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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2008
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 000-18464
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EMCLAIRE FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Pennsylvania 25-1606091
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
612 Main Street, Emlenton, Pennsylvania 16373
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(Address of principal executive offices) (Zip Code)
(724) 867-2311
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(Registrant's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |_|
Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
The number of shares outstanding of the Registrant's common stock was
1,267,835 at May 14, 2008.
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EMCLAIRE FINANCIAL CORP.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Interim Financial Statements (Unaudited)
Consolidated Balance Sheets as of
March 31, 2008 and December 31, 2007...........................................1
Consolidated Statements of Income for the three
months ended March 31, 2008 and 2007...........................................2
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 2008 and 2007...........................................3
Consolidated Statements of Changes in Stockholders'
Equity for the three months ended March 31, 2008 and 2007......................4
Notes to Consolidated Financial Statements.....................................5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations..............................11
Item 3. Quantitative and Qualitative Disclosures About Market Risk....................17
Item 4. Controls and Procedures.......................................................18
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.............................................................18
Item 1A. Risk Factors..................................................................18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds...................19
Item 3. Defaults Upon Senior Securities...............................................19
Item 4T. Submission of Matters to a Vote of Security Holders...........................19
Item 5. Other Information.............................................................19
Item 6. Exhibits......................................................................19
Signatures ..............................................................................20
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Interim Financial Statements
------------------------------------
Emclaire Financial Corp. and Subsidiary
Consolidated Balance Sheets
As of March 31, 2008 (Unaudited) and December 31, 2007
(Dollar amounts in thousands, except share data)
March 31, December 31,
2008 2007
--------------- ---------------
Assets
------
Cash and due from banks $ 8,079 $ 10,288
Interest earning deposits with banks 6,825 195
--------------- ---------------
Cash and cash equivalents 14,904 10,483
Securities available for sale, at fair value 55,078 51,919
Loans receivable, net of allowance for loan
losses of $2,219 and $2,157 232,863 229,819
Federal bank stocks, at cost 2,697 2,662
Bank-owned life insurance 5,036 4,987
Accrued interest receivable 1,360 1,365
Premises and equipment, net 8,091 7,904
Goodwill 1,422 1,422
Prepaid expenses and other assets 1,071 1,159
--------------- ---------------
Total Assets $ 322,522 $ 311,720
=============== ===============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Non-interest bearing $ 48,184 $ 47,111
Interest bearing 203,347 197,151
--------------- ---------------
Total deposits 251,531 244,262
Short-term borrowed funds 8,757 5,400
Long-term borrowed funds 35,000 35,000
Accrued interest payable 780 771
Accrued expenses and other liabilities 1,368 1,584
--------------- ---------------
Total Liabilities 297,436 287,017
--------------- ---------------
Stockholders' Equity:
Preferred stock, $1.00 par value, 3,000,000
shares authorized; none issued - -
Common stock, $1.25 par value, 12,000,000
shares authorized; 1,395,852 shares issued;
1,267,835 shares outstanding 1,745 1,745
Additional paid-in capital 10,923 10,902
Treasury stock, at cost; 128,017 shares (2,653) (2,653)
Retained earnings 15,267 15,114
Accumulated other comprehensive loss (196) (405)
--------------- ---------------
Total Stockholders' Equity 25,086 24,703
--------------- ---------------
Total Liabilities and Stockholders'
Equity $ 322,522 $ 311,720
=============== ===============
Common shares outstanding 1,267,835 1,267,835
See accompanying notes to consolidated financial statements.
1
Emclaire Financial Corp. and Subsidiary
Consolidated Statements of Income
For the three months ended March 31, 2008 and 2007 (Unaudited)
(Dollar amounts in thousands, except per share data)
For the three months ended
March 31,
-----------------------------------
2008 2007
--------------- ---------------
Interest and dividend income:
Loans receivable, including fees $ 3,928 $ 3,604
Securities:
Taxable 378 364
Exempt from federal income tax 161 173
Federal bank stocks 30 50
Deposits with banks 23 121
--------------- ---------------
Total interest and dividend income 4,520 4,312
--------------- ---------------
Interest expense:
Deposits 1,572 1,667
Borrowed funds 405 336
--------------- ---------------
Total interest expense 1,977 2,003
--------------- ---------------
Net interest income 2,543 2,309
Provision for loan losses 60 45
--------------- ---------------
Net interest income after provision for loan
losses 2,483 2,264
--------------- ---------------
Noninterest income:
Fees and service charges 358 326
Commissions on financial services 118 162
Net gain on available for sale securities - 58
Net gain on sales of loans 14 -
Earnings on bank-owned life insurance
(BOLI) 56 53
Other 114 131
--------------- ---------------
Total noninterest income 660 730
--------------- ---------------
Noninterest expense:
Compensation and employee benefits 1,417 1,306
Premises and equipment 420 400
Other 576 604
--------------- ---------------
Total noninterest expense 2,413 2,310
--------------- ---------------
Income before provision for income taxes 730 684
Provision for income taxes 171 133
--------------- ---------------
Net income $ 559 $ 551
=============== ===============
Basic and diluted earnings per share $ 0.44 $ 0.43
Average common shares outstanding 1,267,835 1,267,835
See accompanying notes to consolidated financial statements.
