    
    30,758
    
    
    
    3.91
    
    
    
    31,458
    
    
    
    3.91
    
    
    
    36,817
    
    
    
    4.59Commercial business loans
    
    
    90,458
    
    
    
    9.78
    
    
    
    90,688
    
    
    
    10.27
    
    
    
    65,347
    
    
    
    8.32
    
    
    
    49,297
    
    
    
    6.14
    
    
    
    69,671
    
    
    
    8.69Total non-real estate loans
    
    
    121,388
    
    
    
    13.12
    
    
    
    119,347
    
    
    
    13.52
    
    
    
    96,105
    
    
    
    12.23
    
    
    
    80,755
    
    
    
    10.05
    
    
    
    106,488
    
    
    
    13.28Total fixed rate loans
    
    
    335,960
    
    
    
    36.31
    
    
    
    303,611
    
    
    
    34.39
    
    
    
    285,064
    
    
    
    36.29
    
    
    
    260,098
    
    
    
    32.38
    
    
    
    267,949
    
    
    
    33.42Adjustable rate LoansReal estate:One-to-four family
    
    
    73,299
    
    
    
    7.92
    
    
    
    60,456
    
    
    
    6.85
    
    
    
    58,751
    
    
    
    7.48
    
    
    
    56,563
    
    
    
    7.04
    
    
    
    62,938
    
    
    
    7.85Multi-family
    
    
    24,589
    
    
    
    2.66
    
    
    
    23,120
    
    
    
    2.62
    
    
    
    23,624
    
    
    
    3.01
    
    
    
    34,745
    
    
    
    4.33
    
    
    
    35,478
    
    
    
    4.43Commercial
    
    
    233,469
    
    
    
    25.23
    
    
    
    212,547
    
    
    
    24.08
    
    
    
    193,928
    
    
    
    24.69
    
    
    
    170,363
    
    
    
    21.21
    
    
    
    173,554
    
    
    
    21.65Construction or development
    
    
    78,939
    
    
    
    8.53
    
    
    
    94,516
    
    
    
    10.70
    
    
    
    53,538
    
    
    
    6.82
    
    
    
    67,424
    
    
    
    8.39
    
    
    
    70,841
    
    
    
    8.84Total real estate loans
    
    
    410,296
    
    
    
    44.34
    
    
    
    390,639
    
    
    
    44.25
    
    
    
    329,841
    
    
    
    42.00
    
    
    
    329,095
    
    
    
    40.97
    
    
    
    342,811
    
    
    
    42.77Consumer:Home equity
    
    
    52,194
    
    
    
    5.64
    
    
    
    51,322
    
    
    
    5.81
    
    
    
    54,328
    
    
    
    6.91
    
    
    
    60,853
    
    
    
    7.57
    
    
    
    67,154
    
    
    
    8.38Land/Lot loans
    
    
    1,013
    
    
    
    0.11
    
    
    
    1,535
    
    
    
    0.17
    
    
    
    4,076
    
    
    
    0.52
    
    
    
    8,197
    
    
    
    1.02
    
    
    
    10,754
    
    
    
    1.34Other
    
    
    2,464
    
    
    
    0.27
    
    
    
    3,393
    
    
    
    0.39
    
    
    
    686
    
    
    
    0.09
    
    
    
    390
    
    
    
    0.05
    
    
    
    248
    
    
    
    0.03Total consumer loans
    
    
    55,671
    
    
    
    6.02
    
    
    
    56,250
    
    
    
    6.37
    
    
    
    59,090
    
    
    
    7.52
    
    
    
    69,440
    
    
    
    8.64
    
    
    
    78,156
    
    
    
    9.75Commercial business loans
    
    
    123,317
    
    
    
    13.33
    
    
    
    132,271
    
    
    
    14.99
    
    
    
    111,423
    
    
    
    14.19
    
    
    
    144,665
    
    
    
    18.01
    
    
    
    112,698
    
    
    
    14.06Total non-real estate loans
    
    
    178,988
    
    
    
    19.35
    
    
    
    188,521
    
    
    
    21.36
    
    
    
    170,513
    
    
    
    21.71
    
    
    
    214,105
    
    
    
    26.65
    
    
    
    190,854
    
    
    
    23.81Total adjustable rate loans
    
    
    589,284
    
    
    
    63.69
    
    
    
    579,160
    
    
    
    65.61
    
    
    
    500,354
    
    
    
    63.71
    
    
    
    543,200
    
    
    
    67.62
    
    
    
    533,665
    
    
    
    66.58Total loans
    
    
    925,244
    
    
    
    100.00
    %
    
    
    882,771
    
    
    
    100.00
    %
    
    
    785,418
    
    
    
    100.00
    %
    
    
    803,298
    
    
    
    100.00
    %
    
    
    801,614
    
    
    
    100.00
    %LessLoans in process
    
    
    0
    *
    
    
    
    
    
    
    3,011
    
    
    
    
    
    
    
    5,252
    
    
    
    
    
    
    
    7,008
    
    
    
    
    
    
    
    7,561Unamortized (premiums) discounts
    
    
    569
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    190
    
    
    
    
    
    
    
    63Net deferred loan fees
    
    
    2,529
    
    
    
    
    
    
    
    2,245
    
    
    
    
    
    
    
    2,021
    
    
    
    
    
    
    
    1,644
    
    
    
    
    
    
    
    1,781Allowance for losses on loans
    
    
    21,257
    
    
    
    
    
    
    
    12,438
    
    
    
    
    
    
    
    9,873
    
    
    
    
    
    
    
    8,778
    
    
    
    
    
    
    
