Emclaire Financial Corp Reports Third Quarter and Year to Date Earnings

Emclaire Financial Corp Reports Third Quarter and Year to Date Earnings

EMLENTON, Penn., Oct. 23, 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
$967,000, or $0.54 per diluted common share, for the three months ended
September 30, 2013, compared to $551,000, or $0.31 per common share, for the
same period in 2012.

Net income available to common shareholders for the nine month period ended
September 30, 2013 was $2.5 million, or $1.42 per diluted common share,
compared to $2.6 million, or $1.48 per common share, for the same period in
2012.

OPERATING RESULTS OVERVIEW

Consolidated net income was $1.1 million for the three months ended September
30, 2013, compared to $669,000 for the same period last year. The $413,000, or
61.8%, increase in earnings primarily related to a $1.2 million decrease in
the provision for loan losses, partially offset by decreases in net interest
income and noninterest income of $41,000 and $371,000, respectively, and
increases in noninterest expense and the provision for income taxes of
$186,000 and $205,000, respectively.

The provision for loan losses decreased $1.2 million, or 89.5%, to $143,000
for the quarter ended September 30, 2013 from $1.4 million in the same quarter
last year. The third quarter of 2012 included $1.4 million of provision
expense related to a $3.4 million commercial real estate credit relationship,
which was identified as being impaired during that period.

Net interest income decreased $41,000, or 1.0%, to $4.0 million for the
quarter ended September 30, 2013 from $4.1 million in the same quarter last
year. The decrease in net interest income resulted from a decrease in interest
income of $427,000, or 8.0%, as the Corporation's yield on interest-earning
assets decreased 22 basis points to 4.10% for the third quarter of 2013 from
4.32% for the same quarter in 2012. Partially offsetting the decrease in
interest income, interest expense decreased $386,000, or 31.0%, as the
Corporation's cost of funds decreased 32 basis points to 0.72% for the third
quarter of 2013 from 1.04% for the same period in 2012. Driving this
improvement was a $346,000 decrease in interest paid on deposits and a $40,000
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 74.9% at September 30, 2013 from 70.0% at September 30,
2012, resulting in, along with historically low national market interest
rates, an overall reduction in deposit costs. The management of funding costs
resulted in a 7 basis point increase in the net interest margin to 3.41% for
the third quarter of 2013, from 3.34% for the same period in 2012 despite the
decrease in asset yields.

Noninterest income decreased $371,000, or 27.0%, to $1.0 million for the
quarter ended September 30, 2013 from $1.4 million for the same quarter in
2012. The decrease resulted from decreases in gains on the sale of securities
and commissions on financial services of $283,000 and $110,000, respectively.
During the quarter ended September 30, 2013, the Corporation realized
securities gains of $107,000 primarily related to the sale of certain
municipal and mortgage-backed securities. During the same period in 2012, the
Corporation realized securities gains of $390,000 related to the sale of
mortgage-backed securities. Excluding the securities gains, noninterest income
decreased $88,000, or 9.0%, to $895,000 for the quarter ended September 30,
2013 from $983,000 for the quarter ended September 30, 2012.

Noninterest expense increased $186,000, or 5.5%, to $3.5 million for the
quarter ended September 30, 2013, from $3.4 million for the same quarter in
2012. Increases in compensation and benefits expense, premises and equipment
expense, professional fees and FDIC insurance expense were partially offset by
decreases in intangible amortization expense and other noninterest expense.
Compensation and benefits expense increased $169,000 to $1.8 million for the
quarter ended September 30, 2013 from $1.7 million for the same period last
year primarily due to a $160,000 reduction in incentive compensation accruals
in the third quarter of 2012 given the elevated level of provision for loan
losses realized in the period.

The provision for income taxes increased $205,000 to $272,000 for the quarter
ended September 30, 2013 from $67,000 for the same period last year. The
Corporation's effective tax rate increased to 20.1% for the third quarter of
2013 from 9.1% for the same quarter in the prior year due to an increase in
taxable income.

The Corporation realized an annualized return on average assets and return on
average common equity of 0.82% and 9.77%, respectively, for the quarter ended
September 30, 2013, versus 0.50% and 5.17%, respectively, for the same quarter
in 2012.

CONSOLIDATED YEAR-TO-DATE OPERATING RESULTS OVERVIEW

Consolidated net income was $2.9 million for the nine months ended September
30, 2013, compared to $3.0 million for the same period last year. The $84,000,
or 2.8%, decline in earnings primarily related to decreases in net interest
income and noninterest income of $112,000 and $1.1 million, respectively, and
an increase in noninterest expense of $195,000. These changes were partially
offset by decreases in the provision for loan losses and provision for income
taxes of $1.1 million and $124,000, respectively.

Net interest income decreased $112,000, or 0.9%, to $11.8 million for the nine
months ended September 30, 2013 from $11.9 million for the same period in
2012. The decrease in net interest income resulted from a decrease in interest
income of $1.0 million, or 6.5%, as the Corporation's yield on
interest-earning assets decreased 21 basis points to 4.17% for the first nine
months of 2013 from 4.38% for the same period in 2012. Partially offsetting
the decrease in interest income, interest expense decreased $917,000, or
24.1%, as the Corporation's cost of funds decreased 25 basis points to 0.84%
for the first nine months of 2013 from 1.09% for the same period in 2012.
Driving this improvement was an $800,000 decrease in interest paid on deposits
and a $117,000 decrease in interest paid on borrowings. The management of
funding costs resulted in an increase in the net interest margin to 3.38% for
the first nine months of 2013, compared to 3.35% for the same period in 2012
despite the decrease in asset yields.