2
Emclaire Financial Corp. and Subsidiary
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2008 and 2007 (Unaudited)
(Dollar amounts in thousands)
For the three months ended
March 31,
-----------------------------------
2008 2007
--------------- ---------------
Cash flows from operating activities
Net income $ 559 $ 551
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization of
premises and equipment 165 170
Provision for loan losses 60 45
Amortization of premiums and
accretion of discounts, net (35) (2)
Amortization of mortgage servicing
rights 5 4
Amortization of deferred loan costs 70 52
Realized gains on sales of available
for sale securities, net - (58)
Net gains on sales of loans (14) -
Originations of loans sold (355) (312)
Proceeds from the sale of loans 357 312
Stock compensation expense 20 -
Earnings on bank owned life
insurance, net (49) (47)
(Increase) decrease in accrued
interest receivable 5 (102)
Increase in prepaid expenses and
other assets (25) (191)
Increase (decrease) in accrued
interest payable 9 (71)
Increase (decrease) in accrued
expenses and other liabilities (216) 435
--------------- ---------------
Net cash provided by operating
activities 556 786
--------------- ---------------
Cash flows from investing activities
Loan originations and principal
collections, net (3,164) 312
Available for sale securities:
Sales - 265
Maturities, repayments and calls 24,486 126
Purchases (27,291) (5,647)
(Purchase) redemption of federal bank
stocks (35) 8
Purchases of premises and equipment (352) (103)
--------------- ---------------
Net cash used in investing activities (6,356) (5,039)
--------------- ---------------
Cash flows from financing activities
Net increase (decrease) in deposits 7,269 (1,021)
Net increase in short-term borrowed
funds 3,357 -
Dividends paid on common stock (405) (368)
--------------- ---------------
Net cash provided by (used in)
financing activities 10,221 (1,389)
--------------- ---------------
Net increase (decrease) in cash and cash
equivalents 4,421 (5,642)
Cash and cash equivalents at beginning of
period 10,483 16,717
--------------- ---------------
Cash and cash equivalents at end of
period $ 14,904 $ 11,075
=============== ===============
Supplemental information:
Interest paid $ 1,968 $ 2,074
See accompanying notes to consolidated financial statements.
3
Emclaire Financial Corp. and Subsidiary
Consolidated Statements of Changes in Stockholders' Equity
For the three months ended March 31, 2008 and 2007 (Unaudited)
(Dollar amounts in thousands, except per share data)
For the three months ended
March 31,
-----------------------------------
2008 2007
--------------- ---------------
Balance at beginning of period $ 24,703 $ 23,917
Net income 559 551
Other comprehensive income (loss):
Change in net unrealized gains on available
for sale securities, net of taxes 209 7
Less reclassification adjustment for gains
included
in net income, net of taxes - (38)
--------------- ---------------
Other comprehensive income (loss) 209 (31)
--------------- ---------------
Total comprehensive income 768 520
Stock compensation expense 20 -
Dividends declared (405) (368)
--------------- ---------------
Balance at end of period $ 25,086 $ 24,069
=============== ===============
Common cash dividend per share $ 0.32 $ 0.29
=============== ===============
See accompanying notes to consolidated financial statements.
4
Emclaire Financial Corp. and Subsidiary
Notes to Consolidated Financial Statements (Unaudited)
1. Nature of Operations and Basis of Presentation.
Emclaire Financial Corp. (the "Corporation") is a Pennsylvania company
organized as the holding company of Farmers National Bank of Emlenton (the
"Bank"). The Corporation provides a variety of financial services to
individuals and businesses through its offices in western Pennsylvania. Its
primary deposit products are checking, savings and certificate of deposit
accounts and its primary lending products are residential and commercial
mortgages, commercial business and consumer loans.
The consolidated financial statements include the accounts of the
Corporation and its wholly owned subsidiary, the Bank. All intercompany
transactions and balances have been eliminated in preparing the
consolidated financial statements.
The accompanying unaudited consolidated financial statements for the
interim periods include all adjustments, consisting of normal recurring
accruals, which are necessary, in the opinion of management, to fairly
reflect the Corporation's consolidated financial position and results of
operations. Additionally, these consolidated financial statements for the
interim periods have been prepared in accordance with instructions for the
Securities and Exchange Commission's Form 10-Q and therefore do not include
all information or footnotes necessary for a complete presentation of
financial condition, results of operations and cash flows in conformity
with accounting principles generally accepted in the United States of
America. For further information, refer to the audited consolidated
financial statements and footnotes thereto for the year ended December 31,
2007, as contained in the Corporation's 2007 Annual Report of Form 10-K
filed with the Securities and Exchange Commission.
The balance sheet at December 31, 2007 has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect the reported
amounts in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates. Material estimates that
are particularly susceptible to significant change in the near term relate
to the determination of the allowance for loan losses. The results of
operations for interim quarterly or year to date periods are not
necessarily indicative of the results that may be expected for the entire
year or any other period. Certain amounts previously reported may have been
reclassified to conform to the current year's financial statement
presentation.
2. Earnings per Common Share.
Basic earnings per common share (EPS) excludes dilution and is computed by
dividing net income by the weighted average number of common shares
outstanding during the period. Diluted EPS reflects the potential dilution
that could occur if securities or contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Corporation. Options
on 85,000 shares of common stock were not included in computing diluted
earnings per share because their effects were not dilutive.
5
3. Securities.
The Corporation's securities as of the respective dates are summarized as
follows:
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(Dollar amounts in thousands) Amortized Unrealized Unrealized Fair
cost gains losses value
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Available for sale:
-------------------
March 31, 2008:
U.S. Government agencies and related
entities $ 16,496 $ 145 $ - $ 16,642
Mortgage-backed securities 14,476 62 (6) 14,531
Municipal securities 13,686 669 - 14,354
Corporate securities 5,987 - (1) 5,986
Equity securities 4,265 - (701) 3,565
----------- ---------- ----------- ----------
$ 54,910 $ 876 $ (707) $ 55,078
=========== ========== =========== ==========
December 31, 2007:
U.S. Government agencies and related
entities $ 29,356 $ 37 $ (59) $ 29,334
Mortgage-backed securities 1,932 - (48) 1,884
Municipal securities 13,685 566 - 14,251
Corporate securities 2,939 - - 2,939
Equity securities 4,156 - (645) 3,511
----------- ---------- ----------- ----------
$ 52,068 $ 603 $ (752) $ 51,919
=========== ========== =========== ==========
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Management evaluates securities for other than temporary impairment at
least on a quarterly basis, and more frequently when economic, market or
other concerns warrant such evaluation. Consideration is given to (1) the
length of time and the extent to which the fair value has been less than
cost, (2) the financial condition and near-term prospects of the issuer and
(3) the intent and ability of the Corporation to retain its investment in
the issuer for a period of time sufficient to allow for any anticipated
recovery in fair value. Based on these considerations, the Corporation does
not consider any investment to be other than temporarily impaired at March
31, 2008.