    8,996Total loans receivable, net
    
    $
    900,889
    
    
    
    
    
    
    $
    865,088
    
    
    
    
    
    
    $
    768,232
    
    
    
    
    
    
    $
    785,678
    
    
    
    
    
    
    $
    783,213
 
 *
    
    - Core data processing systems converted in 2008, loans in process amounts are reflected in net
loan amounts in table. 6




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##### Table of Contents



Real EstateMulti-family andOne-to-four family
    
    
    Commercial
    
    
    Construction
    
    
    Consumer
    
    
    Commercial Business
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedDue During Years Ending
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageDecember 31,
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate2009(1)
    
    $
    7,473
    
    
    
    6.52
    %
    
    $
    93,628
    
    
    
    4.83
    %
    
    $
    29,628
    
    
    
    4.50
    %
    
    $
    6,776
    
    
    
    8.34
    %
    
    $
    69,838
    
    
    
    5.97
    %
    
    $
    207,343
    
    
    
    5.34
    %2010
    
    
    11,607
    
    
    
    3.13
    
    
    
    38,046
    
    
    
    4.11
    
    
    
    28,588
    
    
    
    5.23
    
    
    
    2,587
    
    
    
    8.41
    
    
    
    34,380
    
    
    
    6.14
    
    
    
    115,208
    
    
    
    4.992011
    
    
    3,448
    
    
    
    6.96
    
    
    
    40,011
    
    
    
    6.59
    
    
    
    7,055
    
    
    
    4.03
    
    
    
    4,450
    
    
    
    7.88
    
    
    
    23,979
    
    
    
    7.29
    
    
    
    78,943
    
    
    
    6.662012 through 2013
    
    
    10,625
    
    
    
    5.87
    
    
    
    71,638
    
    
    
    6.13
    
    
    
    10,534
    
    
    
    5.88
    
    
    
    13,107
    
    
    
    6.65
    
    
    
    37,130
    
    
    
    6.60
    
    
    
    143,034
    
    
    
    6.262014 through 2018
    
    
    17,906
    
    
    
    5.86
    
    
    
    66,186
    
    
    
    6.66
    
    
    
    8,537
    
    
    
    5.28
    
    
    
    8,927
    
    
    
    7.17
    
    
    
    35,039
    
    
    
    6.83
    
    
    
    136,595
    
    
    
    6.552019 through 2033
    
    
    30,840
    
    
    
    5.91
    
    
    
    45,087
    
    
    
    6.23
    
    
    
    21,144
    
    
    
    6.99
    
    
    
    50,563
    
    
    
    6.23
    
    
    
    13,409
    
    
    
    7.05
    
    
    
    161,043
    
    
    
    6.342034 and following
    
    
    80,090
    
    
    
    5.76
    
    
    
    0
    
    
    
    0.00
    
    
    
    2,797
    
    
    
    5.38
    
    
    
    191
    
    
    
    5.79
    
    
    
    0
    
    
    
    0.00
    
    
    
    83,078
    
    
    
    5.75$
    161,989
    
    
    
    
    
    
    $
    354,596
    
    
    
    
    
    
    $
    108,283
    
    
    
    
    
    
    $
    86,601
    
    
    
    
    
    
    $
    213,775
    
    
    
    
    
    
    $
    925,244
 
 (1)
    
    Includes demand loans, loans having no stated maturity and overdraft loans.  7




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##### Table of Contents



One-to-Four Family Residential Real Estate Lending .
 8




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##### Table of Contents



Commercial Real Estate and Multi-Family Lending.
 9




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##### Table of Contents



Construction Lending.
    10




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##### Table of Contents



Consumer Lending.
    11




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##### Table of Contents



Commercial Business Lending.
  
 Originations, Purchases and Sales of Loans and Mortgage-Backed and Related Securities
      12




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##### Table of Contents



LOANS HELD FOR INVESTMENT
 Year Ended December 31,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Originations by type:Adjustable rate:Real estate -- one-to-four family
    
    $
    24,986
    
    
    
    13,969
    
    
    
    13,493- multi-family
    
    
    4,418
    
    
    
    1,661
    
    
    
    0- commercial
    
    
    38,700
    
    
    
    34,452
    
    
    
    76,797- construction or development
    
    
    49,093
    
    
    
    245,126
    
    
    
    159,278Non-real estate -- consumer
    
    
    19,560
    
    
    
    12,546
    
    
    
    11,607- commercial business
    
    
    44,968
    
    
    
    111,946
    
    
    
    94,603Total adjustable rate
    
    
    181,725
    
    
    
    419,700
    
    
    
    355,778Fixed rate:Real estate -- one-to-four family
    
    
    21,023
    
    
    
    7,822
    
    
    
    14,671- multi-family
    
    
    206
    
    
    
    1,612
    
    
    
    0- commercial
    
    
    14,936
    
    
    
    11,454
    
    
    
    31,635- construction or development
    
    
    26,650
    
    
    
    20,359
    
    
    
    5,691Non-real estate -- consumer
    
    
    18,251
    
    
    
    16,679
    
    
    
    23,127- commercial business
    
    
    38,926
    
    
    
    91,728
    
    
    
    54,261Total fixed rate
    
    
    119,992
    
    
    
    149,654
    
    
    
    129,385Total loans originated
    
    
    301,717
    
    
    
    569,354
    
    
    
    485,163Purchases:Real estate -- one-to-four family
    
    
    0
    
    
    
    165
    
    
    
    0- commercial
    
    
    4,505
    
    
    
    7,097
    
    
    
    8,874- construction or development
    
    
    1,596
    
    
    
    26,500
    
    
    
