Emclaire Financial Corp Reports Second Quarter and Year to Date Earnings

Emclaire Financial Corp Reports Second Quarter and Year to Date Earnings

EMLENTON, Pa., July 18, 2013 (GLOBE NEWSWIRE) -- Emclaire Financial Corp
(Nasdaq:EMCF), the parent holding company of The Farmers National Bank of
Emlenton, reported consolidated net income available to common stockholders of
$814,000, or $0.46 per diluted common share for the three months ended June
30, 2013, compared to $1.1 million, or $0.65 per diluted common share for the
same period in 2012. The results for the 2012 period included $538,000 of
securities gains compared to $99,000 of securities gains realized in 2013.
Excluding securities gains and the related income tax impact, net income
available to common stockholders in the second quarter of 2013 was $749,000
compared to $776,000 for the same period last year.

Net income available to common shareholders for the six month period ended
June 30, 2013 was $1.5 million, or $0.87 per diluted common share, compared to
$2.0 million, or $1.17 per diluted common share for the same period in 2012.
Excluding securities gains of $962,000 and $184,000 for the six month periods
ended June 30, 2012 and 2013, respectively, and the related tax impact, net
income available to common shareholders was $1.4 million for both periods.

William C. Marsh, Chairman, President and Chief Executive Officer of the
Corporation and the Bank noted, "We are pleased to experience stable core
earnings and balance sheet growth, particularly in light of the extremely low
national interest rate environment. Our asset quality continues to improve and
remains quite favorable compared to peer institutions.Efforts in the upcoming
quarters will be focused on the expansion of our loan portfolio, the
implementation of strategies aimed at enhancing revenue and the management of
operating expenses.We are excited to expand our branch network into the Saint
Marys and Cranberry Township, Pennsylvania markets with anticipated opening
dates in the fourth quarter of 2013 and the first quarter of 2014,
respectively.With solid capital levels, we remain positioned for sustainable
franchise growth."

OPERATING RESULTS OVERVIEW

Consolidated net income was $939,000 for the three months ended June 30, 2013,
compared to $1.3 million for the same period last year.The $317,000, or
25.2%, decline in earnings primarily related to decreases in net interest
income and noninterest income of $37,000 and $390,000, respectively, and
increases in the provision for loan losses and noninterest expense of $38,000
and $68,000, respectively.These changes were partially offset by a decrease
in the provision for income taxes of $216,000 as the Corporation's effective
tax rate declined due to higher levels of tax exempt income.

Net interest income decreased $37,000, or 1.0%, to $3.9 million for the
quarter ended June 30, 2013.The decrease in net interest income resulted from
a decrease in interest income of $300,000, or 5.8%, as the Corporation's yield
on interest-earning assets decreased 17 basis points to 4.08% for the second
quarter of 2013 from 4.25% for the same quarter in 2012.Management's strategy
to increase loan volume through the recent expansion of the corporate banking
team and the projected entrance into new markets in the coming quarters is
expected to help mitigate the impact of the decrease in asset yields caused by
an overall decline in interest rates.Partially offsetting the decrease in
interest income, interest expense decreased $263,000, or 20.8%, as the
Corporation's cost of funds decreased 22 basis points to 0.85% for the second
quarter of 2013 from 1.07% for the same period in 2012.Driving this
improvement was a $222,000 decrease in interest paid on deposits and a $41,000
decrease in interest paid on borrowings, the latter of which related primarily
to the Corporation exchanging and modifying $15.0 million of Federal Home Loan
Bank advances during the fourth quarter of 2012.The Corporation improved its
core deposit ratio to 73.7% at June 30, 2013 from 70.2% at June 30, 2012,
resulting in, along with historically low national interest rates, an overall
reduction in deposit costs.The management of funding costs resulted in a 2
basis point increase in the net interest margin to 3.28% for the second
quarter of 2013, from 3.26% for the same period in 2012 despite the decrease
in asset yields.