4. Loans Receivable.
The Corporation's loans receivable as of the respective dates are
summarized as follows:
--------------------------------------------------------------------------------
(Dollar amounts in thousands) March 31, December 31,
2008 2007
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Mortgage loans on real estate:
Residential first mortgages $ 65,798 $ 65,706
Home equity loans and lines of credit 48,892 49,426
Commercial real estate 73,714 71,599
--------------- ---------------
188,404 186,731
Other loans:
Commercial business 37,673 35,566
Consumer 9,005 9,679
--------------- ---------------
46,678 45,245
--------------- ---------------
Total loans, gross 235,082 231,976
Less allowance for loan losses 2,219 2,157
--------------- ---------------
Total loans, net $ 232,863 $ 229,819
=============== ===============
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6
5. Deposits.
The Corporation's deposits as of the respective dates are summarized as
follows:
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(Dollar amounts in thousands) March 31, 2008 December 31, 2007
----------------------------------------------------------------------------------------------------
Type of accounts Amount % Amount %
---------------------------------------------------------------------- --------------------------
Non-interest bearing deposits $ 48,184 19.2% $ 47,111 19.3%
Interest bearing demand deposits 86,345 34.3% 77,614 31.8%
Time deposits 117,002 46.5% 119,537 48.9%
---------- ---------- ----------- ----------
$ 251,531 100.0% $ 244,262 100.0%
========== ========== =========== ==========
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6. Guarantees.
The Corporation does not issue any guarantees that would require liability
recognition or disclosure, other than its standby letters of credit.
Standby letters of credit are conditional commitments issued by the
Corporation to guarantee the performance of a customer to a third party. Of
these letters of credit at March 31, 2008, $85,000 will expire within the
next seventeen months, $848,000 will automatically renew within the next
twelve months and $206,000 will automatically renew within thirteen to
twenty-five months. The Corporation, generally, holds collateral and/or
personal guarantees supporting these commitments. Management believes that
the proceeds obtained through a liquidation of collateral and the
enforcement of guarantees would be sufficient to cover the potential amount
of future payments required under the corresponding guarantees. The credit
risk involved in issuing letters of credit is essentially the same as those
that are involved in extending loan facilities to customers. The current
amount of the liability as of March 31, 2008 for guarantees under standby
letters of credit issued is not material.
7. Employee Benefit Plans.
The Corporation maintains a defined contribution 401(k) Plan. Eligible
employees participate by providing tax-deferred contributions up to 20% of
qualified compensation. Employee contributions are vested at all times. The
Corporation provides a matching contribution of up to 4% of the
participant's salary. Matching contributions for the three months ended
March 31, 2008 and 2007 amounted to $37,000 and $33,000, respectively.
The Corporation provides pension benefits for eligible employees through a
defined benefit pension plan. Substantially all full-time employees
participate in the retirement plan on a non-contributing basis and are
fully vested after five years of service.
The Corporation uses December 31 as the measurement date for its plans.
7
7. Employee Benefit Plans (continued).
The components of the periodic pension cost are as follows:
For the three months ended
(Dollar amounts in thousands) March 31,
--------------------------
2008 2007
----------------------------------------------------------------- ----------
Service cost $ 63 $ 57
Interest cost 71 65
Expected return on plan assets (79) (77)
Transition asset - (2)
Prior service costs (8) (8)
Recognized net actuarial (gain) loss 4 7
---------- ----------
Net periodic pension cost $ 51 $ 42
========== ==========
The expected rate of return on plan assets was 8.50% for the periods ended
March 31, 2008 and 2007. The Corporation previously disclosed in its
financial statements for the year ended December 31, 2007 that it expected
to contribute $335,000 to its pension plan in 2008. As of March 31, 2008,
there have been no contributions. The Corporation presently anticipates
contributing $335,000 to its pension plan in 2008.
8. Stock Compensation Plans.
In May 2007, the Corporation adopted the 2007 Stock Incentive Plan and
Trust. Under the Plan, the Corporation may grant options to its directors,
officers and employees for up to 177,496 shares of common stock. Incentive
stock options, non-incentive or compensatory stock options and share awards
may be granted under the Plan. The exercise price of each option shall at
least equal the market price of a share of common stock on the date of
grant and have a contractual term of ten years. Options shall vest and
become exercisable at the rate, to the extent and subject to such
limitations as may be specified by the Corporation. Effective May 2007, the
Corporation adopted SFAS No. 123(R), Share-Based Payment, which requires
that compensation cost related to share-based payment transactions be
recognized in the financial statements with measurement based upon the fair
value of the equity or liability instruments issued. For the three-month
period ended March 31, 2008, the Corporation recognized $20,000, net of
taxes, in compensation expense for stock options.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions:
For the three months ended
March 31, 2008
------------------------------------------------------------
Dividend yield 4.46%
Expected life 10 years
Expected volatility 14.09%
Risk-free interest rate 5.10%
------------------------------------------------------------
The expected volatility is based on historical stock price fluctuations.
The risk-free interest rates for periods within the contractual life of the
awards are based on the U.S. Treasury yield curve in effect at the time of
the grant. The expected life is based on the maximum term of the options.
The dividend yield assumption is based on the Corporation's history and
expectation of dividend payouts.
