HMN Financial Inc. reported unaudited consolidated earnings results for the fourth quarter and year ended December 31, 2012. For the quarter, the company reported net interest income of $5.52 million, income before income tax expense of $1.62 million and net income available to common shareholders of $1.02 million or $0.25 per diluted share on total interest income of $7.04 million compared to net interest income of $6.88 million, loss before income tax expense of $7.62 million and net loss available to common shareholders of $8.08 million or $2.08 per diluted share on total interest income of $9.21 million reported a year ago. Return on average assets (annualized) was 0.93% compared to a negative return on average assets of 3.75% reported a year ago. Return on average equity was 9.77% compared to a 45.87% loss on average equity for the same period of 2011. Interest income decreased between the periods primarily because of a $163 million decrease in the average interest-earning assets and also because of a decrease in the average yields between the periods. The net income available to common shareholders increased primarily because of the change in the net income between the periods. The improvement in net income in the fourth quarter of 2012 is due primarily to a $7.6 million decrease in the provision for loan losses, a $0.4 million increase in the gain on sale of loans, and a $2.6 million decrease in noninterest expenses due primarily to the decrease in expenses and losses recognized on real estate owned between the periods. These changes to net income were partially offset by a $1.4 million decrease in net interest income due primarily to a decrease in interest earning assets between the periods.

For the year, the company reported net interest income of $23.68 million, income before income tax expense of $5.45 million and net income available to common shareholders of $3.46 million or $0.86 per diluted share on total interest income of $30.82 million compared to net interest income of $28.41 million, loss before income tax expense of $11.55 million and net loss available to common shareholders of $13.37 million or $3.47 per diluted share on total interest income of $39.54 million reported a year ago. Return on average assets (annualized) was 0.79% compared to a negative return on average assets of 1.39% reported a year ago. Book value per common share was $8.02 compared to $7.36 as at December 31, 2011. Return on average common equity was 8.94% for 2012, compared to a 16.94% loss on average common equity for 2011. Net income available to common shareholders was improved $16.9 million. Net income available to common shareholders increased primarily because of the change in net income between the periods. Interest income decreased between the periods primarily because of a $146 million decrease in the average interest-earning assets and also because of a decrease in the average yields earned between the periods. The improvement in net income in 2012 is due primarily to a $14.8 million decrease in the provision for loan losses between the periods, a $1.9 million increase in the gain on sale of loans, and a $4.9 million decrease in noninterest expenses due primarily to the decrease in expenses and losses recognized on real estate owned between the periods. These improvements to net income were partially offset by a $4.7 million decrease in interest income due primarily to a decrease in interest earning assets between the periods.