Emclaire Financial Corp Reports 2013 Earnings

Emclaire Financial Corp Reports 2013 Earnings

Announces Annual Meeting Date

EMLENTON, Penn., Jan. 31, 2014 (GLOBE NEWSWIRE) -- Emclaire Financial Corp
(Nasdaq:EMCF), the parent holding company of The Farmers National Bank of
Emlenton, reported consolidated net income of $3.8 million for the twelve
months ended December 31, 2013, compared to $3.7 million for the twelve months
ended December 31, 2012. The increase in earnings was driven by an increase in
net interest income and a decrease in the provision for loan losses. The
Corporation realized a return on average assets of 0.73% and a return on
average common equity of 8.32% for the year ended December 31, 2013, compared
to 0.70% and 7.56%, respectively, reported for 2012.

Net income was $929,000 for the quarter ended December 31, 2013, compared to
$691,000 for the same period in 2012. The increase in quarterly earnings
related to a $249,000 increase in net interest income and a $424,000 decrease
in the provision for loan losses. The fourth quarter of 2013 included $143,000
in provision for loan losses compared to $567,000 for the same quarter in
2012.

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 earnings for 2013 and the continued growth of our franchise.
During this past year, we have seen decreases in nonperforming assets and the
provision for loans losses due to improved asset quality, an increase in net
interest income and have continued our disciplined management of operating
expenses. This past August, we broke ground for a newly constructed banking
office in Cranberry Township, Pennsylvania, which is expected to open in early
2014, and in October, we opened our fourteenth full-service banking office in
Saint Marys, Pennsylvania. 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."

2013 OPERATING RESULTS OVERVIEW

Net income available to common stockholders increased $227,000, or 7.2%, to
$3.4 million or $1.91 per diluted common share in 2013, compared to $3.2
million or $1.80 per common share in 2012. The increase primarily resulted
from decreases in the provision for loan losses, the provision for income
taxes and preferred stock dividends of $1.6 million, $21,000 and $73,000,
respectively, and a $135,000 increase in net interest income, partially offset
by a $1.0 million decrease in noninterest income and a $543,000 increase in
noninterest expense.

The provision for loan losses decreased $1.6 million to $580,000 for the year
ended December 31, 2013 from $2.2 million in 2012. The provision for loan
losses for 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 increased $135,000, or 0.9%, to $15.9 million for the year
ended December 31, 2013 from $15.8 million in 2012. The increase in net
interest income primarily resulted from a decrease in interest expense of $1.3
million, or 26.1%, as the Corporation's cost of funds decreased 29 basis
points to 0.79% in 2013 from 1.08% in 2012. Driving this improvement was a
$1.2 million decrease in interest paid on deposits and a $127,000 decrease in
interest paid on borrowings, the latter of which related to the Corporation
having exchanged and modified $15.0 million of outstanding Federal Home Loan
Bank long-term advances during 2012. The Corporation improved its non-time
deposit ratio to 75.4% at December 31, 2013 from 69.5% at December 31, 2012,
resulting in an overall reduction in deposit costs. The management of funding
costs resulted in a 6 basis point increase in the net interest margin to 3.40%
for 2013, from 3.34% for 2012, despite decreasing asset yields.

Noninterest income decreased $1.0 million, or 21.1%, to $3.9 million for the
year ended December 31, 2013 from $4.9 million in 2012. The decrease resulted
from a $917,000 decrease in net gains on securities. The Corporation realized
net gains on securities of $340,000 in 2013 compared to $1.4 million in 2012.
The gains recorded in 2012 were partially offset by an other-than-temporary
impairment charge of $103,000 related to a community bank stock held by the
Corporation. Excluding the net gains on securities, noninterest income
decreased $116,000, or 3.2%, to $3.5 million for the year ended December 31,
2013 from $3.6 million in 2012 due to a decrease in commissions on financial
services of $268,000, partially offset by increases in fees and service
charges and earnings on bank-owned life insurance of $65,000 and $80,000,
respectively.

Noninterest expense increased $543,000 to $14.5 million for the year ended
December 31, 2013 from $13.9 million in 2012. The increase primarily related
to increases in compensation and benefits, premises and equipment expense,
professional fees and FDIC insurance expenses of $378,000, $146,000, $43,000
and $54,000, respectively, partially offset by a decrease in intangible asset
amortization of $75,000. Noninterest expense for 2013 includes $105,000
related to the Bank's new branch office in Saint Marys, Pennsylvania.

