Executive Summary

Q4 2023 EPS was $0.33 on net income of $1.45M, down year over year versus $0.56 and $2.44M in Q4 2022, as net interest margin (NIM) compressed to 2.58% from 3.35% YoY on materially higher funding costs .
Sequentially, EPS was roughly flat (Q3: $0.34), but NIM declined to 2.58% (Q3: 2.81%), and the efficiency ratio worsened to 78.45% (Q3: 72.90%) amid revenue pressure and steady opex .
Management cited deposit and rate stabilization late in the quarter and expects NIM compression to slow as deposit costs stabilize and earning assets reprice; the Board declared a $0.08 quarterly dividend payable March 6, 2024 .
Consensus estimates (EPS/revenue) via S&P Global were unavailable for HMNF; thus, we cannot benchmark results vs. Street this quarter. Attempted retrieval returned no CIQ mapping for HMNF.

What Went Well and What Went Wrong

What Went Well

Mortgage banking improved YoY: gain on sale rose to $0.40M in Q4 (vs. $0.30M in Q4 2022) on better mortgage originations/sales; non-interest income grew 13% YoY to $2.20M .
Book value per share increased to $24.16 (Dec-31-23) from $21.72 (Dec-31-22), aided by positive other comprehensive income in Q4 and AOCI improvement .
Management highlighted deposit and rate stabilization observed late in the quarter and expressed optimism that NIM compression will slow as deposit costs stabilize and earning assets reprice .

What Went Wrong

Funding costs surged: interest expense rose to $4.38M (vs. $1.08M in Q4 2022), driven by mix shift toward higher-cost brokered and certificate deposits; NIM fell to 2.58% (from 3.35%) .
Asset quality pressure emerged: non-performing assets increased to $3.82M (0.34% of assets) vs. $1.08M at 9/30/23, largely from a $2.2M commercial business relationship in agriculture classified as non-performing .
Operating leverage tightened: efficiency ratio worsened to 78.45% (Q3: 72.90%; Q4’22: 68.07%), reflecting margin compression and limited expense relief .

Financial Results

Quarterly trend (sequential; oldest → newest)

Metric	Q2 2023	Q3 2023	Q4 2023
Total Revenue (NII + Non-interest) ($M)	$9.70 (7.73 + 1.97)	$9.99 (7.80 + 2.18)	$9.36 (7.16 + 2.20)
Net Interest Income ($M)	$7.73	$7.80	$7.16
Non-interest Income ($M)	$1.97	$2.18	$2.20
Provision for Credit Losses ($M)	$0.26	$0.32	$0.15
Net Income ($M)	$1.42	$1.50	$1.45
Diluted EPS ($)	$0.32	$0.34	$0.33
Net Interest Margin (%)	2.90%	2.81%	2.58%
Efficiency Ratio (%)	76.86%	72.90%	78.45%
ROA (annualized, %)	0.52%	0.52%	0.51%
ROE (annualized, %)	4.81%	4.95%	4.76%

Year-over-year comparison (Q4 2022 → Q4 2023)

Metric	Q4 2022	Q4 2023
Total Revenue (NII + Non-interest) ($M)	$10.86 (8.92 + 1.94)	$9.36 (7.16 + 2.20)
Net Interest Income ($M)	$8.92	$7.16
Non-interest Income ($M)	$1.94	$2.20
Interest Expense ($M)	$1.08	$4.38
Net Interest Margin (%)	3.35%	2.58%
Diluted EPS ($)	$0.56	$0.33
ROA (annualized, %)	0.89%	0.51%
Book Value/Share ($)	$21.72	$24.16
Non-performing Assets ($M)	$1.88	$3.82
Allowance to NPLs (%)	547.24%	309.69%

KPIs and balance sheet (sequential; oldest → newest)

KPI	Q2 2023	Q3 2023	Q4 2023
Loans Receivable, net ($M)	$826.93	$850.76	$845.69
Deposits ($M)	$970.71	$1,043.59	$976.79
NPA / Total Assets (%)	0.16%	0.09%	0.34%
Allowance / Total Loans (%)	1.37%	1.39%	1.38%
Gain on Sale of Loans ($M)	$0.33	$0.46	$0.40
Fees & Service Charges ($M)	$0.83	$0.86	$0.86
Tier 1 Leverage (Bank) (%)	9.25%	8.93%	9.08%

Note: “Total Revenue” is calculated as Net Interest Income + Total Non-interest Income from reported financials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q1 2024 payout (payable Mar 6, 2024; record Feb 13, 2024)	N/A	$0.08	N/A

No formal quantitative financial guidance (revenue/margins/OpEx/tax) was provided in the Q4 2023 press release .