    9,700Non-real estate -- commercial business
    
    
    4,275
    
    
    
    25,911
    
    
    
    8,885Total loans purchased
    
    
    10,376
    
    
    
    59,673
    
    
    
    27,459Sales, Participations and repayments:Real estate -- one-to-four family
    
    
    4,248
    
    
    
    0
    
    
    
    0- commercial
    
    
    21,827
    
    
    
    45,125
    
    
    
    21,588- construction or development
    
    
    7,712
    
    
    
    177,911
    
    
    
    107,649Non-real estate -- consumer
    
    
    440
    
    
    
    1,157
    
    
    
    2,416- commercial business
    
    
    38,559
    
    
    
    14,190
    
    
    
    15,912Total sales
    
    
    72,786
    
    
    
    238,383
    
    
    
    147,565Transfers to loans held for sale
    
    
    7,292
    
    
    
    3,020
    
    
    
    5,994Principal repayments
    
    
    172,350
    
    
    
    285,420
    
    
    
    373,953Total reductions
    
    
    252,428
    
    
    
    526,823
    
    
    
    527,512Decrease in other items, net
    
    
    (17,192
    )
    
    
    (4,851
    )
    
    
    (2,990
    )Net increase (decrease)
    
    $
    42,473
    
    
    
    97,353
    
    
    
    (17,880
    )
 13




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##### Table of Contents



LOANS HELD FOR SALE
 Year Ended December 31,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Originations by type:Adjustable rate:Real estate -- one-to-four family
    
    $
    1,009
    
    
    
    600
    
    
    
    1,400Total adjustable rate
    
    
    1,009
    
    
    
    600
    
    
    
    1,400Fixed rate:Real estate -- one-to-four family
    
    
    48,308
    
    
    
    48,782
    
    
    
    57,277- construction or development
    
    
    0
    
    
    
    2,740
    
    
    
    1,340Total fixed rate
    
    
    48,308
    
    
    
    51,522
    
    
    
    58,617Total loans originated
    
    
    49,317
    
    
    
    52,122
    
    
    
    60,017Sales and repayments:Real estate -- one-to-four family
    
    
    57,359
    
    
    
    53,326
    
    
    
    65,951Total sales
    
    
    57,359
    
    
    
    53,326
    
    
    
    65,951Transfers from loans held for investment
    
    
    (7,292
    )
    
    
    (3,020
    )
    
    
    (5,994
    )Total reductions
    
    
    50,067
    
    
    
    50,306
    
    
    
    59,957Net increase (decrease)
    
    $
    (750
    )
    
    
    1,816
    
    
    
    60
 MORTGAGE-BACKED AND RELATED SECURITIES
 Year Ended December 31,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Purchases:Mortgage-backed securities:FNMA MBSs
    
    $
    59,556
    
    
    
    4,597
    
    
    
    0CMOs and REMICs (1)
    
    
    0
    
    
    
    9,932
    
    
    
    0Total purchases
    
    
    59,556
    
    
    
    14,529
    
    
    
    0Sales:Mortgage-backed securities:Principal repayments
    
    
    (697
    )
    
    
    (2,239
    )
    
    
    (702
    )Net increase (decrease)
    
    $
    58,859
    
    
    
    12,290
    
    
    
    (702
    )
 
 (1)
    
    Collateralized Mortgage Obligations and Real Estate Mortgage Investment
Conduits 
 Classified Assets and Delinquencies
 Classification of Assets .
 14




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##### Table of Contents



ConstructionOne-to-Four
    
    
    or
    
    
    Commercial and
    
    
    
    
    
    
    Commercial(Dollars in thousands)
    
    Family
    
    
    Development
    
    
    Multi-family
    
    
    Consumer
    
    
    Business
    
    
    Other Assets
    
    
    TotalSubstandard
    
    $
    1,256
    
    
    
    11,826
    
    
    
    21,753
    
    
    
    9,057
    
    
    
    3,501
    
    
    
    12,838
    
    
    
    60,231Doubtful
    
    
    6,000
    
    
    
    237
    
    
    
    12,329
    
    
    
    66
    
    
    
    621
    
    
    
    5,876
    
    
    
    25,129Loss
    
    
    472
    
    
    
    0
    
    
    
    808
    
    
    
    650
    
    
    
    549
    
    
    
    25
    
    
    
    2,504Total
    
    $
    7,728
    
    
    
    12,063
    
    
    
    34,890
    
    
    
    9,773
    
    
    
    4,671
    
    
    
    18,739
    
    
    
    87,864
  Delinquency Procedures.
   Loans Delinquent For:
    
    
    Total Delinquent60-89 Days
    
    
    90 Days and Over
    
    
    LoansPercent
    
    
    
    
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    
    
    
    
    Percentof Loan
    
    
    
    
    
    
    
    
    
    
    of Loan
    
    
    
    
    
    
    
    
    
    
    of Loan(Dollars in thousands)
    
    Number
    
    
    Amount
    
    
    Category
    
    
    Number
    
    
    Amount
    
    
    Category
    
    
    Number
    
    
    Amount
    
    
    CategoryOne-to-four family real estate
    
    
    4
    
    
    $
    6,344
    
    
    
    3.92
    %
    
    
    12
    
    
    $
    6,711
    
    
    
    4.14
    %
    
    
    16
    
    
    $
    13,055
    
    
    
    8.06
    %Nonresidential
    
    
    4
    
    
    
    4,697
    
    
    
    1.44
    
    
    
    3
    
    
    
    14,715
    
    
    
    4.52
    
    
    
    7
    
    
    
    19,412
    
    
    
