Tyler, Dave, Brandon, Jack HMN Financial Tyler, Dave, Brandon, Jack

Agenda Company Profile Financial Highlights SWOT Analysis Ratio – Comps Analysis Valuation Recommendation Profile – Financial Highlights – SWOT – Ratio - Valuation

Company Overview Stock savings bank holding company that owns 100% of Home Federal Savings Bank. Operates retail banking and loan production facilities in MN and IA. Business involves attracting deposits from the general public and businesses. Purchase one to four family residential, commercial real estate, and multi-family mortgage loans as well as consumer, construction, and commercial business loans. Also invests in mortgage-backed and related securities. Earnings Per Share: 0.7100 Fourth Quarter Highlights -Net income of $1.5 million compared to net loss of $7.6 million for fourth quarter of 2011. -Diluted earnings per common share of $0.25 compared to diluted loss per common share of $2.08 in the fourth quarter of 2011. -Provision for loan losses of $0, down $7.6 million from fourth quarter of 2011. -Losses on real-estate owned of $0.3 million, down $2.1 million from fourth quarter of 2011. -Net interest income of $5.5 million, down $1.4 million from 4th qrt of 2011. - Non-performing assets of $40.6 million, down $6.6 million from 3rd qrt of 2012. Profile – Financial Highlights – SWOT – Ratio - Valuation *

Financial Highlights Positive Operating Margins after 5 years of negative growth Shrinking balance sheet size and streamlining loan structure Profile – Financial Highlights – SWOT – Ratio - Valuation

Profile – Financial Highlights – SWOT – Ratio - Valuation

SWOT Analysis Profile – Financial Highlights – SWOT – Ratio - Valuation

Strengths Reported financial results reflect the increased volume of mortgage banking activities Diversified real estate holdings in Minnesota Real estate market looking positive 2012 Net income of $5.3 million compared to net loss of $11.6 million for 2011 Undergoing management reconstruction *

Weaknesses Exposure to Savings and Loans industry Relatively small firm Negative net income from ’08-’11

Opportunities Low stock price with room for growth Market niches in Minnesota and Iowa

Threats Potential of clients defaulting Delinquencies Interest rate risk

Comparable Analysis P/E P/B D/E Leverage Ratio HMNF 8.5x 0.77 10.7 10.7 Porter Bancorp -0.3x 0.23 0.73 24.6 Home Federal 97.7x 0.97 5.8 Bank of the Carolinas N/A 6.29 51.6 Community Capital Corp. -0.45x 0.07 2.34 9.4 Profile – Financial Highlights – SWOT – Ratio - Valuation

Valuation Current P/E: 8.5 FY2012 EPS: .86 2013 P/E: 8-20.8 (Industry Average Range) Assumptions: $1.21 2013 EPS Recession: 8.5x Base Case P/E: 14.5 Optimistic: 20.5 Profile – Financial Highlights – SWOT – Ratio - Valuation

Recommendation Buy Half Position at $6.22