Exhibit 99

1016 Civic Center Drive NW  ·  Rochester, MN 55901  ·  Phone (507) 535-1200  ·  Fax (507) 535-1301

HMN FINANCIAL, INC. ANNOUNCES SECOND QUARTER RESULTS

Second Quarter Summary

• Net income of $1.5 million, up $0.9 million, compared to $0.6 million in second quarter of  2015

• Diluted earnings per common share of $0.31, up $0.18, compared to $0.13 in second quarter of 2015

• Net interest income of $6.8 million, up $2.1 million from second quarter of 2015

• Provision for loan losses of $0.4 million, up $0.6 million from second quarter of 2015

• Nonperforming assets of $4.9 million, down $0.7 million, or 12.6%, from March 31, 2016

• Completed branch acquisition in Albert Lea, Minnesota in second quarter of 2016

Year to Date Summary

• Net income of $3.3 million, up $2.3 million, compared to $1.0 million in first six months of 2015

• Diluted earnings per common share of $0.69, up $0.49, compared to $0.20 in first six months of 2015

• Net interest income of $12.9 million, up $3.7 million from first six months of 2015

• Provision for loan losses of ($0.4 million), down $0.2 million from first six months of 2015

• Nonperforming assets of $4.9 million, down $1.3 million, or 21.8%, from December 31, 2015

ROCHESTER, MINNESOTA, July 22, 2016. . . HMN Financial, Inc. (HMN or the Company) (NASDAQ:HMNF), the $653 million holding company for Home Federal Savings Bank (the Bank), today reported net income of $1.5 million for the second quarter of 2016, an increase of $0.9 million, compared to net income of $0.6 million for the second quarter of 2015. Diluted earnings per common share for the second quarter of 2016 was $0.31, an increase of $0.18 from the diluted earnings per common share of $0.13 for the second quarter of 2015. The increase in net income in the second quarter of 2016 was due primarily to a $2.1 million increase in interest income as a result of an increase in the average interest-earning assets and a change in the composition of the average interest-earning assets held between the periods. The increase in interest income was partially offset by a $0.6 million increase in the provision for loan losses because more loan loss reserves were established due to the loan growth experienced during the second quarter of 2016. Income tax expense increased $0.6 million because of the increase in pre-tax income in the second quarter of 2016 when compared to the second quarter of 2015.

On April 8, 2016, the Bank completed the acquisition of loans and assumption of liabilities of the Deerwood Bank branch in Albert Lea, Minnesota. The transaction increased the Bank’s assets by $19.0 million, including increases in loans, cash, goodwill, and core deposit intangible of $11.9 million, $6.1 million, $0.8 million, and $0.2 million, respectively. The Bank also assumed deposit liabilities of $19.0 million. The acquired loans and deposits are being serviced from Home Federal’s existing branch location at 143 West Clark Street, Albert Lea, Minnesota.

President’s Statement

“We are pleased to report the improvement in earnings in the second quarter of 2016 when compared to the same period of 2015,” said Bradley Krehbiel, President and Chief Executive Officer of HMN. “Our strategy to prudently grow our loan portfolios, combined with loan growth from our recent acquisitions, has resulted in an increase in our outstanding loan portfolios and has had a positive impact on the financial performance of our core banking operations.”

Second Quarter Results

Net Interest Income

Net interest income was $6.8 million for the second quarter of 2016, an increase of $2.1 million, or 44.6%, from $4.7 million for the second quarter of 2015. Interest income was $7.2 million for the second quarter of 2016, an increase of $2.1 million, or 41.2%, from $5.1 million for the same period in 2015. Interest income increased between the periods primarily because of an increase in the average interest-earning assets and a change in the composition of the average interest-earning assets held, which resulted in an increase in the average yields earned between the periods. While the average interest-earning assets increased $96.9 million between the periods, the average interest-earning assets held in higher yielding loans increased $144.4 million and the amount of average interest-earning assets held in lower yielding cash and investments decreased $47.5 million between the periods. The yield on average interest-earning assets was also enhanced $0.7 million due to loan prepayment penalties and the interest payments received on non-accruing and previously charged off commercial real estate loans that were paid off in the second quarter of 2016. The increase in the average outstanding loans between the periods was primarily the result of an increase in the commercial loan portfolio, which occurred because of an increase in loan originations and a reduction in loan payoffs between the periods. The Company also acquired $36.0 million of loans through acquisitions that occurred between the periods. The average yield earned on interest-earning assets was 4.61% for the second quarter of 2016, an increase of 75 basis points from 3.86% for the second quarter of 2015.