8
8. Stock Compensation Plans (continued).
A summary of option activity under the Plan as of March 31, 2008, and
changes during the period then ended is presented below:
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Weighted- Weighted-Average
Average Aggregate Remaining Term
Options Exercise Price Intrinsic Value (in years)
----------------------------------------------------------------------------------------------------
Outstanding at the
beginning of the year 84,000 $26.00 9.2
Granted 1,000 25.90 9.9
Exercised - - -
Forfeited - - -
---------- --------------- --------------- --------------------
Outstanding as of March
31, 2008 85,000 $25.99 $- 9.2
========== =============== =============== ====================
Exercisable as of March
31, 2008 - $- $- -
========== =============== =============== ====================
A summary of the status of the Corporation's nonvested shares as of March
31, 2008, and changes during the period then ended is presented below:
----------------------------------------------------------------------
Weighted-Average
Options Grant-date Fair Value
----------------------------------------------------------------------
Nonvested at the beginning of
the year 84,000 $ 3.39
Granted 1,000 3.09
Vested - -
Forfeited - -
--------------- ----------------------
Nonvested as of March 31, 2008 85,000 $ 3.39
=============== ======================
----------------------------------------------------------------------
As of March 31, 2008, there was $236,000 of total unrecognized compensation
cost related to nonvested share-based compensation arrangements granted
under the Plan. That cost is expected to be recognized over an average
period of 2.2 years.
9. Fair Values of Financial Instruments.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value
Measurements (SFAS 157), which defines fair value, establishes a framework
for measuring fair value under generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. SFAS 157
applies to other accounting pronouncements that require or permit fair
value measurements. The new guidance is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and for interim
periods within those fiscal years. The Corporation adopted SFAS 157
effective January 1, 2008 for financial assets and liabilities that are
measured and reported at fair value. There was no impact from the adoption
of SFAS 157 on the amounts reported in the consolidated financial
statements. The primary effect of SFAS 157 on the Corporation was to expand
the required disclosures pertaining to the methods used to determine fair
values.
SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to
valuation methods used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements). The three levels of
the fair value hierarchy under SFAS 157 are as follows:
Level 1: Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted assets
or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that
are observable either directly or indirectly, for substantially the
full term of the asset or liability.
9
9. Fair Values of Financial Instruments (continued).
Level 3: Prices or valuation techniques that require inputs that are
both significant to the fair value measurement and unobservable (i.e.
supported with little or no market activity).
An asset or liability's level within the fair value hierarchy is based on
the lowest level of input that is significant to the fair value
measurement.
For assets measured at fair value on a recurring basis, the fair value
measurements by level within the fair value hierarchy used at March 31,
2008 are as follows:
----------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
(Level 1) Quoted (Level 2)
Prices in Significant (Level 3)
Active Markets Other Significant
for Identical Observable Unobservable
Description March 31, 2008 Assets Inputs Inputs
----------------------------------------------------------------------------------------------------
Securities available for
sale $ 55,078 $ 3,565 $ 51,513 $ -
----------- ---------------- --------------- ---------------
$ 55,078 $ 3,565 $ 51,513 $ -
=========== ================ =============== ===============
----------------------------------------------------------------------------------------------------
The Corporation's adoption of SFAS 157 applies only to its financial
instruments required to be reported at fair value. The adoption does not
apply to non-financial assets and non-financial liabilities until January
1, 2009 in accordance with FSP FAS 157-2. The following valuation technique
was used to measure fair value of assets in the table above on a recurring
basis as of March 31, 2008:
Available for sale securities - Fair value on available for sale securities
were based upon a market approach. Prices for securities that are fixed
income instruments that are not quoted on an exchange, but are traded in
active markets, are obtained through third party data service providers or
dealer market participants which the Corporation has historically
transacted both purchases and sales of investment securities. As of March
31, 2008, all fair values on available for sale securities were based on
prices obtained from these sources and were based on actual market
quotations for each specific security.
10. Adoption of New Accounting Standards.
The Corporation adopted the Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value
Measurements (SFAS 157) effective January 1, 2008 for financial assets and
liabilities that are measured and reported at fair value. There was no
impact from the adoption of SFAS 157 on the amounts reported in the
consolidated financial statements. The primary effect of SFAS 157 on the
Corporation was to expand required disclosures pertaining to the methods
used to determine fair values. See note 9 for further detail.
11. Effect of Recently Issued Accounting Standards.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115 (SFAS 159). SFAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value.
Unrealized gains and losses on items for which the fair value option has
been elected will be recognized in earnings at each subsequent reporting
date. SFAS 159 is effective for the Corporation January 1, 2008. This new
accounting pronouncement had no effect on the Corporation's consolidated
financial statements as the Corporation elected not to adopt SFAS 159.
10
11. Effect of Recently Issued Accounting Standards (continued).
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations
(SFAS 141R). SFAS 141R establishes principles and requirements for how the
acquirer of a business recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R also provides guidance
for recognizing and measuring the goodwill acquired in the business
combination and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of
the business combination. The guidance will become effective for fiscal
years beginning after December 15, 2008. This new pronouncement will impact
the Corporation's accounting for business combinations completed beginning
January 1, 2009.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interest in
Consolidated Financial Statements - An Amendment of ARB No. 51 (SFAS 160).
SFAS 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. The guidance will become effective for fiscal years beginning
after December 15, 2008, which for the Corporation will be January 1, 2009.
The Corporation believes that this new pronouncement will have an
immaterial impact on its consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------
This section discusses the consolidated financial condition and results of
operations of Emclaire Financial Corp. (the "Corporation") and its wholly owned
subsidiary bank, the Farmers National Bank of Emlenton (the "Bank"), for the
three months ended March 31, 2008 compared to the same periods in 2007 and
should be read in conjunction with the Corporation's December 31, 2007 Annual
Report of Form 10-K filed with the Securities and Exchange Commission and with
the accompanying consolidated financial statements and notes presented on pages
1 through 11 of this Form 10-Q.
