##### 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, 2009
 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) 535-1200Registrants Telephone Number, Including Area Code
    o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o   
    Accelerated filer o
    Non-accelerated filer þ
    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. BusinessGeneral
    
    
    4Market Area
    
    
    4Lending Activities
    
    
    5Origination, Purchases and Sales of Mortgage-Backed and Related Securities
    
    
    12Classified Assets and Delinquencies
    
    
    14Investment Activities
    
    
    16Sources of Funds
    
    
    19Other InformationService Corporations of the Bank
    
    
    22Competition
    
    
    22Other Corporations Owned by HMN
    
    
    23Employees
    
    
    23Regulation and Supervision
    
    
    23Executive Officers
    
    
    29Item 1A. Risk Factors
    
    
    30Item 1B. Unresolved Staff Comments
    
    
    36Item 2. Properties
    
    
    36Item 3. Legal Proceedings
    
    
    37Item 4. Reserved
    
    
    37PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    37Item 6. Selected Financial Data
    
    
    38Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    38Item 7A. Quantitative and Qualitative Disclosure About Market Risk
    
    
    39Item 8. Financial Statements and Supplementary Data
    
    
    39Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    39Item 9A. Controls and Procedures
    
    
    39Item 9B. Other Information
    
    
    41PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    41Item 11. Executive Compensation
    
    
    41Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    41Item 13. Certain Relationships and Related Transactions
    
    
    41Item 14. Principal Accountant Fees and Services
    
    
    42PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    43Signatures
    
    
    44Index to Exhibits
    
    
    45EX-13EX-21EX-23EX-31.1EX-31.2EX-32EX-99.1EX-99.2
  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



2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentFixed rate LoansReal estate:One-to-four family:GEM
    
    $
    7,590
    
    
    
    0.92
    %
    
    $
    8,962
    
    
    
    0.97
    %
    
    $
    11,854
    
    
    
    1.34
    %
    
    $
    13,335
    
    
    
    1.70
    %
    
    $
    14,812
    
    
    
    1.84
    %Other
    
    
    70,104
    
    
    
    8.50
    
    
    
    79,728
    
    
    
    8.62
    
    
    
    80,663
    
    
    
    9.14
    
    
    
    62,184
    
    
    
    7.92
    
    
    
    55,700
    
    
    
    6.94Total one-to-four family
    
    
    77,694
    
    
    
    9.42
    
    
    
    88,690
    
    
    
    9.59
    
    
    
    92,517
    
    
    
    10.48
    
    
    
    75,519
    
    
    
    9.62
    
    
    
    70,512
    
    
    
    8.78Multi-family
    
    
    11,455
    
    
    
    1.39
    
    
    
    4,703
    
    
    
    0.50
    
    
    
    5,952
    
    
    
    0.68
    
    
    
    6,238
    
    
    
    0.80
    
    
    
    6,007
    
    
    
    0.75Commercial
    
    
    103,036
    
    
    
    12.49
    
    
    
    91,835
    
    
    
    9.93
    
    
    
    69,276
    
    
    
    7.84
    
    
    
    100,562
    
    
    
    12.80
    
    
    
    89,905
    
    
    
    11.19Construction or development
    
    
    11,148
    
    
    
    1.35
    
    
    
    29,344
    
    
    
    3.17
    
    
    
    16,519
    
    
    
    1.87
    
    
    
    6,640
    
    
    
    0.84
    
    
    
    12,919
    
    
    
    1.61Total real estate loans
    
    
    203,333
    
    
    
    24.65
    
    
    
    214,572
    
    
    
    23.19
    
    
    
    184,264
    
    
    
    20.87
    
    
    
    188,959
    
    
    
    24.06
    
    
    
    179,343
    
    
    
    22.33Consumer loans:Savings
    
    
    324
    
    
    
    0.04
    
    
    
    277
    
    
    
    0.03
    
    
    
    358
    
    
    
    0.04
    
    
    
    814
    
    
    
    0.10
    
    
    
    605
    
    
    
    0.07Automobile
    
    
    902
    
    
    
    0.11
    
    
    
    1,333
    
    
    
    0.15
    
    
    
    1,730
    
    
    
    0.20
    
    
    
    3,093
    
    
    
    0.39
    
    
    
    5,462
    
    
    
    0.68Home equity
    
    
    21,396
    
    
    
    2.59
    
    
    
    22,961
    
    
    
    2.48
    
    
    
    20,249
    
    
    
    2.29
    
    
    
    21,181
    
    
    
    2.70
    
    
    
    19,289
    
    
    
    2.40Mobile home
    
    
    977
    
    
    
    0.12
    
    
    
    1,316
    
    
    
    0.14
    
    
    
    1,699
    
    
    
    0.19
    
    
    
    2,052
    
    
    
    0.26
    
    
    
    2,299
    
    
    
    0.29Land/Lot loans
    
    
    2,554
    
    
    
    0.31
    
    
    
    1,956
    
    
    
    0.21
    
    
    
    2,616
    
    
    
    0.30
    
    
    
    1,426
    
    
    
    0.18
    
    
    
    1,234
    
    
    
    0.15Other
    
    
    4,777
    
    
    
    0.58
    
    
    
    3,087
    
    
    
    0.33
    
    
    
    2,007
    
    
    
    0.23
    
    
    
    2,192
    
    
    
    0.28
    
    
    