Interest expense was $0.4 million for the second quarter of 2016, the same as the second quarter of 2015. Interest expense remained the same and the average rate paid on interest-bearing liabilities decreased 5 basis points between the periods primarily because of the change in the composition of the average interest-bearing liabilities. While the average interest-bearing liabilities increased $93.0 million between the periods, the average amount held in lower rate checking and money market accounts increased $84.6 million and the average amount held in higher rate certificates of deposits and other borrowings increased $8.4 million between the periods. The increase in the average outstanding deposits between the periods was primarily the result of the $66.3 million in deposits obtained through acquisitions between the periods. The average interest rate paid on interest-bearing liabilities was 0.27% for the second quarter of 2016 compared to 0.32% for the second quarter of 2015. Net interest margin (net interest income divided by average interest-earning assets) for the second quarter of 2016 was 4.36%, an increase of 80 basis points, compared to 3.56% for the second quarter of 2015.

A summary of the Company’s net interest margin for the three and six month periods ended June 30, 2016 and 2015 is as follows:

Provision for Loan Losses 

The provision for loan losses was $0.4 million for the second quarter of 2016, an increase of $0.6 million from the ($0.2) million provision for loan losses for the second quarter of 2015. The provision increased primarily because of the increased loan growth that was experienced in the second quarter of 2016 when compared to the second quarter of 2015. The increase in the provision related to increased loan growth was partially offset by an increase in recoveries received on previously charged off loans in the second quarter of 2016 when compared to the same period of 2015. Total non-performing assets were $4.9 million at June 30, 2016, a decrease of $0.7 million, or 12.6%, from $5.6 million at March 31, 2016. Non-performing loans decreased $0.5 million and foreclosed and repossessed assets decreased $0.2 million during the second quarter of 2016.

A reconciliation of the Company’s allowance for loan losses for the quarters ended June 30, 2016 and 2015 is summarized as follows:

The following table summarizes the amounts and categories of non-performing assets in the Bank’s portfolio and loan delinquency information as of the end of the three most recently completed quarters.     

⁽¹⁾ Excludes non-accrual loans.

Non-Interest Income and Expense

Non-interest income was $2.1 million for the second quarter of 2016, an increase of $0.2 million, or 12.6%, from $1.9 million for the same period of 2015. Gain on sales of loans increased $0.2 million between the periods primarily because of an increase in single family loan sales in the second quarter of 2016 when compared to the same period of 2015. Other non-interest income increased slightly between the periods primarily because of an increase in the fees earned on the sale of uninsured investment products. Fees and service charges increased slightly between the periods due to an increase in debit card income.

Non-interest expense was $6.0 million for the second quarter of 2016, an increase of $0.2 million, or 4.0%, from $5.8 million for the same period of 2015. Other non-interest expense increased $0.1 million due to an increase in the amortization costs related to the core deposit intangibles and an increase in annual report costs between the periods. Occupancy and equipment expense increased $0.1 million between the periods because of increased non-capitalized software and equipment expenses. Professional services expense increased $0.1 million due to increased costs related to the branch acquisition that was completed during the second quarter of 2016. Compensation expense increased slightly between the periods as annual increases in compensation were partially offset by a decrease in restricted stock award expenses. These increases in non-interest expenses were partially offset by a $0.1 million increase in the gains on real estate owned because of an increase in the number of properties sold between the periods.

Income tax expense was $1.0 million for the second quarter of 2016, an increase of $0.7 million from $0.3 million for the second quarter of 2015. The increase in income tax expense between the periods is primarily related to the increase in pre-tax income in the second quarter of 2016 when compared to the second quarter of 2015.

Return on Assets and Equity

Return on average assets (annualized) for the second quarter of 2016 was 0.91%, compared to 0.42% for the second quarter of 2015. Return on average equity (annualized) was 8.23% for the second quarter of 2016, compared to 3.50% for the same period in 2015. Book value per common share at June 30, 2016 was $16.34, compared to $15.06 at June 30, 2015. 

Six Month Period Results

Net Income

Net income was $3.3 million for the six month period ended June 30, 2016, an increase of $2.3   million, or 210.9%, compared to net income of $1.0 million for the six month period ended June 30, 2015. The net income available to common shareholders was $3.3 million for the six month period ended June 30, 2016, an increase of $2.4 million, or 246.7%, compared to net income available to common shareholders of $0.9 million for the same period of 2015. Diluted earnings per common share for the six month period ended June 30, 2016 was $0.69, an increase of $0.49 per share compared to diluted earnings per common share of $0.20 for the same period in 2015. The increase in net income for the six month period ended June 30, 2016 was due primarily to a $3.7 million increase in interest income as a result of an increase in the average interest-earning assets and a change in the composition of the average interest-earning assets held between the periods. The provision for loan losses decreased $0.2 million between the periods primarily because there were more recoveries received on previously charged off loans in the first six months of 2016 when compared to the same period of 2015. These increases in income were partially offset by a $1.5 million increase in income tax expense related to the increased pre-tax income between the periods.