Noninterest income decreased $390,000, or 27.5%, to $1.0 million for the
quarter ended June 30, 2013 from $1.4 million for the same quarter in
2012.The decrease resulted from a $439,000 decrease in gains on the sale of
securities.During the quarter ended June 30, 2013, the Corporation realized
securities gains of $99,000 related to the sale of certain mortgage-backed
securities that were experiencing accelerated prepayments.During the same
period in 2012, the Corporation realized securities gains of $538,000 related
to the sale of U.S. Treasury securities. Excluding the securities gains,
noninterest income increased $49,000, or 5.5%, to $932,000 from $883,000 in
the same period last year due to increases in fees and service charges and
earnings on bank-owned life insurance.

Noninterest expense increased a modest $68,000, or 1.9%, to $3.6 million for
the quarter ended June 30, 2013. Increases in compensation and benefits
expense, premises and equipment expense, FDIC insurance expense and
professional fees were partially offset by decreases in intangible
amortization expense and other noninterest expense.

The provision for income taxes decreased $216,000, or 51.2%, to $206,000 for
the quarter ended June 30, 2013 from $422,000 for the same period last
year.This decrease was related to a decrease in pre-tax income, as well as an
increase in the level of tax exempt income realized by the Corporation.

The Corporation realized an annualized return on average assets and common
equity of 0.71% and 7.27%, respectively, for the quarter ended June 30, 2013,
versus 0.95% and 9.79%, respectively, for the same quarter in 2012.

CONSOLIDATED YEAR-TO-DATE OPERATING RESULTS OVERVIEW

Consolidated net income was $1.8 million for the six months ended June 30,
2013, compared to $2.3 million for the same period last year.The $497,000, or
21.7%, decline in earnings primarily related to decreases in net interest
income and noninterest income of $71,000 and $679,000, respectively, and
increases in the provision for loan losses and noninterest expense of $67,000
and $9,000, respectively.These changes were partially offset by a decrease in
the provision for income taxes of $329,000.

Net interest income decreased $71,000, or 1.0%, to $7.8 million for the six
months ended June 30, 2013.The decrease in net interest income resulted from
a decrease in interest income of $602,000, or 5.8%, as the Corporation's yield
on interest-earning assets decreased 18 basis points to 4.22% for the first
six months of 2013 from 4.40% for the same period in 2012.Partially
offsetting the decrease in interest income, interest expense decreased
$531,000, or 20.7%, as the Corporation's cost of funds decreased 23 basis
points to 0.89% for the first six months of 2013 from 1.12% for the same
period in 2012.Driving this improvement was a $453,000 decrease in interest
paid on deposits and a $78,000 decrease in interest paid on borrowings.The
management of funding costs resulted in a slight increase in net interest
margin to 3.37% for the first six months of 2013, compared to 3.36% for the
same period in 2012 despite the decrease in asset yields.

Noninterest income decreased $679,000, or 25.7%, to $2.0 million for the six
months ended June 30, 2013 compared to $2.6 million for the same period in
2012.The decrease related to a $778,000 decrease in gains on the sale of
securities.During the six months ended June 30, 2013, the Corporation
realized securities gains of $184,000 related to the sale of certain
mortgage-backed securities that were experiencing accelerated
prepayments.During the same period in 2012, the Corporation realized
securities gains of $962,000, $424,000 of which related to the sale of common
stock held in a local community bank following its merger with a regional
competitor and $538,000 of which related to the aforementioned sale of U.S.
Treasury securities.Excluding the securities gains, noninterest income
increased $99,000, or 5.9%, to $1.8 million from $1.7 million in the same
period last year due to increases in fees and service charges and earnings on
bank-owned life insurance.

Noninterest expense was essentially flat at $7.2 million for the six month
periods ended June 30, 2013 and 2012.Increases in compensation and benefits
expense, premises and equipment expense and FDIC insurance expense were mostly
offset by decreases in intangible amortization expense, professional fees and
other noninterest expense.

The provision for income taxes decreased $329,000, or 42.8%, to $439,000 for
the six months ended June 30, 2013 from $768,000 for the same period last
year.This decrease was related to a decrease in pre-tax income and an
increase in the level of tax exempt income realized by the Corporation.