    5.97Construction or development
    
    
    0
    
    
    
    0
    
    
    
    0.00
    
    
    
    3
    
    
    
    5,424
    
    
    
    5.01
    
    
    
    3
    
    
    
    5,424
    
    
    
    5.01Consumer
    
    
    19
    
    
    
    3,336
    
    
    
    3.85
    
    
    
    29
    
    
    
    2,232
    
    
    
    2.58
    
    
    
    48
    
    
    
    5,568
    
    
    
    6.43Commercial business
    
    
    5
    
    
    
    4,112
    
    
    
    1.92
    
    
    
    6
    
    
    
    10,698
    
    
    
    5.00
    
    
    
    11
    
    
    
    14,810
    
    
    
    6.93Total
    
    
    32
    
    
    $
    18,489
    
    
    
    2.00
    %
    
    
    53
    
    
    $
    39,780
    
    
    
    4.30
    %
    
    
    85
    
    
    $
    58,269
    
    
    
    6.30
    %
  
 Investment Activities
  15




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##### Table of Contents



Securities.
  
 16




---



##### Table of Contents



December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Amort
    
    
    Adjusted
    
    
    Market
    
    
    % of
    
    
    Amort
    
    
    Adjusted
    
    
    Market
    
    
    % of
    
    
    Amort
    
    
    Adjusted
    
    
    Market
    
    
    % of(Dollars in thousands)
    
    Cost
    
    
    To
    
    
    Value
    
    
    Total
    
    
    Cost
    
    
    To
    
    
    Value
    
    
    Total
    
    
    Cost
    
    
    To
    
    
    Value
    
    
    TotalSecurities available for sale:U.S. Government agency obligations
    
    $
    94,745
    
    
    
    2,723
    
    
    
    97,468
    
    
    
    84.40
    %
    
    $
    164,730
    
    
    
    2,290
    
    
    
    167,020
    
    
    
    89.97
    %
    
    $
    119,240
    
    
    
    22
    
    
    
    119,262
    
    
    
    74.68
    %Corporate preferred stock (1)
    
    
    700
    
    
    
    (350
    )
    
    
    350
    
    
    
    0.30
    
    
    
    700
    
    
    
    0
    
    
    
    700
    
    
    
    0.38
    
    
    
    700
    
    
    
    0
    
    
    
    700
    
    
    
    0.44Subtotal
    
    
    95,445
    
    
    
    
    
    
    
    97,818
    
    
    
    84.70
    
    
    
    165,430
    
    
    
    
    
    
    
    167,720
    
    
    
    90.35
    
    
    
    119,940
    
    
    
    
    
    
    
    119,962
    
    
    
    75.12Federal Home Loan Bank stock
    
    
    7,286
    
    
    
    
    
    
    
    7,286
    
    
    
    6.30
    
    
    
    6,198
    
    
    
    
    
    
    
    6,198
    
    
    
    3.34
    
    
    
    7,956
    
    
    
    
    
    
    
    7,956
    
    
    
    4.98Total investment securities
and Federal Home Loan Bank stock
    
    
    102,731
    
    
    
    
    
    
    
    105,104
    
    
    
    91.00
    
    
    
    171,628
    
    
    
    
    
    
    
    173,918
    
    
    
    93.69
    
    
    
    127,896
    
    
    
    
    
    
    
    127,918
    
    
    
    80.10Average remaining life of
investment securities excluding
Federal Home Loan Bank stock
    
    0.86 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.16 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.06 yearsOther interest earning assets:Cash equivalents
    
    
    10,440
    
    
    
    
    
    
    
    10,440
    
    
    
    9.00
    
    
    
    11,718
    
    
    
    
    
    
    
    11,718
    
    
    
    6.31
    
    
    
    31,776
    
    
    
    
    
    
    
    31,776
    
    
    
    19.90Total
    
    $
    113,171
    
    
    
    
    
    
    
    115,544
    
    
    
    100.00
    %
    
    $
    183,346
    
    
    
    
    
    
    
    185,636
    
    
    
    100.00
    %
    
    $
    159,672
    
    
    
    
    
    
    
    159,694
    
    
    
    100.00
    %Average remaining life or term to
repricing of investment securities and
other interest earning assets, excluding
Federal Home Loan Bank stock
    
    0.77 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.08 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8 years
 
 (1)
    
    Average life assigned to corporate preferred stock holdings is five years. 17




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##### Table of Contents



December 31, 2008After 1
    
    
    After 51 Year
    
    
    through 5
    
    
    through 10
    
    
    Over 10
    
    
    No Statedor Less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Maturity
    
    
    Total SecuritiesAmortized
    
    
    Amortized
    
    
    Amortized
    
    
    Amortized
    
    
    Amortized
    
    
    Amortized
    
    
    Adjusted
    
    
    Market(Dollars in thousands)
    
    Cost
    
    
    Cost
    
    
    Cost
    
    
    Cost
    
    
    Cost
    
    
    Cost
    
    
    To
    
    
    ValueSecurities available for sale:U.S. government agency securities
    
    $
    69,881
    
    
    
    24,864
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    94,745
    
    
    
    2,723
    
    
    
    97,468Corporate preferred stock
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    700
    
    
    
    0
    
    
    
    700
    
    
    
    (350
    )
    
    
    350Total
    
    $
    69,881
    
    
    
    24,864
    
    
    
    0
    
    
    
    700
    
    
    
    0
    
    
    
    95,445
    
    
    
    2,373
    
    
    
    97,818Weighted average yield (1)
    
    
    3.83
    %
    
    
    5.25
    %
    
    
    0.00
    %
    
    
    6.27
    %
    
    
    0.00
    %
    
    
    4.22
    %
 
 (1)
    
