[graphic of open-winged eagle]
HMN FINANCIAL, INC.
101 North Broadway
Spring Valley, MN 55975
Phone 507-346-7345
Fax 507-346-1111




NEWS RELEASE   CONTACT:  James B. Gardner, 
                         Executive Vice President
                         HMN Financial, Inc. (507) 346-7345
                         FOR IMMEDIATE RELEASE


HMN FINANCIAL, INC. ANNOUNCES AGREEMENT TO ACQUIRE MARSHALLTOWN 
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FINANCIAL CORPORATION
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     SPRING VALLEY, MINNESOTA, July 1, 1997 . . . HMN Financial,
Inc. (HMN) (NASDAQ:HMNF), the thrift holding company for Home
Federal Savings Bank, and Marshalltown Financial Corporation
(NASDAQ:MFCX), the thrift holding company for Marshalltown
Savings Bank, FSB, have entered into a definitive agreement to
merge.  Under the agreement, HMN Financial will acquire in a cash
transaction valued at $25.9 million, or $17.51 per share, all
outstanding shares of Marshalltown Financial's common stock.

     The agreement is subject to regulatory approvals, as well as
approval of Marshalltown Financial's shareholders, a process that
is expected to be completed by the end of the year.  Due
diligence work has been completed by HMN.   Marshalltown Savings
Bank, FSB will be operated as a division of Home Federal.  HMN
expects that the transaction will be slightly dilutive to
earnings for the first twelve months after closing and then
accretive to earnings thereafter.  The previous forward-looking
statement regarding earnings expectations involves risks and
uncertainties and actual results may be materially different. 
Factors that could cause actual results to differ include the
successful integration of the two thrifts, retention of key
employees of both companies, successful integration of products,
as well as competitive conditions in the banking industry.      

     HMN's President and Chief Executive Officer, Roger P. Weise,
said that the acquisition provides his company with a unique
opportunity to significantly expand its market into the
neighboring State of Iowa.

     Richard Rathke, President of Marshalltown Financial, stated
that his company's alliance with HMN presents a good opportunity
for the Bank, its customers and employees with an expansion of
products and services.
                                                                  
                                        more...


     Marshalltown Financial, which operates two offices in
Marshalltown and one office in Toledo, Iowa, had assets of $127.1
million and deposits of $106.0 million at March 31, 1997.  With
total equity capital of $19.8 million, Marshalltown Financial is
in full compliance with its regulatory capital requirements. 
Marshalltown is located approximately 45 miles northeast of Des
Moines.

     HMN, which operates seven retail banking offices in southern
Minnesota and one mortgage banking office in Eden Prairie,
Minnesota, completed its mutual-to-stock conversion in June 1994. 
On a consolidated basis, HMN Financial has $553.0 million of
assets and stockholders equity of $78.8 million at March 31,
1997.  

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