Emclaire Financial Corp Reports 2012 Earnings; Announces Annual Meeting Date

Emclaire Financial Corp Reports 2012 Earnings; Announces Annual Meeting Date

EMLENTON, Pa., Feb. 1, 2013 (GLOBE NEWSWIRE) -- Emclaire Financial Corp
(Nasdaq:EMCF), the parent holding company of The Farmers National Bank of
Emlenton, reported consolidated net income of $3.7 million for the twelve
months ended December 31, 2012, compared to $3.8 million for the same period
in 2011. The results for 2012 were impacted by an increase in the provision
for loan losses, which overshadowed growth in recurring revenue and reductions
in noninterest expense. The Corporation realized a return on average assets of
0.70% and a return on average common equity of 7.56% for the year ended
December 31, 2012, compared to 0.78% and 8.98%, respectively, reported for
2011.

Net income was $691,000 for the quarter ended December 31, 2012, compared to
$1.2 million for the same period in 2011. The fourth quarter of 2012 included
$567,000 in provision for loan losses compared to $100,000 for the same
quarter in 2011.

William C. Marsh, Chairman, President and Chief Executive Officer of the
Corporation and the Bank, noted, "The Board of Directors, management and I are
pleased with core earnings for 2012 and the continued growth of our franchise.
During this past year, despite the increase in nonperforming assets, the
provision for loans losses, and the corresponding impact on earnings, we have
seen increases in net interest income and core noninterest revenues and have
continued our disciplined management of operating expenses. Further, we
continue to maintain a sound capital base while providing a solid return to
our shareholders and we are well positioned for future growth opportunities."

2012 OPERATING RESULTS OVERVIEW

Net income available to common stockholders decreased $155,000, or 4.7%, to
$3.2 million or $1.80 per common share in 2012, compared to $3.3 million or
$1.98 per common share in 2011. The decrease primarily related to a $1.7
million increase in the provision for loan losses, which was partially offset
by increases in net interest income and noninterest income of $379,000 and
$1.1 million, respectively, and decreases in noninterest expense and the
provision for income taxes of $108,000 and $16,000, respectively.

The provision for loan losses increased $1.7 million to $2.2 million for the
year ended December 31, 2012 from $420,000 in 2011. The increase resulted
primarily from the deterioration of a $3.4 million commercial real estate
credit relationship, which was identified as impaired based on information
received regarding current cash flow considerations, weakened financial
condition of the principals and guarantors, and recent appraisal information.
This credit relationship was placed on nonaccrual status during the third
quarter of 2012 which led to an increase in the ratio of nonperforming assets
to total assets to 1.41% at December 31, 2012 from 1.19% at December 31, 2011.
Despite this activity, the Corporation's asset quality metrics continue to
compare favorably to national and peer averages.

Net interest income increased $379,000, or 2.5%, to $15.8 million for the year
ended December 31, 2012 from $15.4 million in 2011. The increase in net
interest income primarily related to a decrease in interest expense of
$896,000, or 15.3%, as the Corporation's cost of funds decreased 25 basis
points to 1.08% in 2012 from 1.33% in 2011. Driving this improvement was a
$643,000 decrease in interest paid on deposits and a $253,000 decrease in
interest paid on borrowings, the latter of which related to the Corporation's
repayment of $10.0 million in borrowings during 2011. During the fourth
quarter of 2012, the Corporation exchanged and modified $15.0 million of the
$20.0 million in outstanding Federal Home Loan Bank long-term advances,
further reducing the cost of borrowed funds. The Corporation improved its
non-time deposit ratio to 69.5% at December 31, 2012 from 65.1% at December
31, 2011, resulting in an overall reduction in deposit costs.

Noninterest income increased $1.1 million, or 27.4%, to $4.9 million for the
year ended December 31, 2012 from $3.8 million in 2011. The increase primarily
related to a $775,000 increase in nonrecurring net securities gains as well as
increases in customer service fees, earnings on bank owned life insurance and
other income of $118,000, $61,000 and $173,000, respectively, partially offset
by decreases in fees from financial services and title premiums of $54,000 and
$21,000, respectively. Excluding the securities gains, recurring noninterest
income increased 8.2% to $3.6 million in 2012 from $3.4 million in 2011.