    Yields are computed on a tax equivalent basis. Mortgage-Backed and Related Securities .
  Dec. 31,20085 Years
    
    
    5 to 10
    
    
    10 to 20
    
    
    Over 20
    
    
    Balance(Dollars in thousands)
    
    or Less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    OutstandingSecurities available for sale:Federal Home Loan Mortgage Corporation
    
    $
    10,934
    
    
    
    21,548
    
    
    
    4,336
    
    
    
    0
    
    
    
    36,818Government National Mortgage Association
    
    
    0
    
    
    
    5
    
    
    
    0
    
    
    
    0
    
    
    
    5Federal National Mortgage Association
    
    
    12,653
    
    
    
    15,267
    
    
    
    0
    
    
    
    0
    
    
    
    27,920Collateralized Mortgage Obligations
    
    
    0
    
    
    
    387
    
    
    
    9,667
    
    
    
    2,530
    
    
    
    12,584Total
    
    $
    23,587
    
    
    
    37,207
    
    
    
    14,003
    
    
    
    2,530
    
    
    
    77,327Weighted average yield
    
    
    4.22
    %
    
    
    4.29
    %
    
    
    4.87
    %
    
    
    4.00
    %
    
    
    4.36
    %
    18




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##### Table of Contents



Sources of Funds
 General.
 Deposits.
   Year Ended December 31,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Opening balance
    
    $
    888,118
    
    
    
    725,959
    
    
    
    731,537Deposits
    
    
    6,623,346
    
    
    
    5,736,881
    
    
    
    4,861,548Withdrawals
    
    
    (6,660,954
    )
    
    
    (5,599,222
    )
    
    
    (4,889,449
    )Interest credited
    
    
    29,995
    
    
    
    24,500
    
    
    
    22,323Ending balance
    
    
    880,505
    
    
    
    888,118
    
    
    
    725,959Net increase (decrease)
    
    $
    (7,613
    )
    
    
    162,159
    
    
    
    (5,578
    )Percent increase (decrease)
    
    
    (0.86
    )%
    
    
    22.34
    %
    
    
    (0.76
    )%
 19




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(Dollars in thousands)
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of TotalTransaction and Savings Deposits(1):Non-interest checking
    
    $
    66,905
    
    
    
    7.60
    %
    
    $
    54,998
    
    
    
    6.19
    %
    
    $
    68,990
    
    
    
    9.50
    %NOW Accounts  0.19%(2)
    
    
    126,547
    
    
    
    14.40
    
    
    
    118,652
    
    
    
    13.36
    
    
    
    87,074
    
    
    
    12.00Passbook Accounts 0.11%(3)
    
    
    28,023
    
    
    
    3.20
    
    
    
    39,671
    
    
    
    4.47
    
    
    
    40,445
    
    
    
    5.57Money Market Accounts  1.59%(4)
    
    
    97,416
    
    
    
    11.00
    
    
    
    182,413
    
    
    
    20.54
    
    
    
    178,694
    
    
    
    24.61Total Non-Certificates
    
    $
    318,891
    
    
    
    36.20
    %
    
    $
    395,734
    
    
    
    44.56
    %
    
    $
    375,203
    
    
    
    51.68
    %Certificates:0.00 - 0.99%
    
    $
    1,068
    
    
    
    0.10
    %
    
    $
    555
    
    
    
    0.06
    %
    
    $
    532
    
    
    
    0.08
    %1.00 - 1.99%
    
    
    8,193
    
    
    
    1.00
    
    
    
    2
    
    
    
    0.00
    
    
    
    157
    
    
    
    0.022.00 - 2.99%
    
    
    81,483
    
    
    
    9.30
    
    
    
    6,168
    
    
    
    0.69
    
    
    
    25,700
    
    
    
    3.543.00 - 3.99%
    
    
    344,735
    
    
    
    39.00
    
    
    
    38,388
    
    
    
    4.32
    
    
    
    126,409
    
    
    
    17.414.00 - 4.99%
    
    
    114,155
    
    
    
    13.00
    
    
    
    203,720
    
    
    
    22.95
    
    
    
    119,376
    
    
    
    16.455.00 - 5.99%
    
    
    11,980
    
    
    
    1.40
    
    
    
    243,551
    
    
    
    27.42
    
    
    
    78,582
    
    
    
    10.82Total Certificates
    
    
    561,614
    
    
    
    63.80
    
    
    
    492,384
    
    
    
    55.44
    
    
    
    350,756
    
    
    
    48.32Total Deposits
    
    $
    880,505
    
    
    
    100.00
    %
    
    $
    888,118
    
    
    
    100.00
    %
    
    $
    725,959
    
    
    
    100.00
    %
 
 (1)
    
    Reflects weighted average rates paid on transaction and savings deposits at December 31,
2008.(2)
    
    The weighted average rate on NOW Accounts for 2007 was 1.88% and 2006 was 2.54%.(3)
    
    The weighted average rate on Passbook Accounts for 2007 was 1.40% and 2006 was 1.37%.(4)
    
    The weighted average rate on Money Market Accounts for 2007 was 3.34% and 2006 was 3.31%. 20




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##### Table of Contents



0.00-
    
    
    1.00-
    
    
    2.00-
    
    
    3.00-
    
    
    4.00-
    
    
    5.00-
    
    
    
    
    
    
    Percent(Dollars in thousands)
    
    0.99%
    
    
    1.99%
    
    
    2.99%
    
    
    3.99%
    
    
    4.99%
    
    
    5.99%
    
    
    Total
    
    
    of TotalCertificate accounts maturing in
quarter ending:March 31, 2009
    
    $
    683
    
    
    