Net Interest Income

Net interest income was $12.9 million for the first six months of 2016, an increase of $3.7 million, or 39.8%, from $9.2 million for the same period in 2015. Interest income was $13.7 million for the six month period ended June 30, 2016, an increase of $3.7 million, or 37.5%, from $10.0 million for the same six month period in 2015. Interest income increased between the periods primarily because of an increase in the average interest-earning assets and a change in the composition of the average interest-earning assets held, which resulted in an increase in the average yields earned between the periods. While the average interest-earning assets increased $80.9 million between the periods, the average interest-earning assets held in higher yielding loans increased $126.4 million and the amount of average interest-earning assets held in lower yielding cash and investments decreased $45.5 million between the periods. The yield on average interest-earning assets was also enhanced $1.2 million due to loan prepayment penalties and the interest payments received on non-accruing and previously charged off commercial real estate loans that were paid off during the first six months of 2016. The increase in the average outstanding loans between the periods was primarily the result of an increase in the commercial loan portfolio, which occurred because of an increase in loan originations and a reduction in loan payoffs between the periods. The Company also acquired $36.0 million of loans through acquisitions that occurred between the periods. The average yield earned on interest-earning assets was 4.48% for the first six months of 2016, an increase of 72 basis points from 3.76% for the same period of 2015.

Interest expense was $0.8 million for the first six months of 2016, an increase of $0.1 million, or 7.3%, compared to $0.7 million for the first six months of 2015. Interest expense increased because of an increase in the average outstanding interest-bearing liabilities. The average rate paid on interest-bearing liabilities decreased 3 basis points between the periods primarily because of the change in the composition of the average interest-bearing liabilities. While the average interest-bearing liabilities increased $81.2 million between the periods, the average amount held in lower rate checking and money market accounts increased $73.5 million and the average amount held in higher rate certificates of deposits and other borrowings increased $7.7 million between the periods. The increase in the average outstanding deposits between the periods was primarily the result of the $66.3 million of deposits acquired through acquisitions between the periods. The average interest rate paid on interest-bearing liabilities was 0.27% for the first six months of 2016 compared to 0.30% for the first six months of 2015. Net interest margin (net interest income divided by average interest-earning assets) for the first six months of 2016 was 4.23%, an increase of 74 basis points, compared to 3.49% for the first six months of 2015.

Provision for Loan Losses

The provision for loan losses was ($0.4) million for the first six months of 2016, a decrease of $0.2 million from the ($0.2) million provision for loan losses for the same six month period in 2015. The provision for loan losses decreased between the periods primarily because there were more recoveries received on previously charged off loans in the first six months of 2016 when compared to the same period of 2015. Total non-performing assets were $4.9 million at June 30, 2016, a decrease of $1.3 million, or 21.7%, from $6.2 million at December 31, 2015. Non-performing loans decreased $0.7 million and foreclosed and repossessed assets decreased $0.6 million during the first six months of 2016.

A reconciliation of the Company’s allowance for loan losses for the six month periods ended June 30, 2016 and June 30, 2015 is summarized as follows:

Non-Interest Income and Expense

Non-interest income was $3.9 million for the first six months of 2016, an increase of $0.4 million, or 11.4%, from $3.5 million for the first six months of 2015. Gain on sales of loans increased $0.4 million between the periods primarily because of an increase in single family loan sales in the first six months of 2016 when compared to the same period of 2015.

Non-interest expense was $11.7 million for the first six months of 2016, an increase of $0.5 million, or 4.4%, from $11.2 million for the same period of 2015. Compensation expense increased $0.3 million between the periods due primarily to an increase in wages and incentives related to increased loan production. Other non-interest expense increased $0.2 million due to increased charitable contributions and annual report costs between the periods. Occupancy and equipment expense increased $0.2 million between the periods because of increased non-capitalized software and equipment expenses. Professional services expense increased $0.1 million due to increased costs related to the branch acquisition that was completed during the second quarter of 2016. Data processing costs increased $0.1 million because of increased mobile and on-line banking expenses because of increased customer activity between the periods. These increases in non-interest expenses were partially offset by a $0.4 million increase in the gains on real estate owned because of an increase in the number of properties sold between the periods.

Income tax expense was $2.1 million for the first six months of 2016, an increase of $1.5 million from $0.6 million for the first six months of 2015. The increase in income tax expense between the periods is primarily related to the increase in pre-tax income in the first six months of 2016 when compared to the first six months of 2015. 