    2,569
    
    
    
    0.32Total consumer loans
    
    
    30,930
    
    
    
    3.75
    
    
    
    30,930
    
    
    
    3.34
    
    
    
    28,659
    
    
    
    3.25
    
    
    
    30,758
    
    
    
    3.91
    
    
    
    31,458
    
    
    
    3.91Commercial business loans
    
    
    76,936
    
    
    
    9.33
    
    
    
    90,458
    
    
    
    9.78
    
    
    
    90,688
    
    
    
    10.27
    
    
    
    65,347
    
    
    
    8.32
    
    
    
    49,297
    
    
    
    6.14Total non-real estate loans
    
    
    107,866
    
    
    
    13.08
    
    
    
    121,388
    
    
    
    13.12
    
    
    
    119,347
    
    
    
    13.52
    
    
    
    96,105
    
    
    
    12.23
    
    
    
    80,755
    
    
    
    10.05Total fixed rate loans
    
    
    311,199
    
    
    
    37.73
    
    
    
    335,960
    
    
    
    36.31
    
    
    
    303,611
    
    
    
    34.39
    
    
    
    285,064
    
    
    
    36.29
    
    
    
    260,098
    
    
    
    32.38Adjustable rate LoansReal estate:One-to-four family
    
    
    66,937
    
    
    
    8.12
    
    
    
    73,299
    
    
    
    7.92
    
    
    
    60,456
    
    
    
    6.85
    
    
    
    58,751
    
    
    
    7.48
    
    
    
    56,563
    
    
    
    7.04Multi-family
    
    
    47,811
    
    
    
    5.80
    
    
    
    24,589
    
    
    
    2.66
    
    
    
    23,120
    
    
    
    2.62
    
    
    
    23,624
    
    
    
    3.01
    
    
    
    34,745
    
    
    
    4.33Commercial
    
    
    209,678
    
    
    
    25.42
    
    
    
    233,469
    
    
    
    25.23
    
    
    
    212,547
    
    
    
    24.08
    
    
    
    193,928
    
    
    
    24.69
    
    
    
    170,363
    
    
    
    21.21Construction or development
    
    
    29,264
    
    
    
    3.54
    
    
    
    78,939
    
    
    
    8.53
    
    
    
    94,516
    
    
    
    10.70
    
    
    
    53,538
    
    
    
    6.82
    
    
    
    67,424
    
    
    
    8.39Total real estate loans
    
    
    353,690
    
    
    
    42.88
    
    
    
    410,296
    
    
    
    44.34
    
    
    
    390,639
    
    
    
    44.25
    
    
    
    329,841
    
    
    
    42.00
    
    
    
    329,095
    
    
    
    40.97Consumer:Home equity
    
    
    50,061
    
    
    
    6.07
    
    
    
    52,194
    
    
    
    5.64
    
    
    
    51,322
    
    
    
    5.81
    
    
    
    54,328
    
    
    
    6.91
    
    
    
    60,853
    
    
    
    7.57Land/Lot loans
    
    
    636
    
    
    
    0.08
    
    
    
    1,013
    
    
    
    0.11
    
    
    
    1,535
    
    
    
    0.17
    
    
    
    4,076
    
    
    
    0.52
    
    
    
    8,197
    
    
    
    1.02Other
    
    
    588
    
    
    
    0.07
    
    
    
    2,464
    
    
    
    0.27
    
    
    
    3,393
    
    
    
    0.39
    
    
    
    686
    
    
    
    0.09
    
    
    
    390
    
    
    
    0.05Total consumer loans
    
    
    51,285
    
    
    
    6.22
    
    
    
    55,671
    
    
    
    6.02
    
    
    
    56,250
    
    
    
    6.37
    
    
    
    59,090
    
    
    
    7.52
    
    
    
    69,440
    
    
    
    8.64Commercial business loans
    
    
    108,589
    
    
    
    13.17
    
    
    
    123,317
    
    
    
    13.33
    
    
    
    132,271
    
    
    
    14.99
    
    
    
    111,423
    
    
    
    14.19
    
    
    
    144,665
    
    
    
    18.01Total non-real estate loans
    
    
    159,874
    
    
    
    19.39
    
    
    
    178,988
    
    
    
    19.35
    
    
    
    188,521
    
    
    
    21.36
    
    
    
    170,513
    
    
    
    21.71
    
    
    
    214,105
    
    
    
    26.65Total adjustable rate loans
    
    
    513,564
    
    
    
    62.27
    
    
    
    589,284
    
    
    
    63.69
    
    
    
    579,160
    
    
    
    65.61
    
    
    
    500,354
    
    
    
    63.71
    
    
    
    543,200
    
    
    
    67.62Total loans
    
    
    824,763
    
    
    
    100.00
    %
    
    
    925,244
    
    
    
    100.00
    %
    
    
    882,771
    
    
    
    100.00
    %
    
    
    785,418
    
    
    
    100.00
    %
    
    
    803,298
    
    
    
    100.00
    %LessLoans in process *
    
    
    0
    
    
    
    
    
    

    
    0
    
    
    
    
    
    
    
    3,011
    
    
    
    
    
    
    
    5,252
    
    
    
    
    
    
    
    7,008Unamortized (premiums) discounts
    
    
    177
    
    
    
    
    
    
    
    569
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    190Net deferred loan fees
    
    
    1,518
    
    
    