CONSOLIDATED BALANCE SHEET & ASSET QUALITY OVERVIEW

Total assets increased $20.6 million, or 4.1%, to $529.6 million at June 30,
2013 from $509.0 million at December 31, 2012.Asset growth was the result of
a $26.1 million increase in securities, funded primarily by a $17.0 million
increase in customer deposits, a $9.0 million decrease in cash and equivalents
and a $5.5 million increase in short-term borrowed funds.

Total nonperforming assets were $5.6 million, or 1.05% of total assets at June
30, 2013 compared to $7.2 million, or 1.41% of total assets at December 31,
2012.This $1.6 million, or 22.4%, decrease in nonperforming assets was due to
repayments made on nonperforming loans during the period and a $941,000
partial charge-off of a nonperforming commercial real estate loan for which a
specific reserve of $1.4 million was established in 2012.Of the $5.3 million
in loans classified as nonperforming, $3.6 million, or 69.4%, relate to two
commercial credit relationships.

Stockholders' equity decreased $2.1 million, or 4.1%, to $49.6 million at June
30, 2013 compared to $51.7 million at December 31, 2012.This resulted from a
$3.1 million decrease in accumulated comprehensive income as unrealized gains
on the Corporation's securities portfolio decreased by $4.7 million following
the recent rise in market interest rates.The Corporation remains well
capitalized and is positioned for continued growth with total stockholders'
equity at 9.4% of total assets.Tangible book value per common share was
$19.78 at June 30, 2013 compared to $20.93 at December 31, 2012.

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, currently operating thirteen 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   Six month period
                                     ended June 30,       ended June 30,
                                    2013      2012       2013       2012
                                                                 
Interest income                      $4,898  $5,198   $9,812   $10,414
Interest expense                     999      1,262     2,035     2,566
Net interest income                  3,899    3,936     7,777     7,848
Provision for loan losses            153      115       295       228
Noninterest income                   1,031    1,421     1,961     2,640
Noninterest expense                  3,632    3,564     7,207     7,198
Income before provision for income   1,145    1,678     2,236     3,062
taxes
Provision for income taxes           206      422       439       768
Net income                           939      1,256     1,797     2,294
Accumulated preferred stock          125      125       250       250
dividends and discount accretion
Net income available to common       $814    $1,131   $1,547   $2,044
stockholders
                                                                 
Basic earnings per common share      $0.46     $0.65      $0.88      $1.17
Diluted earnings per common share    $0.46     $0.65      $0.87      $1.17
Dividends per common share           $0.20     $0.18      $0.40      $0.36
                                                                 
Return on average assets (1)         0.71%     0.95%      0.70%      0.89%
Return on average equity (1)         7.27%     9.79%      7.00%      8.98%
Return on average common equity (1)  7.81%     10.93%     7.46%      9.93%
Yield on average interest-earning    4.08%     4.25%      4.22%      4.40%
assets
Cost of average interest-bearing     1.09%     1.33%      1.15%      1.40%
liabilities
Cost of funds                        0.85%     1.07%      0.89%      1.12%
Net interest margin                  3.28%     3.26%      3.37%      3.36%
Efficiency ratio                     70.84%    69.30%     71.17%     70.79%
____________________                                              
(1) Returns are annualized for the three and
six month periods ended June 30, 2013 and                          
2012.
                                                                 
CONSOLIDATED BALANCE SHEET DATA:             As of      As of      
                                               6/30/2013  12/31/2012
                                                                 
Total assets                                  $529,624 $509,014 
Cash and equivalents                          11,405    20,424    
Securities                                    146,281   120,206   
Loans, net                                    334,291   333,801   
Deposits                                      449,497   432,459   
Borrowed funds                                25,500    20,000    
Common stockholders' equity                   39,613    41,725    
Stockholders' equity                          49,613    51,725    
                                                                 
Book value per common share                   $22.48     $23.72     
Tangible book value per common share          $19.78     $20.93     
                                                                 
Net loans to deposits                         74.37%     77.19%     
Allowance for loan losses to total            1.38%      1.58%      
loans
Nonperforming assets to total assets          1.05%      1.41%      
Earning assets to total assets                94.47%     95.16%     
Stockholders' equity to total assets          9.37%      10.16%     
Shares of common stock outstanding            1,762,158 1,759,408 

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