    2,035
    
    
    
    13,761
    
    
    
    31,414
    
    
    
    49,234
    
    
    
    1,378
    
    
    
    98,505
    
    
    
    17.54
    %June 30, 2009
    
    
    44
    
    
    
    4,236
    
    
    
    27,557
    
    
    
    58,114
    
    
    
    4,337
    
    
    
    5,719
    
    
    
    100,007
    
    
    
    17.81September 30, 2009
    
    
    41
    
    
    
    31
    
    
    
    19,125
    
    
    
    112,889
    
    
    
    7,781
    
    
    
    474
    
    
    
    140,341
    
    
    
    24.99December 31, 2009
    
    
    44
    
    
    
    1,665
    
    
    
    10,204
    
    
    
    30,821
    
    
    
    5,107
    
    
    
    510
    
    
    
    48,351
    
    
    
    8.61March 31, 2010
    
    
    28
    
    
    
    158
    
    
    
    3,757
    
    
    
    15,836
    
    
    
    20,539
    
    
    
    25
    
    
    
    40,343
    
    
    
    7.18June 30, 2010
    
    
    9
    
    
    
    21
    
    
    
    620
    
    
    
    37,068
    
    
    
    1,384
    
    
    
    109
    
    
    
    39,211
    
    
    
    6.98September 30, 2010
    
    
    10
    
    
    
    0
    
    
    
    2,378
    
    
    
    18,500
    
    
    
    19,094
    
    
    
    3,487
    
    
    
    43,469
    
    
    
    7.74December 31, 2010
    
    
    33
    
    
    
    43
    
    
    
    889
    
    
    
    15,951
    
    
    
    2,171
    
    
    
    0
    
    
    
    19,087
    
    
    
    3.40March 31, 2011
    
    
    15
    
    
    
    0
    
    
    
    816
    
    
    
    14,850
    
    
    
    67
    
    
    
    110
    
    
    
    15,858
    
    
    
    2.82June 30, 2011
    
    
    9
    
    
    
    3
    
    
    
    609
    
    
    
    4,776
    
    
    
    550
    
    
    
    0
    
    
    
    5,947
    
    
    
    1.06September 30, 2011
    
    
    4
    
    
    
    0
    
    
    
    390
    
    
    
    1,841
    
    
    
    1,259
    
    
    
    168
    
    
    
    3,662
    
    
    
    0.65December 31, 2011
    
    
    12
    
    
    
    1
    
    
    
    624
    
    
    
    183
    
    
    
    558
    
    
    
    0
    
    
    
    1,378
    
    
    
    0.25Thereafter
    
    
    136
    
    
    
    0
    
    
    
    753
    
    
    
    2,492
    
    
    
    2,074
    
    
    
    0
    
    
    
    5,455
    
    
    
    0.97Total
    
    $
    1,068
    
    
    
    8,193
    
    
    
    81,483
    
    
    
    344,735
    
    
    
    114,155
    
    
    
    11,980
    
    
    
    561,614
    
    
    
    100.00
    %Percent of total
    
    
    0.19
    %
    
    
    1.46
    %
    
    
    14.51
    %
    
    
    61.38
    %
    
    
    20.33
    %
    
    
    2.13
    %
    
    
    100.00
    %
 21




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##### Table of Contents



MaturityOver
    
    
    Over
    
    
    Over3 Months
    
    
    3 to 6
    
    
    6 to 12
    
    
    12(Dollars in thousands)
    
    or Less
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    TotalCertificates of deposit less than $100,000
    
    $
    90,771
    
    
    
    86,368
    
    
    
    156,590
    
    
    
    156,262
    
    
    
    489,991Certificates of deposit of $100,000 or more
    
    
    6,138
    
    
    
    13,478
    
    
    
    31,267
    
    
    
    17,965
    
    
    
    68,848Public funds less than $100,000(1)
    
    
    88
    
    
    
    61
    
    
    
    224
    
    
    
    4
    
    
    
    377Public funds of $100,000 or more(1)
    
    
    1,507
    
    
    
    100
    
    
    
    654
    
    
    
    137
    
    
    
    2,398Total certificates of deposit
    
    $
    98,504
    
    
    
    100,007
    
    
    
    188,735
    
    
    
    174,368
    
    
    
    561,614Passbook of $100,000 or more
    
    $
    183,737
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    183,737Accounts of $100,000 or more
    
    $
    191,382
    
    
    
    13,578
    
    
    
    31,921
    
    
    
    18,102
    
    
    
    254,983
 
 (1)
    
    Deposits from governmental and other public entities.  Borrowings.
 
 Service Corporations of the Bank
   
 22




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##### Table of Contents



Competition
   
 Other Corporations Owned by the Company
  
 Employees
  
 Regulation and Supervision
  Holding Company Regulation
   23




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##### Table of Contents



Acquisitions by Savings and Loan Holding Companies.
 Examination and Reporting.
 Affiliate Transactions.
 Capital Adequacy.
 Bank Regulation
   Qualified Thrift Lender Test.
 OTS Assessments.
 Transactions with Affiliates and Insiders.
 24




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##### Table of Contents



Dividend Restrictions.
 Deposit Insurance
   FDIC Temporary Liquidity Guarantee Program
      25




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##### Table of Contents



Capital Requirements
   Core or Tier 1 Capital to
    
    Tangible
    
    Core or Tier 1
    
    Total Capital toAdjusted
    
    Capital to
    
    Capital to Risk-
    
    Risk-WeightedTotal Assets
    
    Assets
    
    Weighted Assets
    
    AssetsRegulatory Minimum
    
    
    3.00

%(1)
    
