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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): May 14, 2024
 
HMN Financial, Inc.
(Exact Name of Registrant as Specified in Charter)
 
Delaware
0-24100
41-1777397
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
1016 Civic Center Drive Northwest
Rochester, Minnesota 55901
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s telephone number, including area code: (507) 535-1200
 
N/A
(Former Name or Former Address, if Changed Since Last Report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
  
Trading symbol
  
Name of each exchange on which registered
Common Stock, $0.01 par value per share
  
HMNF
  
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 
 
 
 
Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
On May 14, 2024, HMN Financial, Inc., a Delaware corporation (the “Company”) and Home Federal Savings Bank, the Company’s wholly-owned subsidiary (the “Bank”), entered into an agreement with each of Jon Eberle and Lawrence McGraw to amend the Executive Severance Agreement dated June 6, 2023 among the Company, the Bank and such executive (each such agreement, the “Amendment” and collectively, the “Amendments”). Mr. Eberle is the Senior Vice President, Chief Financial Officer and Treasurer of the Company and Executive Vice President, Chief Financial Officer and Treasurer of the Bank. Mr. McGraw is the Executive Vice President and Chief Operating Officer of the Bank.
 
Prior to the Amendment, the Executive Severance Agreement provided for the certain payments and benefits to an executive for a qualifying termination of employment if a Change in Control (as defined in the Company’s 2017 Equity Incentive Plan) occurred during the term of the Executive Severance Agreement and the date of termination of the executive’s employment occurred on the date of the Change in Control or during a two-year transition period following the Change in Control. The Amendments eliminate the requirement that a termination of employment must occur during the two-year transition period following the Change in Control in order for the executive to receive the Executive Severance Agreement payments and benefits. Under the Amendments, if a Change in Control occurs during the term and prior to, or on the same day as, the date of termination of the executive’s employment, then the Company or the Bank will provide to the executives the payments and benefits specified in the Executive Severance Agreements, which were not changed in amount by the Amendments.
 
The Amendments were recommended by the Compensation Committee of the Board of Directors of the Company and were approved by the Board of Directors of the Company.
 
The foregoing summary of each Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment. The Amendment with Mr. Eberle is attached hereto as Exhibit 10.1 and incorporated herein by reference. The Amendment with Mr. McGraw is attached hereto as Exhibit 10.2 and incorporated herein by reference.
 
Item 9.01.
Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit
No.
  
Description
     
10.1
  
     
10.2
  
     
104
  
Cover Page Interactive Data File (embedded within the inline XBRL document)
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: May 16, 2024 HMN Financial, Inc.  
         
         
  By: /s/ Jon Eberle  
      Jon Eberle  
      Senior Vice President, Chief Financial Officer and Treasurer  
         
         
 
 

EXHIBIT 10.1

 

AGREEMENT TO AMEND THE

EXECUTIVE SEVERANCE AGREEMENT

 

This Agreement (the “Amendment”) to amend the Executive Severance Agreement, entered into June 6, 2023 (the “Executive Severance Agreement”) by and among HMN Financial, Inc., a Delaware corporation (the “Company”), the Company’s wholly-owned subsidiary Home Federal Savings Bank, a federally chartered savings bank (the “Bank”), and Jon Eberle (the “Executive”).

 

BACKGROUND

 

A.        The Executive is a key member of the management of the Company and the Bank and has heretofore devoted substantial skill and effort to the affairs of the Company and the Bank.

 

B.        The Company, Bank and Executive have agreed to amend the Executive Severance Agreement to provide Executive with a bonus payable upon a change in lieu of certain severance payments that would have otherwise been made to Executive in the event Executive was separated from employment with the Company and the Bank under certain identified circumstances.

 

C.        The parties desire to enter into this Amendment, which supersedes, negates and replaces the sections of the Executive Severance Agreement referenced below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the Company, Bank and the Executive agree to amend the Executive Severance Agreement as follows:

 

1.

Section 3 is amended so that the introductory paragraph reads as follows:

 

3.    Severance Payments and Benefits; Change of Control Bonus. If, during the Term of this Agreement, either (1) the employment of the Executive with the Company and the Bank is terminated by the Company and the Bank without Cause (as defined in the Company’s 2017 Equity Incentive Plan) and other than as a result of the Executive’s death or Disability (as defined in the Company’s 2017 Equity Incentive Plan), or the Executive resigns for Good Reason (as defined in Section 3(g) below) (either such event, a “Qualifying Termination”) or (2) the Company undergoes a Change of Control, then, subject to satisfaction of the conditions set forth in Section 3(c) of this Agreement, the Executive will receive the severance payments and benefits identified in this Section 3(a) or the Change in Control bonus described in Section 3(b), as applicable.

