Home Federal narrows losses
Home Federal has fully emerged from increased regulation by the Federal Reserve system.
HMN Financial, Home Federal's parents company, Tuesdayannounced thatthe Board of Governors of the Federal Reserve terminated the supervisory agreement it had with HMN that was signed Feb. 22, 2011.
Regulators required Home Federal to sign the supervisory agreement to improve its poor financial condition. The bank struggled in the aftermath of the collapse of the U.S. housing market in 2008, and it was also hit by losses related to the multimillion-dollar Tom Petters fraud case.
The company lost $29 million in 2010 and $11.6 million in 2011. However, it emerged in 2012 with net income of $5.3 million, and in 2013 it had net income of $26.7 million.
"We are pleased that the improvements in our financial results andcapital position have allowed this regulatory agreement to beterminated," said Brad Krehbiel, President of HMN. "This was the finaloutstanding regulatory agreement and we look forward to operating thecompany without the additional regulatory requirements of theterminated agreement."
The agreement required thecompanyto submit periodic business plans and reports to the Federal Reserve.Under the increased regulation plan, the company could not do the following without the prior consent of the Federal Reserve system:
• Pay any cash dividends on its stock, makecapital distributions, or purchase or redeem any of its stock
• Incur debt or increase lines of credit.
• Enter into any new contracts related to compensation or benefits with any director or certain executive officers.
Rochester-based Home Federal Savings Bank operates eight fullservice offices in Minnesota, located in Albert Lea, Austin, Eagan, LaCrescent, two in Rochester, Spring Valley and Winona; one full serviceoffice in Marshalltown, Iowa; one loan origination office in Sartell; and two private banking offices in Rochester.
The Office of the Comptroller of the Currency also required certain capitalization levels of Home Federal, in another agreement that has since ended.
The bank also took a $26 million loan from the federal Troubled Asset Relief Program.