    
    1.50
    %
    
    
    4.00
    %
    
    
    8.00
    %The Banks Actual
    
    
    9.23
    %
    
    
    9.23
    %
    
    
    11.63
    %
    
    
    12.67
    %
 
 (1)
    
    Savings associations are required to maintain a leverage ratio of 4.00% or more to be considered
adequately capitalized. Capital Categories and Prompt Corrective Action
  Other Regulations and Examination Authority
   26




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##### Table of Contents



Federal Home Loan Bank (FHLB) System
   Federal Reserve Regulation
   Community Reinvestment Act
  Bank Secrecy Act
  27




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##### Table of Contents



Troubled Asset Relief Program  Capital Purchase Program
  
 EXECUTIVE OFFICERS
  Bradley C. Krehbiel , age 50.
 Jon J. Eberle , age 43.
 Dwain C. Jorgensen , age 60.
 Susan K. Kolling , age 57.
  28




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##### Table of Contents



Available Information
  
 ITEM 1A. RISK FACTORS
  Our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio.
    29




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##### Table of Contents



Changes in interest rates could negatively impact the Companys results of operations.
    The Company has increased its commercial real estate loan originations, increasing the risk in its
loan portfolio.
  30




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##### Table of Contents



Changes in interest rates or prepayment speeds could negatively impact the value of capitalized
mortgage servicing rights.
  Declines in home values could decrease our loan originations and increase delinquencies and
defaults.
  Regional economic changes in the Companys markets could adversely impact results from operations.
  New or revised tax, accounting and other laws, regulations, rules and standards could significantly
impact strategic initiatives, results of operations and financial condition.
  31




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##### Table of Contents



Our participation in the Capital Purchase Program (CPP) under the Troubled Asset Relief Program
(TARP) imposes restrictions on us affecting our capital stock and our compensation practices that
may be adverse, and greater restriction is possible in the future.
   32




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##### Table of Contents



There is no assurance we will be able to employ the CPP funds profitably.
  The extended disruption of vital infrastructure could negatively impact the Companys results of
operations and financial condition.
  Strong competition within the Companys market area may limit profitability.
  33




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##### Table of Contents



Loss of large checking and money market deposit customers could increase cost of funds and have a
negative effect on results of operations.
  Because of the limited size of the Company, losses on a few large loans or lending relationships
can cause significant volatility in earnings.
  We are subject to the Community Reinvestment Act and fair lending laws, and failure to comply with
these laws could lead to material penalties.
  The USA Patriot Act and Bank Secrecy Act may subject us to large fines for non-compliance.
  34




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##### Table of Contents



The Company may not be able to meet its cash flow needs on a timely basis at a reasonable cost, and
its cost of funds for banking operations may significantly increase as a result of general economic
conditions, interest rates and competitive pressures.
     
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
 st th
 
 ITEM 3. LEGAL PROCEEDINGS
  35




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
   36




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##### Table of Contents



STOCKHOLDER RETURN PERFORMANCE PRESENTATION
  
 Period EndingIndex
    
    12/31/03
    
    12/31/04
    
    12/31/05
    
    12/31/06
    
    12/31/07
    
    12/31/08HMN Financial, Inc.
    
    
    100.00
    
    
    
    140.01
    
    
    
    128.93
    
    
    
    155.28
    
    
    
    114.17
    
    
    
    20.24NASDAQ Composite
    
    
    100.00
    
    
    
    108.59
    
    
    
    110.08
    
    
    
    120.56
    
    
    
    132.39
    
    
    
    78.72SNL Bank NASDAQ
    
    
    100.00
    
    
    
    114.61
    
    
    
    111.12
    
    
    
    124.75
    
    
    
    97.94
    
    
    
    71.13
 
 ITEM 6. SELECTED FINANCIAL DATA
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  37




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures.
 Managements Annual Report on Internal Control over Financial Reporting.
    38




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    Internal
Control  Integrated Framework
  
 39




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##### Table of Contents



Changes in internal controls.
 
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  40




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  41




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 1. Financial Statements
  Pages inAnnual Report Section
    
    2008 Annual ReportConsolidated Balance Sheets 

December 31, 2008 and 2007
    
    
    24Consolidated Statements of Income 

Each of the Years in the Three-Year Period Ended December 31, 2008
    
    
    25Consolidated Statements of Stockholders Equity and Comprehensive Income 

Each of the Years in the Three-Year Period Ended December 31, 2008
    
    
    26Consolidated Statements of Cash Flows 

Each of the Years in the Three-Year Period Ended December 31, 2008
    
    
    27Notes to Consolidated Financial Statements
    
    
    28Report of Independent Registered Public Accounting Firm
    
    
    48
 2. Financial Statement Schedules
  3. Exhibits
  42




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##### Table of Contents



SIGNATURES
  HMN FINANCIAL, INC.Date:      March 4, 2009
    By:

/s/ Bradley C. KrehbielBradley C. Krehbiel,Home Federal Savings Bank President  Name
    
    Title/s/ Bradley C. Krehbiel

     Bradley C. Krehbiel
    
    President, Home Federal Savings Bank
(Principal Executive Officer)/s/ Jon J. Eberle

     Jon J. Eberle
    
    Senior Vice President,Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)/s/ Timothy R. Geisler
    