    
    
    
    
    2,529
    
    
    
    
    
    
    
    2,245
    
    
    
    
    
    
    
    2,021
    
    
    
    
    
    
    
    1,644Allowance for losses on loans
    
    
    23,812
    
    
    
    
    
    
    
    21,257
    
    
    
    
    
    
    
    12,438
    
    
    
    
    
    
    
    9,873
    
    
    
    
    
    
    
    8,778Total loans receivable, net
    
    $
    799,256
    
    
    
    
    
    
    $
    900,889
    
    
    
    
    
    
    $
    865,088
    
    
    
    
    
    
    $
    768,232
    
    
    
    
    
    
    $
    785,678
 
 *
    
    - Core data processing systems converted in 2008, loans in process amounts are reflected in loan
amounts in table. 6




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##### Table of Contents



Real EstateMulti-family and
    
    
    Construction orOne-to-four family
    
    
    Commercial
    
    
    Development
    
    
    Consumer
    
    
    Commercial Business
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedDue During Years
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageEnding December 31,
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate2010(1)
    
    $
    16,128
    
    
    
    5.94
    %
    
    $
    104,663
    
    
    
    4.86
    %
    
    $
    18,428
    
    
    
    5.75
    %
    
    $
    4,789
    
    
    
    7.86
    %
    
    $
    90,098
    
    
    
    5.16
    %
    
    $
    234,106
    
    
    
    5.18
    %2011
    
    
    6,665
    
    
    
    6.75
    
    
    
    58,879
    
    
    
    5.77
    
    
    
    8,791
    
    
    
    2.00
    
    
    
    7,179
    
    
    
    4.13
    
    
    
    21,164
    
    
    
    5.45
    
    
    
    102,678
    
    
    
    5.332012
    
    
    5,328
    
    
    
    6.23
    
    
    
    25,761
    
    
    
    5.95
    
    
    
    1,406
    
    
    
    2.72
    
    
    
    3,020
    
    
    
    7.77
    
    
    
    37,039
    
    
    
    6.39
    
    
    
    72,554
    
    
    
    6.212013 through 2014
    
    
    8,175
    
    
    
    6.06
    
    
    
    75,999
    
    
    
    5.59
    
    
    
    657
    
    
    
    0.00
    
    
    
    14,125
    
    
    
    6.37
    
    
    
    16,510
    
    
    
    6.57
    
    
    
    115,466
    
    
    
    5.832015 through 2019
    
    
    15,307
    
    
    
    5.81
    
    
    
    61,883
    
    
    
    6.45
    
    
    
    4,215
    
    
    
    6.69
    
    
    
    5,647
    
    
    
    7.35
    
    
    
    17,349
    
    
    
    6.90
    
    
    
    104,401
    
    
    
    6.492020 through 2034
    
    
    28,684
    
    
    
    5.13
    
    
    
    44,795
    
    
    
    6.52
    
    
    
    5,473
    
    
    
    6.07
    
    
    
    47,448
    
    
    
    5.90
    
    
    
    3,365
    
    
    
    6.00
    
    
    
    129,765
    
    
    
    5.952035 and thereafter
    
    
    64,344
    
    
    
    5.65
    
    
    
    0
    
    
    
    0.00
    
    
    
    1,442
    
    
    
    4.66
    
    
    
    7
    
    
    
    0.00
    
    
    
    0
    
    
    
    0.00
    
    
    
    65,793
    
    
    
    5.63$
    144,631
    
    
    
    
    
    
    $
    371,980
    
    
    
    
    
    
    $
    40,412
    
    
    
    
    
    
    $
    82,215
    
    
    
    
    
    
    $
    185,525
    
    
    
    
    
    
    $
    824,763
 
 (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.
    Commercial Business Lending.
 11




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##### Table of Contents



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)
    
    2009
    
    
    2008
    
    
    2007Originations by type:Adjustable rate:Real estate -- one-to-four family
    
    $
    11,300
    
    
    
    24,986
    
    
    
    13,969- multi-family
    
    
    1,357
    
    
    
    4,418
    
    
    
    1,661- commercial
    
    
    3,966
    
    
    
    38,700
    
    
    
    34,452- construction or development
    
    
    4,596
    
    
    
    49,093
    
    
    
    245,126Non-real estate -- consumer
    
    
    20,295
    
    
    
    19,560
    
    
    
    12,546- commercial business
    
    
    18,881
    
    
    
    44,968
    
    
    
    111,946Total adjustable rate
    
    
    60,395
    
    
    
    181,725
    
    
    
    419,700Fixed rate:Real estate -- one-to-four family
    
    
    11,141
    
    
    
    21,023
    
    
    
    7,822- multi-family
    
    
    803
    
    
    
    206
    
    
    
    1,612- commercial
    
    
    8,142
    
    
    
    14,936
    
    
    
    11,454- construction or development
    
    
    1,917
    
    
    
    26,650
    
    
    
    20,359Non-real estate -- consumer
    
    
    15,184
    
    
    
    18,251
    
    
    
    16,679- commercial business
    
    
    24,403
    
    
    
    38,926
    
    
    
    91,728Total fixed rate
    
    
    61,590
    
    
    
    119,992
    
    
    
    149,654Total loans originated
    
    
    121,985
    
    
    
    301,717
    
    
    
    569,354Purchases:Real estate -- one-to-four family
    
    
    0
    
    
    
