By Bob Freund
freund@postbulletin.com
Coming off a strong first quarter, Rochester-based HMN Financial Inc. lifted its dividend by more than 25 percent, raising it at 18 cents a share. The financial company's stock reacted with a moderate upswing on heavy volume in market trading on Tuesday. The price was up 15 cents, to $16.45, in trading at about 9 a.m. today.
The move marked the second dividend increase within a year. It will be paid on June 10 to investors holding shares on May 23.
HMN, which owns the Home Federal Savings Bank network in southern Minnesota and Iowa, after close of business on Friday reported first-quarter earnings at just less than $2 million, or 50 cents a diluted share. Profits were up 24 percent from a year earlier.
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The performance also marked a recovery from the December quarter, when losses on investments in some mortgage servicing partnerships undercut returns. HMN reported almost a $379,000 gain from its shares in those partnerships for the March 31 quarter.
HMN President Michael McNeil said the company was able to recapture $475,000 in previously reported losses from partnerships.
In the first quarter, HMN lowered its interest expenses on accounts leading to a $300,000 improvement in net interest income, compared to the first quarter of 2001. But HMN executives also felt it necessary to shore up its provision for loan losses by another $570,000, raising it to $720,000.
In a written release, McNeil said he was "pleased to report that HMN had a 23.7 percent increase in net income," despite the big boost in loan loss reserves.
In the first quarter, Home Federal Savings Bank also reduced its effective income tax rate significantly through some state tax planning.
That accounted for $104,000 of a $158,000 decline in income tax expenses for parent HMN, the company said.
Home Federal operates 10 offices in Rochester, Spring Valley, Austin, and other area communities, as well as a mortgage banking office in Brooklyn Park, Minn.