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes," "anticipates," "contemplates" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. Those risks and uncertainties include changes
in interest rates, the ability to control costs and expenses and general
economic conditions. The Corporation does not undertake, and specifically
disclaims any obligation, to update any forward-looking statements to reflect
occurrences or unanticipated events or circumstances after the date of such
statements.
CHANGES IN FINANCIAL CONDITION
Total assets increased $10.8 million to $322.5 million at March 31, 2008 from
$311.7 million at December 31, 2007. This 3.5% increase resulted from increases
in cash and cash equivalents, securities and loans receivable, net of allowance
for loan losses, of $4.4 million, $3.2 million and $3.0 million, respectively.
The increase in the Corporation's assets was primarily funded by increases in
customer deposits and short-term borrowed funds.
Total liabilities increased $10.4 million to $297.4 million at March 31, 2008
from $287.0 million at December 31, 2007, while total stockholders' equity
increased $383,000 to $25.1 million at March 31, 2008 from $24.7 million at
December 31, 2007. The increase in total liabilities resulted primarily from
increases in customer deposits of $7.3 million and short-term borrowed funds of
$3.4 million.
11
RESULTS OF OPERATIONS
Comparison of Results for the Three Month Periods Ended March 31, 2008 and 2007
General. Net income increased $8,000 or 1.4% to $559,000 for the three months
ended March 31, 2008 from $551,000 for the same period in 2007. This increase
was the result of an increase in net interest income of $234,000 partially
offset by a decrease in noninterest income of $70,000 and increases in the
provision for loan losses, noninterest expense and the provision for income
taxes of $15,000, $103,000 and $38,000, respectively.
Net interest income. Net interest income on a tax equivalent basis increased
$226,000 or 9.3% to $2.6 million for the three months ended March 31, 2008 from
$2.4 million for the same period in 2007. This net increase can be attributed to
an increase in tax equivalent interest income of $200,000 and a decrease in
interest expense of $26,000.
Interest income. Interest income on a tax equivalent basis increased $200,000 or
4.5% to $4.6 million for the three months ended March 31, 2008, compared to $4.4
million for the same period in the prior year. This increase can be attributed
to an increase in interest earned on loans of $322,000, partially offset by
decreases in interest on securities and interest-earning deposits with banks and
dividends on federal bank stocks of $4,000, $98,000 and $20,000, respectively.
Tax equivalent interest earned on loans receivable increased $322,000 or 8.9% to
$4.0 million for the three months ended March 31, 2008, compared to $3.6 million
for the same period in 2007. This increase resulted primarily from average loans
increasing $18.4 million or 8.6%, accounting for $312,000 in additional loan
interest income. This increase can be primarily attributed to growth in the
Corporation's commercial loan portfolios.
Tax equivalent interest earned on securities decreased $4,000 to $611,000 for
the three months ended March 31, 2008, compared to $615,000 for the same period
in 2007. The average volume of securities decreased $5.0 million or 9.5%,
accounting for a $61,000 decrease in interest income. Offsetting this volume
decrease, the yield on securities increased 43 basis points to 5.23% for the
three months ended March 31, 2008, versus 4.80% for the same period in 2007, as
a result of certain lower yielding securities maturing. This favorable yield
variance contributed an additional $57,000 to interest income.
Interest earned on interest-earning deposit accounts decreased $98,000 or 81.0%
to $23,000 for the three months ended March 31, 2008 from $121,000 for the same
period in 2007. The average volume of these assets decreased $6.0 million or
64.1%, primarily as a result of funding loans and purchasing securities,
decreasing interest income by $57,000. Additionally, the average yield on
interest-earning deposit accounts decreased 248 basis points to 2.75% for the
three months ended March 31, 2008, compared to 5.23% for the same period in the
prior year, accounting for a $41,000 decrease in interest income. The decrease
in the average yield reflects the recent decreases in short-term market interest
rates. Dividends on federal bank stocks decreased $20,000 or 40.0% to $30,000
for the three month period ended March 31, 2008 from $50,000 for the same period
in 2007. The average volume of these assets increased $309,000 or 14.0%,
accounting for a $6,000 increase in income. Offsetting this volume increase, the
yield on federal bank stock decreased 439 basis points to 4.79% for the three
months ended March 31, 2008, versus 9.18% for the same period in 2007. The
higher yield experienced during the first quarter of 2007 resulted from the
recognition during the period of a fourth quarter 2006 special dividend on FHLB
capital stock.
Interest expense. Interest expense decreased $26,000 or 1.3% to $2.0 million for
the three months ended March 31, 2008, and 2007. This decrease in interest
expense can be attributed to a decrease in interest incurred on deposits of
$95,000, partially offset by an increase in borrowed funds of $69,000.
12
Interest expense incurred on deposits decreased $95,000 or 5.7% to $1.6 million
for the three months ended March 31, 2008, compared to $1.7 million for the same
period in the prior year. The average volume of deposits decreased $4.0 million
to $195.7 million for the three months ended March 31, 2008, compared to $199.7
million for the same period in 2007 causing a $33,000 decrease in interest
expense. Additionally, the cost of interest-bearing deposits decreased 16 basis
points to 3.23% for the three months ended March 31, 2008, compared to 3.39% for
the same period in 2007 causing a $62,000 decrease in interest expense.