    0
    
    
    
    165- commercial
    
    
    904
    
    
    
    4,505
    
    
    
    7,097- construction or development
    
    
    388
    
    
    
    1,596
    
    
    
    26,500Non-real estate -- commercial business
    
    
    5,264
    
    
    
    4,275
    
    
    
    25,911Total loans purchased
    
    
    6,556
    
    
    
    10,376
    
    
    
    59,673Sales, participations
and repayments:Real estate -- one-to-four family
    
    
    0
    
    
    
    4,248
    
    
    
    0- multi-family
    
    
    649
    
    
    
    0
    
    
    
    0- commercial
    
    
    3,579
    
    
    
    21,827
    
    
    
    45,125- construction or development
    
    
    0
    
    
    
    7,712
    
    
    
    177,911Non-real estate -- consumer
    
    
    423
    
    
    
    440
    
    
    
    1,157- commercial business
    
    
    975
    
    
    
    38,559
    
    
    
    14,190Total sales
    
    
    5,626
    
    
    
    72,786
    
    
    
    238,383Transfers to loans held for sale
    
    
    5,228
    
    
    
    7,292
    
    
    
    3,020Principal repayments
    
    
    191,870
    
    
    
    172,350
    
    
    
    285,420Total reductions
    
    
    202,724
    
    
    
    252,428
    
    
    
    526,823Decrease in other items, net
    
    
    (26,298
    )
    
    
    (17,192
    )
    
    
    (4,851
    )Net increase (decrease)
    
    $
    (100,481
    )
    
    
    42,473
    
    
    
    97,353
 13




---



##### Table of Contents



LOANS HELD FOR SALE
 Year Ended December 31,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Originations by type:Adjustable rate:Real estate -- one-to-four family
    
    $
    399
    
    
    
    1,009
    
    
    
    600Total adjustable rate
    
    
    399
    
    
    
    1,009
    
    
    
    600Fixed rate:Real estate -- one-to-four family
    
    
    113,025
    
    
    
    48,308
    
    
    
    48,782- construction or development
    
    
    0
    
    
    
    0
    
    
    
    2,740Total fixed rate
    
    
    113,025
    
    
    
    48,308
    
    
    
    51,522Total loans originated
    
    
    113,424
    
    
    
    49,317
    
    
    
    52,122Sales and repayments:Real estate -- one-to-four family
    
    
    118,202
    
    
    
    57,359
    
    
    
    53,326Total sales
    
    
    118,202
    
    
    
    57,359
    
    
    
    53,326Transfers from loans held for investment
    
    
    (5,228
    )
    
    
    (7,292
    )
    
    
    (3,020
    )Changes in deferred fees and market value
    
    
    33
    
    
    
    (37
    )
    
    
    48Total reductions
    
    
    113,007
    
    
    
    50,030
    
    
    
    50,354Net increase (decrease)
    
    $
    417
    
    
    
    (713
    )
    
    
    1,768
 MORTGAGE-BACKED AND RELATED SECURITIES
 Year Ended December 31,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Purchases:Mortgage-backed securities:FNMA MBSs
    
    $
    0
    
    
    
    59,556
    
    
    
    4,597CMOs and REMICs (1)
    
    
    0
    
    
    
    0
    
    
    
    9,932Total purchases
    
    
    0
    
    
    
    59,556
    
    
    
    14,529Sales:Mortgage-backed securities:Fixed rate MBSs
    
    
    (98
    )
    
    
    0
    
    
    
    0CMOs and REMICs
    
    
    (2,039
    )
    
    
    0
    
    
    
    0Total sales
    
    
    (2,137
    )
    
    
    0
    
    
    
    0Principal repayments
    
    
    (25,905
    )
    
    
    (697
    )
    
    
    (2,239
    )Net increase (decrease)
    
    $
    (23,768
    )
    
    
    58,859
    
    
    
    12,290
 
 (1)
    
    Collateralized Mortgage Obligations and Real Estate Mortgage Investment Conduits 
 Classified Assets and Delinquencies
 Classification of Assets .
 14




---



##### Table of Contents



ConstructionOne-to-Four
    
    
    or
    
    
    Commercial and
    
    
    
    
    
    
    Commercial(Dollars in thousands)
    
    Family
    
    
    Development
    
    
    Multi-family
    
    
    Consumer
    
    
    Business
    
    
    Other Assets
    
    
    TotalSubstandard
    
    $
    2,104
    
    
    
    4,692
    
    
    
    30,018
    
    
    
    3,850
    
    
    
    14,802
    
    
    
    11,841
    
    
    
    67,307Doubtful
    
    
    1,488
    
    
    
    474
    
    
    
    10,531
    
    
    
    56
    
    
    
    4,279
    
    
    
    1,721
    
    
    
    18,549Loss
    
    
    0
    
    
    
    0
    
    
    
    5,904
    
    
    
    581
    
    
    
    769
    
    
    
    2,700
    
    
    
    9,954Total
    
    $
    3,592
    
    
    
    5,166
    
    
    
    46,453
    
    
    
    4,487
    
    
    
    19,850
    
    
    
    16,262
    
    
    
    95,810
  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
    
    
    8
    
    
    $
    736
    
    
    
    0.51
    %
    
    
    19
    
    
    $
    1,720
    
    
    
    1.19
    %
    
    
    27
    
    
    $
    2,456
    
    
    