Net Income Available to Common Shareholders

The net income available to common shareholders was $3.3 million for the first six months of 2016, an increase of $2.4 million from the $0.9 million net income available to common shareholders in the first six months of 2015. The net income available to common shareholders increased primarily because of the increase in the net income between the periods and a reduction in the dividends paid on the outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the “Preferred Stock”). On February 17, 2015 the Company redeemed the final 10,000 shares of its outstanding Preferred Stock and, as a result, no dividends are required to be paid on the Preferred Stock after that date.

Return on Assets and Equity

Return on average assets (annualized) for the six month period ended June 30, 2016 was 1.01%, compared to 0.37% for the same period in 2015. Return on average equity (annualized) was 9.16% for the six month period ended June 30, 2016, compared to 3.04% for the same period in 2015.

General Information

HMN Financial, Inc. and the Bank are headquartered in Rochester, Minnesota. Home Federal Savings Bank operates twelve full service offices in Minnesota located in Albert Lea, Austin, Eagan, Kasson (2), La Crescent, Rochester (4), Spring Valley and Winona; one full service office in Marshalltown, Iowa; and three loan origination offices located in Delafield, Wisconsin, Sartell, Minnesota, and Owatonna, Minnesota.

Safe Harbor Statement 

This press release may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are often identified by such forward-looking terminology as “expect,” “intend,” “look,” “believe,” “anticipate,” “estimate,” “project,” “seek,” “may,” “will,” “would,” “could,” “should,” “trend,” “target,” and “goal” or similar statements or variations of such terms and include, but are not limited to, those relating to increasing our core deposit relationships, improving credit quality, reducing non-performing assets, and generating improved financial results (including profitability); the adequacy and amount of available liquidity and capital resources to the Bank; the Company’s liquidity and capital requirements; our expectations for core capital and our strategies and potential strategies for maintenance thereof; improvements in loan production; changes in the size of the Bank’s loan portfolio; the amount of the Bank’s non-performing assets and the appropriateness of the allowance therefor; our ability to integrate the Deerwood Bank branch and other acquired operations; anticipated future levels of the provision for loan losses; future losses on non-performing assets; the amount and composition of interest-earning assets; the amount and composition of interest bearing liabilities; the availability of alternate funding sources; the payment of dividends by HMN; the future outlook for the Company; the amount of dividends paid by the Federal Home Loan Bank (FHLB) on its stock; the amount of deposits that will be withdrawn from checking and money market accounts and how the withdrawn deposits will be replaced; the projected changes in net interest income based on rate shocks; the range that interest rates may fluctuate over the next twelve months; the net market risk of interest rate shocks; the future outlook for the issuer trust preferred securities held by the Bank; the ability of the Bank to pay dividends to HMN; the ability of HMN to pay the principal and interest payments on its third party note payable; the ability to remain well capitalized; and compliance by the Bank with regulatory standards generally (including the Bank’s status as “well-capitalized”) and other supervisory directives or requirements to which the Company or the Bank are or may become expressly subject, specifically, and possible responses of the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB), the Bank, and the Company to any failure to comply with any such regulatory standard, directive or requirement.

A number of factors could cause actual results to differ materially from the Company’s assumptions and expectations. These include but are not limited to the adequacy and marketability of real estate and other collateral securing loans to borrowers; federal and state regulation and enforcement; possible legislative and regulatory changes, including additional changes to regulatory capital rules; the ability of the Bank to comply with other applicable regulatory capital requirements; enforcement activity of the OCC and FRB in the event of our non-compliance with any applicable regulatory standard or requirement; adverse economic, business and competitive developments such as shrinking interest margins, reduced collateral values, deposit outflows, changes in credit or other risks posed by the Company’s loan and investment portfolios; changes in costs associated with alternate funding sources, including changes in collateral advance rates and policies of the FHLB; technological, computer-related or operational difficulties; results of litigation; reduced demand for financial services and loan products; changes in accounting policies and guidelines, or monetary and fiscal policies of the federal government or tax laws; international economic developments; the Company’s access to and adverse changes in securities markets; the market for credit related assets; the future operating results, financial condition, cash flow requirements and capital spending priorities of the Company and the Bank; the availability of internal and, as required, external sources of funding; acquisition integration costs; our ability to attract and retain employees; or other significant uncertainties. Additional factors that may cause actual results to differ from the Company’s assumptions and expectations include those set forth in the Company’s most recent filing on Forms 10-K and 10-Q with the Securities and Exchange Commission. All forward-looking statements are qualified by, and should be considered in conjunction with, such cautionary statements. For additional discussion of the risks and uncertainties applicable to the Company, see the “Risk Factors” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and Part II, Item 1A of its subsequently filed quarterly reports on Form 10-Q.

All statements in this press release, including forward-looking statements, speak only as of the date they are made, and we undertake no duty to update any of the forward-looking statements after the date of this press release.

(Three pages of selected consolidated financial information are included with this release.)

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HMN FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(unaudited)

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