Interest expense incurred on borrowed funds increased $69,000 or 20.5% to
$405,000 for the three months ended March 31, 2008, compared to $336,000 for the
same period in the prior year. This increase in interest expense can be
attributed to the increase in the average balance of borrowed funds of $8.4
million or 27.8% to $38.4 million for the three months ended March 31, 2008,
compared to $30.0 million for the same period in the prior year contributing
$89,000 in additional expense. This volume increase was the result of $5.0
million of FHLB long-term borrowings placed in the fourth quarter of 2007 used
primarily to fund loan growth and $8.7 million in short-term borrowings placed
in the first quarter of 2008 used to fund security purchases. Partially
offsetting this volume increase, the cost of borrowed funds decreased 28 basis
points to 4.25% for the three months ended March 31, 2008, compared to 4.54% for
the same period in 2007 causing a $20,000 decrease in interest expense.
13
Average Balance Sheet and Yield/Rate Analysis. The following table sets forth,
for the periods indicated, information concerning the total dollar amounts of
interest income from interest-earning assets and the resulting average yields,
the total dollar amounts of interest expense on interest-bearing liabilities and
the resulting average costs, net interest income, interest rate spread and the
net interest margin earned on average interest-earning assets. For purposes of
this table, average loan balances include non-accrual loans and exclude the
allowance for loan losses and interest income includes accretion of net deferred
loan fees. Interest and yields on tax-exempt loans and securities (tax-exempt
for federal income tax purposes) are shown on a fully tax equivalent basis. The
information is based on average daily balances during the periods presented.
------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands) Three months ended March 31,
------------------------------------------------------------------------------------------
2008 2007
---------------------------------------- ----------------------------------------
Average Yield/ Average Yield /
Balance Interest Rate Balance Interest Rate
------------------------------------------------------------------------------------------------------------------------
Interest-earning assets:
--------------------------
Loans, taxable $227,600 $3,860 6.82% $208,776 $3,532 6.86%
Loans, tax exempt 6,082 98 6.47% 6,495 104 6.49%
---------- ---------- ---------- ----------
Total loans receivable 233,682 3,958 6.81% 215,271 3,636 6.85%
---------- ---------- ---------- ----------
Securities, taxable 32,664 378 4.65% 36,758 364 4.02%
Securities, tax exempt 14,361 233 6.53% 15,224 251 6.68%
---------- ---------- ---------- ----------
Total securities 47,025 611 5.23% 51,982 615 4.80%
---------- ---------- ---------- ----------
Interest-earning deposits
with banks 3,362 23 2.75% 9,375 121 5.23%
Federal bank stocks 2,518 30 4.79% 2,209 50 9.18%
---------- ---------- ---------- ----------
Total interest-earning
cash equivalents 5,880 53 3.63% 11,584 171 5.99%
---------- ---------- ---------- ----------
Total interest-earning
assets 286,587 4,622 6.49% 278,837 4,422 6.43%
Cash and due from banks 5,224 6,163
Other noninterest-earning
assets 14,614 14,535
---------- ----------
Total Assets $306,425 $299,535
========== ==========
Interest-bearing
liabilities:
--------------------------
Interest-bearing demand
deposits $78,962 282 1.44% $72,176 233 1.31%
Time deposits 116,734 1,290 4.44% 127,533 1,434 4.56%
---------- ---------- ---------- ----------
Total interest-bearing
deposits 195,696 1,572 3.23% 199,709 1,667 3.39%
---------- ---------- ---------- ----------
Borrowed funds, short-
term 3,351 4 0.48% - - 0.00%
Borrowed funds, long-
term 35,000 401 4.61% 30,000 336 4.54%
---------- ---------- ---------- ----------
Total borrowed funds 38,351 405 4.25% 30,000 336 4.54%
---------- ---------- ---------- ----------
Total interest-bearing
liabilities 234,047 1,977 3.40% 229,709 2,003 3.54%
---------- ---------- ---------- ----------
Noninterest-bearing demand
deposits 45,163 - - 43,368 - -
---------- ---------- ---------- ----------
Funding and cost of funds 279,210 1,977 2.85% 273,077 2,003 2.97%
Other noninterest-bearing
liabilities 2,388 2,572
---------- ----------
Total Liabilities 281,598 275,649
Stockholders' Equity 24,827 23,886
---------- ----------
Total Liabilities and
Stockholders' Equity $306,425 $299,535
========== ---------- ========== ----------
Net interest income $2,645 $2,419
========== ==========
Interest rate spread (difference between 3.09% 2.89%
weighted average rate on interest-earning
assets and interest-bearing liabilities)
Net interest margin (net interest 3.69% 3.52%
income as a percentage of average
interest-earning assets)
14
Analysis of Changes in Net Interest Income. The following table analyzes the
changes in interest income and interest expense in terms of: (1) changes in
volume of interest-earning assets and interest-bearing liabilities and (2)
changes in yields and rates. The table reflects the extent to which changes in
the Corporation's interest income and interest expense are attributable to
changes in rate (change in rate multiplied by prior year volume), changes in
volume (changes in volume multiplied by prior year rate) and changes
attributable to the combined impact of volume/rate (change in rate multiplied by
change in volume). The changes attributable to the combined impact of
volume/rate are allocated on a consistent basis between the volume and rate
variances. Changes in interest income on loans and securities reflect the
changes in interest income on a fully tax equivalent basis.
----------------------------------------------------------------------------------------------------
(Dollar amounts in thousands) Three months ended March 31,
2008 versus 2007
Increase (Decrease) due to
----------------------------------------
Volume Rate Total
----------------------------------------------------------------------------------------------------
Interest income:
Loans $ 312 $ 10 $ 322
Securities (61) 57 (4)
Interest-earning deposits with banks (57) (41) (98)
Federal bank stocks 6 (26) (20)
---------- ---------- -----------
Total interest-earning assets 200 - 200
---------- ---------- -----------
Interest expense:
Deposits (33) (62) (95)
Borrowed funds 89 (20) 69
---------- ---------- -----------
Total interest-bearing liabilities 56 (82) (26)
---------- ---------- -----------
Net interest income $ 144 $ 82 $ 226
========== ========== ===========
----------------------------------------------------------------------------------------------------
Provision for loan losses. The Corporation records provisions for loan losses to
maintain a level of total allowance for loan losses that management believes, to
the best of its knowledge, covers all known and inherent losses that are both
probable and reasonably estimable at each reporting date. Management considers
historical loss experience, the present and prospective financial condition of
borrowers, current conditions (particularly as they relate to markets where the
Corporation originates loans), the status of non-performing assets, the
estimated underlying value of the collateral and other factors related to the
collectibility of the loan portfolio.