    1.70
    %Commercial real estate
    
    
    3
    
    
    
    1,309
    
    
    
    0.42
    
    
    
    17
    
    
    
    29,563
    
    
    
    9.45
    
    
    
    20
    
    
    
    30,872
    
    
    
    9.87Construction or development
    
    
    1
    
    
    
    474
    
    
    
    1.17
    
    
    
    2
    
    
    
    3,088
    
    
    
    7.64
    
    
    
    3
    
    
    
    3,562
    
    
    
    8.81Consumer
    
    
    12
    
    
    
    498
    
    
    
    0.61
    
    
    
    24
    
    
    
    3,829
    
    
    
    4.66
    
    
    
    36
    
    
    
    4,327
    
    
    
    5.26Commercial business
    
    
    3
    
    
    
    1,802
    
    
    
    0.97
    
    
    
    13
    
    
    
    9,733
    
    
    
    5.25
    
    
    
    16
    
    
    
    11,535
    
    
    
    6.22Total
    
    
    27
    
    
    $
    4,819
    
    
    
    0.58
    %
    
    
    75
    
    
    $
    47,933
    
    
    
    5.81
    %
    
    
    102
    
    
    $
    52,752
    
    
    
    6.40
    %
  15




---



##### Table of Contents



Investment Activities
  Securities.
   16




---



##### Table of Contents



December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Amort
    
    
    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
    
    $
    105,023
    
    
    
    845
    
    
    
    105,868
    
    
    
    85.00
    %
    
    $
    94,745
    
    
    
    2,723
    
    
    
    97,468
    
    
    
    84.40
    %
    
    $
    164,730
    
    
    
    2,290
    
    
    
    167,020
    
    
    
    90.00
    %Corporate preferred stock (1)
    
    
    700
    
    
    
    (525
    )
    
    
    175
    
    
    
    0.10
    
    
    
    700
    
    
    
    (350
    )
    
    
    350
    
    
    
    0.30
    
    
    
    700
    
    
    
    0
    
    
    
    700
    
    
    
    0.40Subtotal
    
    
    105,723
    
    
    
    
    
    
    
    106,043
    
    
    
    85.10
    
    
    
    95,445
    
    
    
    
    
    
    
    97,818
    
    
    
    84.70
    
    
    
    165,430
    
    
    
    
    
    
    
    167,720
    
    
    
    90.40Federal Home Loan Bank stock
    
    
    7,286
    
    
    
    
    
    
    
    7,286
    
    
    
    5.80
    
    
    
    7,286
    
    
    
    
    
    
    
    7,286
    
    
    
    6.30
    
    
    
    6,198
    
    
    
    
    
    
    
    6,198
    
    
    
    3.30Total investment securities
and Federal Home Loan Bank stock
    
    
    113,009
    
    
    
    
    
    
    
    113,329
    
    
    
    90.90
    
    
    
    102,731
    
    
    
    
    
    
    
    105,104
    
    
    
    91.00
    
    
    
    171,628
    
    
    
    
    
    
    
    173,918
    
    
    
    93.70Average remaining life of
investment securities excluding
Federal Home Loan Bank stock
    
    
    0.53

    years
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    0.86
    years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.16
    yearsOther interest earning assets:Cash equivalents
    
    
    11,316
    
    
    
    
    
    
    
    11,316
    
    
    
    9.10
    
    
    
    10,440
    
    
    
    
    
    
    
    10,440
    
    
    
    9.00
    
    
    
    11,718
    
    
    
    
    
    
    
    11,718
    
    
    
    6.30Total
    
    $
    124,325
    
    
    
    
    
    
    
    124,645
    
    
    
    100.00
    %
    
    $
    113,171
    
    
    
    
    
    
    
    115,544
    
    
    
    100.00
    %
    
    $
    183,346
    
    
    
    
    
    
    
    185,636
    
    
    
    100.00
    %Average remaining life or term to
repricing of investment securities and
other interest earning assets, excluding
Federal Home Loan Bank stock
    
    
    0.48

    years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.77
    years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.08
    years
 
 (1)
    
    Average life assigned to corporate preferred stock holdings is five
years. 17




---



##### Table of Contents



December 31, 2009After 1
    
    
    After 51 Yearor Less
    
    
    through 5 
Years
    
    
    through 10
 Years
    
    
    Over 10 
Years
    
    
    No StatedMaturity
    
    
    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
    
    $
    100,037
    
    
    
    4,986
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    105,023
    
    
    
    845
    
    
    
    105,868Corporate preferred stock
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    700
    
    
    
    700
    
    
    
    (525
    )
    
    
    175Total
    
    $
    100,037
    
    
    
    4,986
    
    
    
    0
    
    
    
    0
    
    
    
    700
    
    
    
    105,723
    
    
    
    320
    
    
    
    106,043Weighted average yield (1)
    
    
    1.98
    %
    
    
    5.25
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    5.07
    %
    
    
    2.15
    %
 
 (1)
    
    Yields are computed on a tax equivalent basis.(2)
    
    Callable U.S. government agency securities maturity date based on first
available call date if security is anticipated to be called. Mortgage-Backed and Related Securities .
  Dec. 31,20095 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
    
    $
    9,873
    
    
    
    17,269
    
    
    
    0
    
    
    
    0
    
    
    
