HMN Financial Inc (HMNF) Reports Decrease in Q3 Earnings
HMN Financial Inc (NASDAQ:HMNF) reports Q3 net income of $1.5 million, down $0.3 million from Q3 2022.
Diluted earnings per share for Q3 stand at $0.34, a decrease of $0.08 from the same period last year.
Net loans receivable increased by $24 million to $851 million.
Net interest income for Q3 was $7.8 million, down $0.5 million from Q3 2022.
HMN Financial Inc (NASDAQ:HMNF) released its earnings report for the third quarter of 2023 on October 20, 2023. The company reported a net income of $1.5 million, marking a decrease of $0.3 million from the $1.8 million reported for the third quarter of 2022. Diluted earnings per share also saw a decrease, down $0.08 from $0.42 in Q3 2022 to $0.34 in Q3 2023.
Financial Performance and Challenges
Despite the decrease in net income and diluted earnings per share, HMNF reported an increase in net loans receivable, up $24 million from $827 million at the end of June 2023 to $851 million at the end of Q3 2023. However, net interest income saw a decrease of $0.5 million, down from $8.3 million in Q3 2022 to $7.8 million in Q3 2023. The net interest margin also decreased by 32 basis points from 3.13% in Q3 2022 to 2.81% in Q3 2023.
Maintaining our net interest margin is a challenge in the current rate environment," said Bradley Krehbiel, President and Chief Executive Officer of HMN. "The migration of deposits from lower cost transaction accounts to higher rate certificates of deposit accounts combined with the increased use of wholesale funding during the quarter increased our costs of funds. We will continue to focus our efforts on growing our core deposit relationships in order to reduce the impact of these changes on our overall deposit costs in the future."
Year to Date Summary
For the first nine months of 2023, HMNF reported a net income of $4.6 million, down $1.0 million from the $5.6 million reported for the same period in 2022. Diluted earnings per share also decreased by $0.23, down from $1.27 in 2022 to $1.04 in 2023. However, net interest income saw a slight increase of $0.3 million, up from $23.3 million in 2022 to $23.6 million in 2023. Net loans receivable also saw significant growth, up $74 million from $777 million at the end of 2022 to $851 million at the end of September 2023.
Looking Ahead
Despite the challenges faced in Q3, HMNF remains committed to its growth strategy. The company will continue to focus on growing its core deposit relationships to mitigate the impact of increased funding costs. With the growth in net loans receivable, HMNF is poised to leverage this momentum into the final quarter of 2023.
This article first appeared on GuruFocus.