 

1
 

 

2.

Section 3(b) is replaced in its entirety with the following:

 

(b)          Change of Control Bonus. If a Change in Control occurs during the Term and prior to, or on the same day as, the Executive’s Termination Date, then the Company or the Bank shall provide to Executive the following payments and benefits:

 

(i)          Payment of a cash amount equal to two (2.0) times the sum of (A) the Executive’s annualized base salary as of the Change in Control, and (B) an amount equal to the Executive’s target annual incentive bonus for the calendar year in which the Change of Control occurs, less applicable withholdings. Such amount shall be payable to the Executive by the Company or the Bank in a lump sum on the Company’s first payroll date following the 60th day after the Change in Control but in no event later than 75 days after the Change in Control.

 

(ii)        If Executive was enrolled in a group health and dental plan sponsored by the Company or Bank immediately prior to the Change in Control, payment of a lump sum amount equal to 24 times the monthly amount the Company or the Bank expends immediately prior to the Change in Control for its share of the premiums for health and dental insurance coverage for Executive and Executive’s eligible spouse and dependents, less applicable withholdings. Such lump-sum payment will be paid to Executive at the same time as the payment specified in Section 3(b)(i).

 

(iii)      Payment of a lump sum amount equal to 24 times the monthly amount the Company or the Bank expends as of the Change in Control for its share of the premiums for 24 months of life and disability insurance coverage for the Executive under the Company’s or Bank’s then current plans for employees, less applicable withholdings,. Such lump-sum payment will be paid to Executive at the same time as the payment specified in Section 3(b)(i).

 

3.

Section 3(c) is amended to read as follows:

 

(c)         Conditions to Payments. Notwithstanding the foregoing provisions of this Section 3, neither the Company nor the Bank will be obligated to make any payments to or on behalf of Executive under Sections 3(a) or 3(b) unless (i) the Executive signs a release of claims in favor of the Company and the Bank in a form to be prescribed by the Company (the “Release”), (ii) all applicable consideration periods and rescission periods provided by law with respect to the Release have expired without the Executive rescinding the Release, and (iii), solely with respect to Section 3(a), the Executive is in compliance with Executive’s continuing obligations to the Company and the Bank (including but not limited to those in Section 4 of this Agreement). The payments provided for in this Section 3 shall be in addition to any salary or other remuneration otherwise payable to the Executive on account of employment by the Company, the Bank or one or more of either of their subsidiaries (including any amounts received prior to such termination of employment for personal services rendered after the occurrence of the Change in Control) but shall be reduced by any severance pay which the Executive receives from the Company, the Bank, or their subsidiaries under any other policy or agreement of any of such entities in the event of termination of Executive’s employment.

 

Except as provided above, the terms and conditions of the Executive Severance Agreement will remain in full force and effect, including, but not limited to, the requirement that you execute the Release described in Section 3(c) as amended by this Amendment.

 

[Signature Page Follows]

 

2
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the Effective Date first above written.

 

  HMN FINANCIAL, INC.
     
     
  By:  /s/ Bradley Krehbiel
     Bradley Krehbiel, its President and CEO
     
  HOME FEDERAL SAVINGS BANK
     
     
  By:  /s/ Bradley Krehbiel
     Bradley Krehbiel, its President and CEO
     
  Executive
     
     
  /s/ Jon Eberle
  Jon Eberle

 

3
 

EXHIBIT 10.2

 

AGREEMENT TO AMEND THE

EXECUTIVE SEVERANCE AGREEMENT

 

This Agreement (the “Amendment”) to amend the Executive Severance Agreement, entered into June 6, 2023 (the “Executive Severance Agreement”) by and among HMN Financial, Inc., a Delaware corporation (the “Company”), the Company’s wholly-owned subsidiary Home Federal Savings Bank, a federally chartered savings bank (the “Bank”), and Lawrence McGraw (the “Executive”).

 

BACKGROUND

 

A.        The Executive is a key member of the management of the Company and the Bank and has heretofore devoted substantial skill and effort to the affairs of the Company and the Bank.

 

B.        The Company, Bank and Executive have agreed to amend the Executive Severance Agreement to provide Executive with a bonus payable upon a change in lieu of certain severance payments that would have otherwise been made to Executive in the event Executive was separated from employment with the Company and the Bank under certain identified circumstances.