    27,142Federal National Mortgage Association
    
    
    9,860
    
    
    
    10,335
    
    
    
    0
    
    
    
    0
    
    
    
    20,195Collateralized Mortgage Obligations
    
    
    0
    
    
    
    392
    
    
    
    4,582
    
    
    
    1,248
    
    
    
    6,222Total
    
    $
    19,733
    
    
    
    27,996
    
    
    
    4,582
    
    
    
    1,248
    
    
    
    53,559Weighted average yield
    
    
    4.20
    %
    
    
    4.34
    %
    
    
    5.50
    %
    
    
    4.00
    %
    
    
    4.38
    %
    18




---



##### Table of Contents



Sources of Funds
 General.
 Deposits.
   Year Ended December 31,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Opening balance
    
    $
    880,505
    
    
    
    888,118
    
    
    
    725,959Deposits
    
    
    5,879,026
    
    
    
    6,623,346
    
    
    
    5,736,881Withdrawals
    
    
    (5,984,653
    )
    
    
    (6,660,954
    )
    
    
    (5,599,222
    )Interest credited
    
    
    21,133
    
    
    
    29,995
    
    
    
    24,500Ending balance
    
    
    796,011
    
    
    
    880,505
    
    
    
    888,118Net increase (decrease)
    
    $
    (84,494
    )
    
    
    (7,613
    )
    
    
    162,159Percent increase (decrease)
    
    
    (9.60
    )%
    
    
    (0.86
    )%
    
    
    22.34
    %
 19




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(Dollars in thousands)
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of TotalTransaction and Savings Deposits(1):Non-interest checking
    
    $
    80,330
    
    
    
    10.10
    %
    
    $
    66,905
    
    
    
    7.60
    %
    
    $
    54,998
    
    
    
    6.20
    %NOW Accounts  0.08%(2)
    
    
    103,998
    
    
    
    13.00
    
    
    
    126,547
    
    
    
    14.40
    
    
    
    118,652
    
    
    
    13.40Passbook Accounts 0.13%(3)
    
    
    31,068
    
    
    
    3.90
    
    
    
    28,023
    
    
    
    3.20
    
    
    
    39,671
    
    
    
    4.50Money Market Accounts  1.25%(4)
    
    
    125,008
    
    
    
    15.70
    
    
    
    97,416
    
    
    
    11.00
    
    
    
    182,413
    
    
    
    20.50Total Non-Certificates
    
    $
    340,404
    
    
    
    42.70
    %
    
    $
    318,891
    
    
    
    36.20
    %
    
    $
    395,734
    
    
    
    44.60
    %Certificates:0.00 - 0.99%
    
    $
    16,615
    
    
    
    2.10
    %
    
    $
    1,068
    
    
    
    0.10
    %
    
    $
    555
    
    
    
    0.10
    %1.00 - 1.99%
    
    
    113,916
    
    
    
    14.30
    
    
    
    8,193
    
    
    
    1.00
    
    
    
    2
    
    
    
    0.002.00 - 2.99%
    
    
    135,311
    
    
    
    17.00
    
    
    
    81,483
    
    
    
    9.30
    
    
    
    6,168
    
    
    
    0.703.00 - 3.99%
    
    
    138,152
    
    
    
    17.40
    
    
    
    344,735
    
    
    
    39.00
    
    
    
    38,388
    
    
    
    4.304.00 - 4.99%
    
    
    47,692
    
    
    
    6.00
    
    
    
    114,155
    
    
    
    13.00
    
    
    
    203,720
    
    
    
    22.905.00 - 5.99%
    
    
    3,921
    
    
    
    0.50
    
    
    
    11,980
    
    
    
    1.40
    
    
    
    243,551
    
    
    
    27.40Total Certificates
    
    
    455,607
    
    
    
    57.30
    
    
    
    561,614
    
    
    
    63.80
    
    
    
    492,384
    
    
    
    55.40Total Deposits
    
    $
    796,011
    
    
    
    100.00
    %
    
    $
    880,505
    
    
    
    100.00
    %
    
    $
    888,118
    
    
    
    100.00
    %
 
 (1)
    
    Reflects weighted average rates paid on transaction and savings deposits at December 31,
2009.(2)
    
    The weighted average rate on NOW Accounts for 2008 was 0.19% and 2007 was 1.88%.(3)
    
    The weighted average rate on Passbook Accounts for 2008 was 0.11% and 2007 was 1.40%.(4)
    
    The weighted average rate on Money Market Accounts for 2008 was 1.59% and 2007 was 3.34%. 20




---



##### Table of Contents



The following table shows rate and maturity information for the Banks certificates of
deposit as of December 31, 2009.
 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, 2010
    
    $
    4,359
    
    
    
    5,126
    
    
    
    7,189
    
    
    
    16,401
    
    
    
    20,566
    
    
    
    26
    
    
    
    53,667
    
    
    
    11.78
    %June 30, 2010
    
    
    3,083
    
    
    
    14,584
    
    
    
    14,180
    
    
    
    37,128
    
    
    
    1,294
    
    
    
    114
    
    
    
    70,383
    
    
    
    15.46September 30, 2010
    
    
    2,504
    
    
    
    15,901
    
    
    
    19,161
    
    
    
    18,113
    
    
    
    19,062
    
    
    
    3,496
    
    
    
    78,237
    
    
    
    17.17December 31, 2010
    
    
    6,438
    
    
    