Noninterest income decreased $1.0 million, or 26.2%, to $3.0 million for the
nine months ended September 30, 2013 compared to $4.0 million for the same
period in 2012. The decrease resulted from a $1.1 million decrease in gains on
the sale of securities. During the nine months ended September 30, 2013, the
Corporation realized securities gains of $291,000. During the same period in
2012, the Corporation realized securities gains of $1.4 million, $424,000 of
which related to the sale of common stock held in a local community bank
following its merger with a regional competitor, $538,000 related to the sale
of U.S. Treasury securities and $390,000 related to the sale of certain
mortgage-backed securities. Also contributing to the decline in noninterest
income, commissions on financial serviced decreased $196,000, or 51.2%, to
$187,000 for the nine months ended September 30, 2013 from $383,000 for the
same period last year. Excluding the securities gains, noninterest income
increased $11,000, to $2.7 million due to increases in fees and service
charges and earnings on bank-owned life insurance.

Noninterest expense increased $195,000, or 1.8%, to $10.8 million for the nine
month period ended September 30, 2013 from $10.6 million for the same period
in 2012. Increases in compensation and benefits expense, premises and
equipment expense and FDIC insurance expense were mostly offset by decreases
in intangible amortization expense and other noninterest expense.

The provision for income taxes decreased $124,000, or 14.9%, to $711,000 for
the nine months ended September 30, 2013 from $835,000 for the same period
last year. This decrease was related to a decrease in pre-tax income realized
by the Corporation.

CONSOLIDATED BALANCE SHEET & ASSET QUALITY OVERVIEW

Total assets increased $17.2 million, or 3.4%, to $526.2 million at September
30, 2013 from $509.0 million at December 31, 2012. Asset growth was the result
of an increase in loans receivable and securities of $13.9 million and $5.1
million, respectively, funded primarily by a $26.7 million increase in
short-term borrowed funds, a $5.8 million decrease in cash and equivalents and
a $3.0 million decrease in customer deposits.

Total nonperforming assets were $5.5 million, or 1.04% of total assets at
September 30, 2013, compared to $7.2 million, or 1.41% of total assets at
December 31, 2012. The $1.7 million, or 23.7% 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 68.7%, relate
to two commercial credit relationships.

Stockholders' equity decreased $7.1 million, or 13.7%, to $44.7 million at
September 30, 2013 compared to $51.7 million at December 31, 2012. This
resulted from the previously disclosed redemption of $5.0 million, or 50% of
the $10.0 million in outstanding preferred shares that had been issued to the
United States Department of the Treasury in August 2011 through the Small
Business Lending Fund ("SBLF") and a $3.7 million decrease in accumulated
comprehensive income as unrealized gains on the Corporation's securities
portfolio decreased following the recent rise in long term market interest
rates. The Corporation remains well capitalized and is positioned for
continued growth with total stockholders' equity at 8.5% of total assets.
Tangible book value per common share was $19.84 at September 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 fourteen 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       Nine month period
                                 ended September 30,      ended September 30,
                                2013     2012            2013       2012
                                                                 
Interest income                  $4,898 $5,325        $14,710  $15,739
Interest expense                 860     1,246          2,895     3,812
Net interest income              4,038   4,079          11,815    11,927
Provision for loan losses        143     1,359          438       1,587
Noninterest income               1,002   1,373          2,963     4,013
Noninterest expense              3,543   3,357          10,750    10,555
Income before provision for      1,354   736            3,590     3,798
income taxes
Provision for income taxes       272     67             711       835
Net income                       1,082   669            2,879     2,963
Accumulated preferred stock      115     118            365       368
dividends
Net income available to common   $967   $551          $2,514   $2,595
stockholders
                                                                 
Basic earnings per common share  $0.55    $0.31           $1.43      $1.48
Diluted earnings per common      $0.54    $0.31           $1.42      $1.48
share
Dividends per common share       $0.20    $0.18           $0.60      $0.54
                                                                 
Return on average assets (1)     0.82%    0.50%           0.74%      0.76%
Return on average equity (1)     8.85%    5.08%           7.59%      7.65%
Return on average common equity  9.77%    5.17%           8.21%      8.31%
(1)
Yield on average                 4.10%    4.32%           4.17%      4.38%
interest-earning assets
Cost of average interest-bearing 0.93%    1.32%           1.08%      1.37%
liabilities
Cost of funds                    0.72%    1.04%           0.84%      1.09%
Net interest margin              3.41%    3.34%           3.38%      3.35%
Efficiency ratio                 67.70%   62.29%          69.99%     67.84%
                                                                 
(1) Returns are annualized for the three and nine month periods ended
September 30, 2013 and 2012.
                                                                 
CONSOLIDATED BALANCE SHEET DATA:                                  
                                        As of 9/30/2013 As of      
                                                          12/31/2012
                                                                 
Total assets                             $526,200      $509,014 
Cash and equivalents                     14,636         20,424    
Securities                               125,325        120,206   
Loans, net                               347,729        333,801   
Deposits                                 429,442        432,459   
Borrowed funds                           46,650         20,000    
Common stockholders' equity              39,663         41,725    
Stockholders' equity                     44,663         51,725    
                                                                 
Book value per common share              $22.50          $23.72     
Tangible book value per common           $19.84          $20.93     
share
                                                                 
Net loans to deposits                    80.97%          77.19%     
Allowance for loan losses to             1.36%           1.58%      
total loans
Nonperforming assets to total            1.04%           1.41%      
assets
Earning assets to total assets           93.92%          95.16%     
Stockholders' equity to total            8.49%           10.16%     
assets
Shares of common stock                   1,763,158      1,759,408 
outstanding

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