 

C.        The parties desire to enter into this Amendment, which supersedes, negates and replaces the sections of the Executive Severance Agreement referenced below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the Company, Bank and the Executive agree to amend the Executive Severance Agreement as follows:

 

1.

Section 3 is amended so that the introductory paragraph reads as follows:

 

3.    Severance Payments and Benefits; Change of Control Bonus. If, during the Term of this Agreement, either (1) the employment of the Executive with the Company and the Bank is terminated by the Company and the Bank without Cause (as defined in the Company’s 2017 Equity Incentive Plan) and other than as a result of the Executive’s death or Disability (as defined in the Company’s 2017 Equity Incentive Plan), or the Executive resigns for Good Reason (as defined in Section 3(g) below) (either such event, a “Qualifying Termination”) or (2) the Company undergoes a Change of Control, then, subject to satisfaction of the conditions set forth in Section 3(c) of this Agreement, the Executive will receive the severance payments and benefits identified in this Section 3(a) or the Change in Control bonus described in Section 3(b), as applicable.

 

1
 

 

2.

Section 3(b) is replaced in its entirety with the following:

 

(b)          Change of Control Bonus. If a Change in Control occurs during the Term and prior to, or on the same day as, the Executive’s Termination Date, then the Company or the Bank shall provide to Executive the following payments and benefits:

 

(i)         Payment of a cash amount equal to two (2.0) times the sum of (A) the Executive’s annualized base salary as of the Change in Control, and (B) an amount equal to the Executive’s target annual incentive bonus for the calendar year in which the Change of Control occurs, less applicable withholdings. Such amount shall be payable to the Executive by the Company or the Bank in a lump sum on the Company’s first payroll date following the 60th day after the Change in Control but in no event later than 75 days after the Change in Control.

 

(ii)        If Executive was enrolled in a group health and dental plan sponsored by the Company or Bank immediately prior to the Change in Control, payment of a lump sum amount equal to 24 times the monthly amount the Company or the Bank expends immediately prior to the Change in Control for its share of the premiums for health and dental insurance coverage for Executive and Executive’s eligible spouse and dependents, less applicable withholdings. Such lump-sum payment will be paid to Executive at the same time as the payment specified in Section 3(b)(i).

 

(iii)       Payment of a lump sum amount equal to 24 times the monthly amount the Company or the Bank expends as of the Change in Control for its share of the premiums for 24 months of life and disability insurance coverage for the Executive under the Company’s or Bank’s then current plans for employees, less applicable withholdings,. Such lump-sum payment will be paid to Executive at the same time as the payment specified in Section 3(b)(i).

 

3.

Section 3(c) is amended to read as follows:

 

(c)        Conditions to Payments. Notwithstanding the foregoing provisions of this Section 3, neither the Company nor the Bank will be obligated to make any payments to or on behalf of Executive under Sections 3(a) or 3(b) unless (i) the Executive signs a release of claims in favor of the Company and the Bank in a form to be prescribed by the Company (the “Release”), (ii) all applicable consideration periods and rescission periods provided by law with respect to the Release have expired without the Executive rescinding the Release, and (iii), solely with respect to Section 3(a), the Executive is in compliance with Executive’s continuing obligations to the Company and the Bank (including but not limited to those in Section 4 of this Agreement). The payments provided for in this Section 3 shall be in addition to any salary or other remuneration otherwise payable to the Executive on account of employment by the Company, the Bank or one or more of either of their subsidiaries (including any amounts received prior to such termination of employment for personal services rendered after the occurrence of the Change in Control) but shall be reduced by any severance pay which the Executive receives from the Company, the Bank, or their subsidiaries under any other policy or agreement of any of such entities in the event of termination of Executive’s employment.

 

Except as provided above, the terms and conditions of the Executive Severance Agreement will remain in full force and effect, including, but not limited to, the requirement that you execute the Release described in Section 3(c) as amended by this Amendment.

 

[Signature Page Follows]

 

2
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the Effective Date first above written.

 

  HMN FINANCIAL, INC.
     
     
  By:  /s/ Bradley Krehbiel
     Bradley Krehbiel, its President and CEO
     
     
  HOME FEDERAL SAVINGS BANK
     
     
  By:  /s/ Bradley Krehbiel
     Bradley Krehbiel, its President and CEO
     
     
  Executive
     
     
  /s/ Larry McGraw
  Larry McGraw

 

3