    30,564
    
    
    
    4,617
    
    
    
    16,246
    
    
    
    2,287
    
    
    
    0
    
    
    
    60,152
    
    
    
    13.20March 31, 2011
    
    
    15
    
    
    
    25,284
    
    
    
    6,106
    
    
    
    14,767
    
    
    
    87
    
    
    
    116
    
    
    
    46,375
    
    
    
    10.18June 30, 2011
    
    
    23
    
    
    
    2,177
    
    
    
    20,249
    
    
    
    7,847
    
    
    
    564
    
    
    
    0
    
    
    
    30,860
    
    
    
    6.77September 30, 2011
    
    
    12
    
    
    
    14,053
    
    
    
    4,785
    
    
    
    1,709
    
    
    
    1,357
    
    
    
    169
    
    
    
    22,085
    
    
    
    4.85December 31, 2011
    
    
    22
    
    
    
    1,711
    
    
    
    6,777
    
    
    
    3,368
    
    
    
    472
    
    
    
    0
    
    
    
    12,350
    
    
    
    2.71March 31, 2012
    
    
    6
    
    
    
    4,067
    
    
    
    9,819
    
    
    
    4,704
    
    
    
    1,229
    
    
    
    0
    
    
    
    19,825
    
    
    
    4.35June 30, 2012
    
    
    15
    
    
    
    120
    
    
    
    7,967
    
    
    
    14,964
    
    
    
    84
    
    
    
    0
    
    
    
    23,150
    
    
    
    5.08September 30, 2012
    
    
    7
    
    
    
    95
    
    
    
    30,289
    
    
    
    348
    
    
    
    216
    
    
    
    0
    
    
    
    30,955
    
    
    
    6.79December 31, 2012
    
    
    9
    
    
    
    234
    
    
    
    531
    
    
    
    140
    
    
    
    415
    
    
    
    0
    
    
    
    1,329
    
    
    
    0.29Thereafter
    
    
    122
    
    
    
    0
    
    
    
    3,641
    
    
    
    2,417
    
    
    
    59
    
    
    
    0
    
    
    
    6,239
    
    
    
    1.37Total
    
    $
    16,615
    
    
    
    113,916
    
    
    
    135,311
    
    
    
    138,152
    
    
    
    47,692
    
    
    
    3,921
    
    
    
    455,607
    
    
    
    100.00
    %Percent of total
    
    
    3.65
    %
    
    
    25.00
    %
    
    
    29.70
    %
    
    
    30.32
    %
    
    
    10.47
    %
    
    
    0.86
    %
    
    
    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
    
    $
    47,854
    
    
    
    62,116
    
    
    
    111,148
    
    
    
    174,634
    
    
    
    395,752Certificates of deposit of $100,000 or more
    
    
    4,720
    
    
    
    7,553
    
    
    
    26,461
    
    
    
    18,531
    
    
    
    57,265Public funds less than $100,000(1)
    
    
    253
    
    
    
    14
    
    
    
    160
    
    
    
    3
    
    
    
    430Public funds of $100,000 or more(1)
    
    
    840
    
    
    
    700
    
    
    
    620
    
    
    
    0
    
    
    
    2,160Total certificates of deposit
    
    $
    53,667
    
    
    
    70,383
    
    
    
    138,389
    
    
    
    193,168
    
    
    
    455,607Passbook of $100,000 or more
    
    $
    194,758
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    194,758Accounts of $100,000 or more
    
    $
    200,318
    
    
    
    8,253
    
    
    
    27,081
    
    
    
    18,531
    
    
    
    254,183
 
 (1)
    
    Deposits from governmental and other public entities.  Borrowings.
 
 Service Corporations of the Bank
   
 Competition
  22




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##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



OTS Assessments.
 Transactions with Affiliates and Insiders.
 Dividend Restrictions.
  Deposit Insurance
    25




---



##### Table of Contents



FDIC Temporary Liquidity Guarantee Program
   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
    
    
    8.64
    %
    
    
    8.64
    %
    
    
    10.87
    %
    
    
    12.12
    %
 
 (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
  26




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##### Table of Contents



Other Regulations and Examination Authority
   Federal Home Loan Bank (FHLB) System
   Federal Reserve Regulation
  27




---



##### Table of Contents



Community Reinvestment Act
  Bank Secrecy Act
  Troubled Asset Relief Program  Capital Purchase Program
  28




---



##### Table of Contents



EXECUTIVE OFFICERS
  Bradley C. Krehbiel , age 51.
 Jon J. Eberle , age 44.
 Dwain C. Jorgensen , age 61.
 Susan K. Kolling , age 58.
 Available Information
  29




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##### Table of Contents



ITEM 1A. RISK FACTORS
  Our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio.
    Changes in interest rates could negatively impact the Companys results of operations.
  30




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##### Table of Contents



The Company has increased its commercial real estate loan originations, increasing the risk in its loan portfolio.
  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.
  31




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##### Table of Contents



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.
  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



The Company and the Bank are subject to the restrictions and conditions of informal written
agreements with the Office of Thrift Supervision (OTS). Failure to comply with the informal
agreements could result in enforcement actions against us, including the imposition of monetary
penalties
   33




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##### Table of Contents



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.
  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.
  34




---



##### Table of Contents



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.
  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.
     35




---



##### Table of Contents



We operate in a highly regulated environment and may be adversely affected by changes in federal
and state laws and regulations, including changes that may restrict our ability to foreclose on
single-family home loans and offer overdraft protection.
     