Earnings Call Themes & Trends

No Q4 2023 earnings call transcript was found for HMNF despite targeted searches; themes below reflect press release commentary across Q2–Q4 2023 [Search documented above; no HMNF transcript returned].

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2023)	Trend
Funding costs & deposit mix	“Deposit outflows increased our use of higher rate wholesale funding” in Q2; migration to CDs and wholesale funding noted as raising cost of funds in Q3 .	Rates on deposits/funding increased more quickly than asset yields; management observed stabilization in deposit balances and interest rates late in Q4 .	Cost pressure persisted, but mgmt sees stabilization emerging .
Net interest margin	NIM 3.00% in Q2; 2.81% in Q3, with compression tied to higher funding costs .	NIM 2.58%; mgmt expects compression to slow as deposits stabilize and assets reprice .	Continued compression, with improving outlook per mgmt .
Credit quality	NPA 0.16% (Q2); 0.09% (Q3); allowance strengthened with CECL adoption; delinquencies uptick tied to ag relationship in Q3 .	NPA rose to 0.34% on a $2.2M ag-related commercial business loan; allowance/NPLs 309.7% .	Deterioration in Q4 from low levels; coverage still strong .
Mortgage banking	Gain on sale fell in H1 vs 2022; improved modestly in Q3 .	Q4 gain on sale $0.40M vs $0.30M YoY, citing higher originations/sales .	YoY improvement in Q4 .
Taxes/Regulatory	Q3: valuation allowance on WI deferred tax asset increased tax expense; FDIC assessment costs higher YTD .	No specific tax changes noted; FDIC costs discussed at the annual level .	Neutral in Q4; cost focus ongoing .

Management Commentary

“Maintaining our net interest income continued to be a challenge in the fourth quarter as the rates paid on our deposits and other funding sources increased more quickly than the rates on our interest earning assets.” — Bradley Krehbiel, President & CEO .
“We are… encouraged by the stabilization in our deposit balances and interest rates that we began to observe in the fourth quarter. We are optimistic that net interest margin compression will slow in the coming quarters as our deposit costs stabilize and our earning assets reprice to current market rates.” — Bradley Krehbiel .
Prior quarter context: “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.” — Q3 2023 .
Prior quarter context: “Deposit outflows increased our use of higher rate wholesale funding sources which increased our cost of funds during the quarter.” — Q2 2023 .

Q&A Highlights

No Q4 2023 earnings call transcript was found for HMNF; no Q&A to report for the quarter (search returned no HMNF transcript documents).

Estimates Context

Wall Street consensus estimates (EPS, revenue) via S&P Global Capital IQ were unavailable for HMNF for Q4 2023 (attempted retrieval returned no CIQ mapping). Consequently, we cannot provide beat/miss analysis versus consensus for this quarter.

Key Takeaways for Investors

Margin pressure remains the central theme: NIM declined to 2.58% (Q3: 2.81%; Q4’22: 3.35%) as funding costs outpaced asset yields; management expects compression to slow as deposits stabilize and assets reprice .
Credit watch: NPA rose to 0.34% of assets on an ag-related commercial business loan; however, allowance coverage of NPLs remains solid at ~310% .
Operating efficiency slipped: efficiency ratio increased to 78.45% from 72.90% in Q3, reflecting revenue pressure; monitoring cost discipline and revenue stabilization is key near term .
Mortgage banking improved YoY in Q4, supporting non-interest income resilience despite rate headwinds; sustainability will depend on rate path and origination volumes .
Capital and dividend: Tier 1 leverage of 9.08% at the bank and a declared $0.08 dividend provide support for shareholder returns during the transition period .
Deposit trends and mix are the swing factor: management noted deposit/rate stabilization; watch mix between core deposits and higher-cost CDs/brokered funding for earnings inflection .
Absence of consensus estimates and call Q&A elevates focus on next quarter’s reported NIM trajectory, NPA resolution, and deposit mix updates as potential catalysts .

Sources:

Q4 2023 press release and financials (Form 8-K, Item 2.02; published Jan 26, 2024) .
Q3 2023 press release and financials (Form 8-K, Item 2.02; published Oct 20, 2023) .
Q2 2023 press release and financials (Form 8-K, Item 2.02; published Jul 21, 2023) .

HMN FINANCIAL INC (HMNF)·Q4 2023 Earnings Summary