HMN Financial (HMNF) Stock Climbs Sharply On Merger News

In the most recent trading session, the shares of HMN Financial, Inc. (NASDAQ: HMNF) increased significantly, climbing 19.23% to hit $23.25. This significant increase happened after a merger deal was announced.

The Merger Agreement

Alerus Financial Corporation and HMN Financial have officially executed a final agreement and merger plan. In accordance with the conditions of this agreement, Alerus will combine with Home Federal Savings Bank’s parent company, HMN Financial, exclusively through stock transfers. In this deal worth $116.4 million, Home Federal will become Alerus’ wholly-owned subsidiary Alerus Financial, National Association, and HMN Financial will become Alerus.

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Financial Effects Of Strategic Expansion

The combined entity will have around $5.5 billion in total assets, $3.7 billion in total loans, $4.3 billion in total deposits, and approximately $43.1 billion in assets under management and administration. The merged business will run 29 sites in Arizona and the Midwest.

Home Federal was established in 1934 and now has 12 locations in Minnesota in addition to one in each of Iowa and Wisconsin. HMN Financial reported consolidated total assets of $1.2 billion as of March 31, 2024, which included of $872.3 million in loans and $1.0 billion in total deposits.

Enhanced Market Presence And Shareholder Benefits

The merger will enable Alerus to strategically expand into the growing Rochester, Minnesota market and other communities served by Home Federal. Home Federal has established a valuable core deposit franchise based on long-term client relationships, with a culture, vision, and purpose that align well with Alerus.

Alerus has shown via successful acquisition execution, profitable expansion, and diversification in the past. Stockholders of HMN Financial will get 1.25 shares of Alerus common stock for each share of HMNF common stock they own, under the terms of the merger.

Alerus expects the deal to have an internal rate of return of more than 25%, a tangible book value earn-back duration of around 2.2 years, and an instant accretiveness to its forecast profits before one-time charges. One director from HMN Financial will become a member of the Alerus Board of Directors when the transaction is finalized.

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