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  36




---



##### Table of Contents



th st th
 
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. RESERVED
 
 PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
              PURCHASES OF EQUITY SECURITIES
   37




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##### Table of Contents



STOCKHOLDER RETURN PERFORMANCE PRESENTATION
  
 Period EndingIndex
    
    
    12/31/04
    
    
    
    12/31/05
    
    
    
    12/31/06
    
    
    
    12/31/07
    
    
    
    12/31/08
    
    
    
    12/31/09HMN Financial, Inc.
    
    
    
    100.00
    
    
    
    
    92.09
    
    
    
    
    110.91
    
    
    
    
    81.55
    
    
    
    
    14.46
    
    
    
    
    14.53NASDAQ Composite
    
    
    
    100.00
    
    
    
    
    101.37
    
    
    
    
    111.03
    
    
    
    
    121.92
    
    
    
    
    72.49
    
    
    
    
    104.31SNL Bank NASDAQ Index
    
    
    
    100.00
    
    
    
    
    96.95
    
    
    
    
    108.85
    
    
    
    
    85.45
    
    
    
    
    62.06
    
    
    
    
    50.34
 
 ITEM 6. SELECTED FINANCIAL DATA
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  38




---



##### 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.
    39




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    Internal
Control  Integrated Framework
  
 40




---



##### 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
  41




---



##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  42




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 1. Financial Statements
 The following financial statements appearing in the Companys Annual Report to Security
Holders for the year ended December 31, 2009, are incorporated herein by reference.
 Pages inAnnual Report Section
    
    2009 Annual ReportConsolidated Balance Sheets 
December 31, 2009 and 2008
    
    
    23Consolidated Statements of Income 
Each of the Years in the Three-Year Period Ended December 31, 2009
    
    
    24Consolidated Statements of Stockholders Equity and Comprehensive Income 
Each of the Years in the Three-Year Period Ended December 31, 2009
    
    
    25Consolidated Statements of Cash Flows 
Each of the Years in the Three-Year Period Ended December 31, 2009
    
    
    26Notes to Consolidated Financial Statements
    
    
    27Report of Independent Registered Public Accounting Firm
    
    
    50
 2. Financial Statement Schedules
 All financial statement schedules have been omitted as this information is not required
under the related instructions, is not applicable or has been included in the Notes to
Consolidated Financial Statements.
 3. Exhibits
  43




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##### Table of Contents



SIGNATURES
  HMN FINANCIAL, INC.Date: March 4, 2010
    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

     Timothy R. Geisler
    
    Chairman of the Board/s/ Allan R. DeBoer

     Allan R. DeBoer
    
    Director/s/ Michael J. Fogarty

     Michael J. Fogarty
    
    Director/s/ Karen L. Himle

     Karen L. Himle
    
    Director/s/ Susan K. Kolling

     Susan K. Kolling
    
    Director/s/ Malcolm W. McDonald

     Malcolm W. McDonald
    
    Director/s/ Mahlon C. Schneider

     Mahlon C. Schneider
    
    Director/s/ Hugh C. Smith

     Hugh C. Smith
    
    Director
 44




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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)10.13
    
    HMN Financial, Inc. 2009 Equity Incentive Plan
    
    Incorporated by Reference (18)10.14
    
    Form of Restricted Stock Agreement under HMN Financial, Inc.
2009 Equity Incentive Plan
    
    Incorporated by Reference (19)10.15
    
    Form of Incentive Stock Option Agreement under HMN Financial,
Inc. 2009 Equity Incentive Plan
    
    Incorporated by Reference (20)10.16
    
    Form of Non-Statutory Stock Option Agreement under HMN
Financial, Inc. 2009 Equity Incentive Plan
    
    Incorporated by Reference (21)10.17
    
    Description of Bradley Krehbiel 2010 Incentive Plan
    
    Incorporated by Reference (22)13
    
    Portions of Annual Report to Security Holders incorporated by
reference
    
    Filed Electronically
 45




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##### Table of Contents



ExhibitNumber
    
    Exhibit
    
    Filing Status14
    
    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 Electronically99.1
    
    Section 111(b)(4) Certifications of Chief Executive Officer
    
    Filed Electronically99.2
    
    Section 111(b)(4) Certifications of Chief Financial Officer
    
    Filed Electronically
 
 
    
    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 A to the Companys Proxy Statement for its 2009 Annual
Meeting of Stockholders held on April 28, 2009 (File No. 0-24100).19
    
    Incorporated by reference to Exhibit 99.1 to the Companys Current Report on Form 8-K dated
May 6, 2009, filed on May 12, 2009 (File No. 0-24100). 46




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##### Table of Contents



20
    
    Incorporated by reference to Exhibit 99.2 to the Companys Current Report on Form 8-K dated
May 6, 2009, filed on May 12, 2009 (File No. 0-24100).21
    
    Incorporated by reference to Exhibit 99.3 to the Companys Current Report on Form 8-K dated
May 6, 2009, filed on May 12, 2009 (File No. 0-24100).22
    
    Incorporated by reference to Exhibit 10 to the Companys Current Report on Form 8-K dated
January 25, 2010, filed on January 28, 2010 (File No. 0-24100).23
    
    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). 47