Noninterest expense decreased $108,000 to $13.9 million for the year ended
December 31, 2012 from $14.0 million in 2011. The decrease primarily related
to decreases in premises and equipment expense, intangible asset amortization,
professional fees and FDIC insurance expenses of $183,000, $96,000, $34,000
and $23,000, respectively, partially offset by increases in compensation and
benefits and other noninterest expenses of $56,000 and $172,000, respectively.
Included in other noninterest expense for 2011 was $336,000 in prepayment
penalties associated with the early retirement of a $5.0 million Federal Home
Loan Bank advance. On a recurring basis, which excludes the impact of the
aforementioned prepayment penalty, noninterest expense increased $228,000, or
1.7%, between the two annual periods.

The provision for income taxes decreased $16,000, or 1.7%, to $934,000 for the
year ended December 31, 2012 from $950,000 in 2011. This decrease primarily
related to a decrease in pre-tax net income, partially offset by an increase
in the effective tax rate to 20.4% for 2012 from 19.9% in 2011.

FOURTH QUARTER OPERATING RESULTS OVERVIEW

Net income available to common stockholders decreased $467,000, or 45.2%, to
$566,000 or $0.32 per common share for the quarter ended December 31, 2012
compared to $1.0 million or $0.59 per common share for the same period last
year. This decrease primarily related to increases in provision for loan
losses and noninterest expense of $467,000 and $93,000, respectively, and a
$159,000 decrease in net interest income. The increase in the provision for
loan losses was driven by an increase in classified and criticized assets and
the deterioration of certain credit relationships. Despite these trends,
overall credit quality compares favorably to peer and national averages. These
changes, coupled with an overall decline in asset yields, have placed pressure
on the Corporation's net interest margin, which led to the aforementioned
decline in net interest income in the current quarter.

Partially offsetting these unfavorable variances, the provision for income
taxes decreased $241,000 given lower levels of pre-tax net income while
noninterest income increased $16,000 between the two quarterly periods.
Excluding $103,000 in other-than temporary impairment charges and other
security gains of $7,000 recorded during the fourth quarter of 2012, recurring
noninterest income increased $112,000 or 13.0% to $975,000 for the current
quarter from $863,000 for the same period last year.

The Corporation realized an annualized return on average assets and common
equity of 0.54% and 5.34%, respectively, for the three months ended December
31, 2012, compared to 0.93% and 9.13%, respectively, for the same period last
year.

CONSOLIDATED BALANCE SHEET & ASSET QUALITY OVERVIEW

Total assets increased $17.1 million, or 3.5%, to $509.0 million at December
31, 2012 from $491.9 million at December 31, 2011. Asset growth was driven by
increases in customer deposits of $16.0 million and stockholders' equity of
$1.0 million, which when coupled with a $2.9 million decrease in securities
and a $7.8 million decrease in cash and equivalents, funded a $21.3 million
increase in net loans.

Total nonperforming assets were $7.2 million, or 1.41%, of total assets at
December 31, 2012 compared to $5.9 million, or 1.19%, of total assets at
December 31, 2011. This $1.3 million, or 22.0%, increase in nonperforming
assets was primarily due to the aforementioned $3.4 million commercial real
estate relationship placed on nonaccrual status during the year, partially
offset by the successful resolution and payoff of a $450,000 nonperforming
residential mortgage loan and the continued management and collection efforts
related to other nonperforming assets. Classified and criticized assets
increased $3.6 million, or 30.5%, to $15.4 million at December 31, 2012 from
$11.8 million at December 31, 2011. The increase was mostly due to the
aforementioned commercial real estate relationship.

Stockholders' equity increased $1.0 million, or 2.0%, to $51.7 million at
December 31, 2012 from $50.7 million at December 31, 2011. The Corporation
remains well capitalized and is positioned for continued growth with total
stockholders' equity at 10.2% of total assets. Book value and tangible book
value per common share were $23.72 and $20.93, respectively, at December 31,
2012, compared to $23.25 and $20.26, respectively, at December 31, 2011.

ANNUAL SHAREHOLDER MEETING

In addition to reporting earnings, the Corporation announced that the annual
meeting of shareholders will be held on Wednesday, April 24, 2013 at 9:00 a.m.
at the main office of The Farmers National Bank of Emlenton, in Emlenton,
Pennsylvania. The voting record date for the purpose of determining
stockholders eligible to vote on proposals presented at the annual meeting
will be March 1, 2013.