Information pertaining to the allowance for loan losses and non-performing
assets for the quarters ended March 31, 2008 and 2007 is as follows:
--------------------------------------------------------------------------------
(Dollar amounts in thousands) For the three months ended
March 31,
-----------------------------------
2008 2007
--------------------------------------------------------------------------------
Balance at the beginning of the period $ 2,157 $ 2,035
Provision for loan losses 60 45
Charge-offs (9) (15)
Recoveries 11 13
--------------- ---------------
Balance at the end of the period $ 2,219 $ 2,078
=============== ===============
Non-performing loans $ 855 $ 1,980
Non-performing assets 979 1,980
Non-performing loans to total loans 0.36% 0.92%
Non-performing assets to total assets 0.30% 0.66%
Allowance for loan losses to total loans 0.94% 0.97%
Allowance for loan losses to non-performing
loans 259.53% 104.95%
--------------------------------------------------------------------------------
15
The provision for loan losses increased $15,000 or 33.3% to $60,000 for the
three month period ended March 31, 2008 from $45,000 for the same period in the
prior year. Management's evaluation of the loan portfolio, including the
changing composition of the portfolio as well as economic trends, regulatory
considerations and other factors contributed to the recognition of $60,000 in
the provision for loan losses during the three months ended March 31, 2008.
Noninterest income. Noninterest income decreased $70,000 or 9.6% to $660,000
during the three months ended March 31, 2008, compared to $730,000 during the
same period in the prior year. This decrease can be attributed to decreases in
commissions earned on financial services, gains on securities and other
noninterest income of $44,000, $58,000 and $17,000, respectively. Partially
offsetting this decrease in noninterest income were increases in fees and
service charges, gains on the sale of loans and earnings on bank-owned life
insurance of $32,000, $14,000, and $3,000, respectively.
Noninterest expense. Noninterest expense increased $103,000 to $2.4 million
during the three months ended March 31, 2008, compared to $2.3 million during
the same period in the prior year. This increase in noninterest expense can be
attributed to increases in compensation and employee benefits and premises and
equipment of $111,000 and $20,000, respectively, partially offset by a decrease
in other noninterest expenses of $28,000.
Compensation and employee benefits increased $111,000 or 8.5% to $1.4 million
for the three months ended March 31, 2008, compared to $1.3 million for the same
period the prior year. This increase can be attributed primarily to normal
salary and wage increases and the addition of staff at a new branch location.
Premises and equipment increased $20,000 or 5.0% to $420,000 for the three
months ended March 31, 2008, compared to $400,000 for the same period in the
prior year. This increase can be attributed primarily to costs associated with
an additional branch office which was opened in April 2008.
Other noninterest expense decreased $28,000 or 4.6% to $576,000 during the three
months ended March 31, 2008, compared to $604,000 for the same period in the
prior year. This decrease can be attributed primarily to a decrease in
professional fees relating to Sarbanes-Oxley Section 404 compliance.
Provision for income taxes. The provision for income taxes increased $38,000 or
28.6% to $171,000 for the three months ended March 31, 2008, compared to
$133,000 for the same period in the prior year. This was due to an increase in
pre-tax earnings of $46,000 or 6.7% to $730,000 for the three months ended March
31, 2008, compared to $684,000 for the same period in the prior year and an
increase in the effective tax rate to 23.4% for the three months ended March 31,
2008, compared to 19.4% for the same period in 2007. The difference between the
statutory rate of 34% and the Corporation's effective tax rate is due to
tax-exempt income earned on certain tax-free loans and securities and bank-owned
life insurance.
LIQUIDITY
The Corporation's primary sources of funds generally have been deposits obtained
through the offices of the Bank, borrowings from the FHLB and amortization and
prepayments of outstanding loans and maturing securities. During the three
months ended March 31, 2008, the Corporation used its sources of funds primarily
to fund loan originations and security purchases. As of such date, the
Corporation had outstanding loan commitments, including undisbursed loans and
amounts available under credit lines, totaling $28.8 million, and standby
letters of credit totaling $1.1 million.
16
At March 31, 2008, time deposits amounted to $117.0 million or 46.5% of the
Corporation's total consolidated deposits, including approximately $47.1 million
of which are scheduled to mature within the next year. Management of the
Corporation believes that it has adequate resources to fund all of its
commitments, that all of its commitments will be funded as required by related
maturity dates and that, based upon past experience and current pricing
policies, it can adjust the rates of time deposits to retain a substantial
portion of maturing liabilities.
Aside from liquidity available from customer deposits or through sales and
maturities of securities, the Corporation has alternative sources of funds such
as a term borrowing capacity from the FHLB and, to a limited and rare extent,
the sale of loans. At March 31, 2008, the Corporation's borrowing capacity with
the FHLB, net of funds borrowed, was $119.4 million.
Management is not aware of any conditions, including any regulatory
recommendations or requirements, which would adversely impact its liquidity or
its ability to meet funding needs in the ordinary course of business.
CRITICAL ACCOUNTING POLICIES
Management views critical accounting policies to be those which are highly
dependent on subjective or complex judgments, estimates and assumptions and
where changes in those estimates and assumptions could have a significant impact
on the financial statements. Management currently views the determination of the
allowance for loan losses as a critical accounting policy.