    Chairman of the BoardTimothy R. Geisler/s/ Allan R. DeBoer
    
    DirectorAllan R. DeBoer/s/ Duane D. Benson
    
    DirectorDuane D. Benson/s/ Michael J. Fogarty
    
    DirectorMichael J. Fogarty/s/ Karen L. Himle
    
    DirectorKaren L. Himle/s/ Susan K. Kolling
    
    DirectorSusan K. Kolling/s/ Malcolm W. McDonald
    
    DirectorMalcolm W. McDonald/s/ Mahlon C. Schneider
    
    DirectorMahlon C. Schneider
 43




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Exhibit
    

Filing Status3.1
    
    Amended and Restated Certificate of Incorporation
    
    Incorporated by Reference (1)3.2
    
    Amended and Restated By-laws
    
    Incorporated by Reference (2)4.1
    
    Form of Common Stock Certificate
    
    Incorporated by Reference (3)4.2
    
    Certificate of Designations of Fixed Rate Cumulative Perpetual
Preferred Stock, Series A
    
    Incorporated by Reference (4)4.3
    
    Warrant to Purchase Common Stock, dated December 23, 2008
    
    Incorporated by Reference (5)10.1
    
    Employment Agreement with Michael McNeil dated as of May 27, 2008
    
    Incorporated by Reference (6)10.2
    
    Form of Change in Control Agreement with executive officers
    
    Incorporated by Reference (7)10.3
    
    Directors Deferred Compensation Plan
    
    Incorporated by Reference (8)10.4
    
    Amended and Restated HMN Financial, Inc. Stock Option and
Incentive Plan dated July 29, 1998
    
    Incorporated by Reference (9)10.5
    
    HMN Financial, Inc. 2001 Omnibus Stock Plan
    
    Incorporated by Reference (10)10.6
    
    Form of Incentive Stock Option Agreement for HMN Financial, Inc.
2001 Omnibus Stock
    
    Incorporated by Reference (11)10.7
    
    Form of Non-Statutory Stock Option Agreement for HMN Financial,
Inc. 2001 Omnibus Stock Plan
    
    Incorporated by Reference (12)10.8
    
    Form of Restricted Stock Agreement for HMN Financial, Inc. 2001
Omnibus Stock Plan
    
    Incorporated by Reference (13)10.9
    
    HMN Financial, Inc. Employee Stock Ownership Plan (as amended
through February 26, 2008)
    
    Incorporated by Reference (14)10.10
    
    Letter Agreement, dated December 23, 2008, including Securities
Purchase AgreementStandard Terms incorporated therein by
reference, between HMN Financial, Inc. and the United States
Department of the Treasury
    
    Incorporated by Reference (15)10.11
    
    Form of Agreement with Senior Executive Officer to Amend Certain
Benefit Plans of the Company
    
    Incorporated by Reference (16)10.12
    
    Form of Waiver by Senior Executive Officers
    
    Incorporated by Reference (17)13
    
    Portions of Annual Report to Security Holders incorporated by
reference
    
    Filed Electronically14
    
    Code of Business Conduct and Ethics
    
    Incorporated by Reference (18)21
    
    Subsidiaries of Registrant
    
    Filed Electronically23
    
    Consent of KPMG LLP
    
    Filed Electronically24
    
    Powers of Attorney
    
    Included with Signatures31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
    
    Filed Electronically31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
    
    Filed Electronically32
    
    Section 1350 Certifications
    
    Filed Electronically
 44




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##### Table of Contents




    
    Management contract or compensatory arrangement1
    
    Incorporated by reference to Exhibit 3(a) to the Companys Quarterly Report on Form 10-Q for
the period ended March 31, 1998 (File No. 0-24100).2
    
    Incorporated by reference to Exhibit 3.2 to the Companys Current Report on Form 10-Q, as
amended, for the period ended September 30, 2008 (File No. 0-24100).3
    
    Incorporated by reference to the same numbered exhibit to the Companys Registration
Statement on Form S-1 dated April 1, 1994 (File No. 33-77212).4
    
    Incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K dated
December 19, 2008, filed on December 23, 2008 (File No. 0-24100).5
    
    Incorporated by reference to Exhibit 4.1 to the Companys Current Report on Form 8-K dated
December 19, 2008, filed on December 23, 2008 (File No. 0-24100).6
    
    Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated
May 27, 2008, filed on June 2, 2008 (File No. 0-24100).7
    
    Incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K dated
May 27, 2008, filed on June 2, 2008 (File No. 0-24100).8
    
    Incorporated by reference to the same numbered exhibit to the Companys Annual Report on Form
10-K for the period ended December 31, 1994 (File No. 0-24100).9
    
    Incorporated by reference to Exhibit 10.1(b) to the Companys Quarterly Report on Form 10-Q
for the period ended September 30, 1998 (File No. 0-24100).10
    
    Incorporated by reference to Exhibit B to the Companys Proxy Statement for its Annual
Meeting of Stockholders held on April 24, 2001 (File no. 0-24100).11
    
    Incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for
the period ended September 30, 2004 (File No. 0-24100).12
    
    Incorporated by reference to Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for
the period ended September 30, 2004 (File No. 0-24100).13
    
    Incorporated by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K dated
January 24, 2005, filed on January 28, 2005 (File No. 0-24100).14
    
    Incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the period ended
December 31, 2007 (File No. 0-24100).15
    
    Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated
December 19, 2008, filed on December 23, 2008 (File No. 0-24100).16
    
    Incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K dated
December 19, 2008, filed on December 23, 2008 (File No. 0-24100).17
    
    Incorporated by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K dated
December 19, 2008, filed on December 23, 2008 (File No. 0-24100).18
    
    Incorporated by reference to Exhibit 14 to the Companys Quarterly Report on Form 10-Q for
the period ended September 30, 2005 (File No. 0-24100). 45