Emclaire Financial Corp is the parent company of The Farmers National Bank of
Emlenton, an independent, nationally chartered, FDIC-insured community bank
headquartered in Emlenton, Pennsylvania, operating 13 full service offices in
Venango, Butler, Clarion, Clearfield, Crawford, Elk, Jefferson and Mercer
counties, Pennsylvania. The Corporation's common stock is quoted on and traded
through the NASDAQ Capital Market under the symbol "EMCF". For more
information, visit the Corporation's website at "www.emclairefinancial.com".

This news release may contain forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
may contain words such as "believe", "expect", "anticipate", "estimate",
"should", "may", "can", "will", "outlook", "project", "appears" or similar
expressions. Such forward-looking statements are subject to risk and
uncertainties which could cause actual results to differ materially from those
currently anticipated due to a number of factors. Such factors include, but
are not limited to, changes in interest rates which could affect net interest
margins and net interest income, the possibility that increased demand or
prices for the Corporation's financial services and products may not occur,
changing economic and competitive conditions, technological and regulatory
developments, and other risks and uncertainties, including those detailed in
the Corporation's filings with the Securities and Exchange Commission. 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.



EMCLAIRE FINANCIAL CORP
Consolidated Financial Highlights
(Unaudited - Dollar amounts in thousands, except share data)
                                                                 
CONSOLIDATED OPERATING RESULTS DATA:  Three month period  Year ended
                                     ended December 31,  December 31,
                                     2012     2011       2012       2011
                                                                 
Interest income                       $5,023 $5,380   $20,762  $21,279
Interest expense                      1,164   1,362     4,976     5,872
Net interest income                   3,859   4,018     15,786    15,407
Provision for loan losses             567     100       2,154     420
Noninterest income                    879     863       4,893     3,841
Noninterest expense                   3,382   3,289     13,937    14,045
Income before provision for income    789     1,492     4,588     4,783
taxes
Provision for income taxes            98      339       934       950
Net income                            691     1,153     3,654     3,833
Accumulated preferred stock dividends 125     120       493       517
and discount accretion
Net income available to common        $566   $1,033   $3,161   $3,316
stockholders
                                                                 
Basic and diluted earnings per common $ 0.32   $ 0.59     $ 1.80     $ 1.98
share
Dividends per common share            $ 0.28   $ 0.16     $ 0.82     $ 0.64
                                                                 
Return on average assets (1)          0.54%    0.93%      0.70%      0.78%
Return on average equity (1)          5.27%    9.13%      7.05%      8.44%
Return on average common equity (1)   5.34%    10.23%     7.56%      8.98%
Yield on average interest-earning     4.28%    4.75%      4.35%      4.74%
assets
Cost of average interest-bearing      1.30%    1.54%      1.36%      1.64%
liabilities
Cost of funds                         1.02%    1.24%      1.08%      1.33%
Net interest margin                   3.32%    3.59%      3.34%      3.47%
Efficiency ratio                      65.99%   62.98%     67.41%     69.70%
____________________                                              
(1) Returns are annualized for the
three month periods ended December                                
31, 2012 and 2011.
                                                                 
CONSOLIDATED BALANCE SHEET DATA:              As of      As of      
                                             12/31/2012 12/31/2011 
                                                                 
Total assets                                  $509,014 $491,882 
Cash and equivalents                          20,424    28,193    
Securities                                    120,206   123,154   
Loans, net                                    333,801   312,545   
Deposits                                      432,459   416,468   
Borrowed funds                                20,000    20,000    
Common stockholders' equity                   41,725    40,730    
Stockholders' equity                          51,725    50,730    
                                                                 
Book value per common share                   $ 23.72    $ 23.25    
Tangible book value per common share          $ 20.93    $ 20.26    
                                                                 
Net loans to deposits                         77.19%     75.05%     
Allowance for loan losses to total            1.58%      1.12%      
loans
Nonperforming assets to total assets          1.41%      1.19%      
Earning assets to total assets                95.16%     95.18%     
Stockholders' equity to total assets          10.16%     10.31%     
Shares of common stock outstanding            1,759,408 1,751,908 

CONTACT: William C. Marsh
         Chairman, President and
         Chief Executive Officer
        
         Phone: (724) 867-2018
         Email: wmarsh@farmersnb.com
 
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