The allowance for loan losses provides for an estimate of probable losses in the
loan portfolio. In determining the appropriate level of the allowance for loan
loss, the loan portfolio is separated into risk-rated and homogeneous pools.
Migration analysis/historical loss rates, adjusted for relevant trends, have
been applied to these pools. Qualitative adjustments are then applied to the
portfolio to allow for quality of lending policies and procedures, national and
local economic and business conditions, changes in the nature and volume of the
portfolio, experience, ability and depth of lending management, changes in the
trends, volumes and severity of past due, non-accrual and classified loans and
loss and recovery trends, quality of the Corporation's loan review system,
concentrations of credit, and external factors. The methodology used to
determine the adequacy of the Corporation's allowance for loan losses is
comprehensive and meets regulatory and accounting industry standards for
assessing the allowance, however, it is still an estimate. Loan losses are
charged against the allowance while recoveries of amounts previously charged-off
are credited to the allowance. Loan loss provisions are charged against current
earnings based on management's periodic evaluation and review of the factors
indicated above.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
------------------------------------------------------------------
Market risk for the Corporation consists primarily of interest rate risk
exposure and liquidity risk. Since virtually all of the interest-earning assets
and interest-bearing liabilities are at the Bank, virtually all of the interest
rate risk and liquidity risk lies at the Bank level. The Bank is not subject to
currency exchange risk or commodity price risk, and has no trading portfolio,
and therefore, is not subject to any trading risk. In addition, the Bank does
not participate in hedging transactions such as interest rate swaps and caps.
Changes in interest rates will impact both income and expense recorded and also
the market value of long-term interest-earning assets. Interest rate risk and
liquidity risk management is performed at the Bank level. Although the Bank has
a diversified loan portfolio, loans outstanding to individuals and businesses
depend upon the local economic conditions in the immediate trade area.
One of the primary functions of the Corporation's asset/liability management
committee is to monitor the level to which the balance sheet is subject to
interest rate risk. The goal of the asset/liability committee is to manage the
relationship between interest rate sensitive assets and liabilities, thereby
minimizing the fluctuations in the net interest margin, which achieves
consistent growth of net interest income during periods of changing interest
rates.
17
Interest rate sensitivity is the result of differences in the amounts and
repricing dates of the Bank's rate sensitive assets and rate sensitive
liabilities. These differences, or interest rate repricing "gap", provide an
indication of the extent that the Corporation's net interest income is affected
by future changes in interest rates. A gap is considered positive when the
amount of interest rate-sensitive assets exceeds the amount of interest
rate-sensitive liabilities and is considered negative when the amount of
interest rate-sensitive liabilities exceeds the amount of interest
rate-sensitive assets. Generally, during a period of rising interest rates, a
negative gap would adversely affect net interest income while a positive gap
would result in an increase in net interest income. Conversely, during a period
of falling interest rates, a negative gap would result in an increase in net
interest income and a positive gap would adversely affect net interest income.
The closer to zero that gap is maintained, generally, the lesser the impact of
market interest rate changes on net interest income.
Based on certain assumptions provided by a federal regulatory agency, which
management believes most accurately represents the sensitivity of the
Corporation's assets and liabilities to interest rate changes, at March 31,
2008, the Corporation's interest-earning assets maturing or repricing within one
year totaled $97.4 million while the Corporation's interest-bearing liabilities
maturing or repricing within one-year totaled $94.5 million, providing an excess
of interest-earning assets over interest-bearing liabilities of $2.9 million or
1.0% of total assets. At March 31, 2008, the percentage of the Corporation's
assets to liabilities maturing or repricing within one year was 103.0%.
For more information, see "Market Risk Management" in Exhibit 13 to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2007.
Item 4T. Controls and Procedures
--------------------------------
The Corporation maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Corporation's
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and that such information
is accumulated and communicated to the Corporation's management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure based closely on the definition
of "disclosure controls and procedures" in Rule 13a-15(e).
There has been no change made in the Corporation's internal control over
financial reporting during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the Corporation's
internal control over financial reporting.
As of March 31, 2008, the Corporation carried out an evaluation, under the
supervision and with the participation of the Corporation's management,
including the Corporation's Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Corporation's disclosure
controls and procedures. Based on the foregoing, the Corporation's Chief
Executive Officer and Chief Financial Officer concluded that the Corporation's
disclosure controls and procedures were effective. There have been no
significant changes in the Corporation's internal controls or in other factors
that could significantly affect the internal controls subsequent to the date the
Corporation completed its evaluation.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
--------------------------
The Corporation is involved in various legal proceedings occurring in the
ordinary course of business. It is the opinion of management, after consultation
with legal counsel, that these matters will not materially effect the
Corporation's consolidated financial position or results of operations.
Item 1A. Risk Factors
----------------------
There have been no material changes in the Corporation's risk factors from those
previously disclosed in the 2007 Form 10-K.
18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
-------------------------------------------------------------------
None.
Item 3. Defaults Upon Senior Securities
---------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
None.
Item 5. Other Information
-------------------------
(a) Not applicable.
(b) Not applicable.
Item 6. Exhibits
----------------
Exhibit 31.1 Rule 13a-14(a) Certification of Chief Executive Officer
Exhibit 31.2 Rule 13a-14(a) Certification of Chief Financial Officer
Exhibit 32.1 CEO Certification Pursuant to 18 U.S.C. Section 1350
Exhibit 32.2 CFO Certification Pursuant to 18 U.S.C. Section 1350
19
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, thereunto duly authorized.
EMCLAIRE FINANCIAL CORP. AND SUBSIDIARY
Date: May 14, 2008 By: /s/ David L. Cox
------------------------------------
David L. Cox
Chairman of the Board,
President and Chief Executive Officer
Date: May 14, 2008 By: /s/ William C. Marsh
------------------------------------
William C. Marsh
Chief Financial Officer and Treasurer
20