The provision for income taxes decreased $21,000, or 2.2%, to $913,000 for the
year ended December 31, 2013 from $934,000 in 2012. This decrease related to a
decrease in the Corporation's effective tax rate to 19.3% for 2013 from 20.4%
in 2012.

FOURTH QUARTER OPERATING RESULTS OVERVIEW

Net income available to common stockholders increased $308,000, or 54.4%, to
$874,000 or $0.49 per diluted common share for the quarter ended December 31,
2013 compared to $566,000 or $0.32 per common share for the same period in the
prior year. This increase primarily related to decreases in the provision for
loan losses and preferred stock dividends of $424,000 and $70,000,
respectively, and increases in net interest income and noninterest income of
$249,000 and $17,000, respectively. Partially offsetting these favorable
variances, noninterest expense and the provision for income taxes increased
$348,000 and $104,000, respectively.

The Corporation realized an annualized return on average assets and common
equity of 0.71% and 8.67%, respectively, for the three months ended December
31, 2013, compared to 0.54% and 5.34%, respectively, for the same period in
the prior year.

CONSOLIDATED BALANCE SHEET & ASSET QUALITY OVERVIEW

Total assets increased $16.8 million, or 3.3%, to $525.8 million at December
31, 2013 from $509.0 million at December 31, 2012. Asset growth was driven by
an $18.6 million increase in net loans, which was funded by a $24.2 million
increase in short-term borrowed funds, a $2.9 million decrease in securities
and a $3.8 million decrease in cash and equivalents. The decrease in cash and
securities also funded a $5.0 million partial redemption of the Corporation's
preferred stock issued to the United States Department of the Treasury under
the Small Business Lending Fund, which was completed in the third quarter of
2013.

Total nonperforming assets were $5.3 million, or 1.01% of total assets, at
December 31, 2013 compared to $7.2 million, or 1.41% of total assets, at
December 31, 2012. This $1.9 million, or 25.9%, decrease in nonperforming
assets was due to 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 and the continued management and collection efforts related to other
nonperforming assets. Classified and criticized assets decreased $3.3 million,
or 21.4%, to $12.1 million at December 31, 2013 from $15.4 million at December
31, 2012. The decrease was mostly due to the aforementioned partial charge-off
of a nonperforming commercial real estate relationship and the payoff of a
separate $471,000 commercial real estate loan.

Stockholders' equity decreased $6.7 million, or 12.9%, to $45.1 million at
December 31, 2013 from $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 and a $3.9 million decrease in
accumulated other comprehensive income as unrealized gains related to 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 8.6% of
total assets. Tangible book value per common share was $20.04 at December 31,
2013, compared to $20.93 at December 31, 2012.

ANNUAL SHAREHOLDER MEETING

In addition to reporting earnings, the Corporation announced that the annual
meeting of shareholders will be held on Tuesday, April 22, 2014 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 3, 2014.

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 14 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   Three month period ended Year ended
DATA:                            December 31,             December 31,
                                2013        2012         2013       2012
                                                                 
Interest income                  $4,890    $5,023     $19,598  $20,762
Interest expense                 782        1,164       3,677     4,976
Net interest income              4,108      3,859       15,921    15,786
Provision for loan losses        143        567         580       2,154
Noninterest income               896        879         3,860     4,893
Noninterest expense              3,730      3,382       14,480    13,937
Income before provision for      1,131      789         4,721     4,588
income taxes
Provision for income taxes       202        98          913       934
Net income                       929        691         3,808     3,654
Accumulated preferred stock      55         125         420       493
dividends
Net income available to common   $874      $566       $3,388   $3,161
stockholders
                                                                 
Basic earnings per common share  $0.50       $0.32        $1.92      $1.80
Diluted earnings per common      $0.49       $0.32        $1.91      $1.80
share
Dividends per common share       $0.20       $0.28        $0.80      $0.82
                                                                 
Return on average assets (1)     0.71%       0.54%        0.73%      0.70%
Return on average equity (1)     8.19%       5.27%        7.73%      7.05%
Return on average common equity  8.67%       5.34%        8.32%      7.56%
(1)
Yield on average                 4.12%       4.28%        4.15%      4.35%
interest-earning assets
Cost of average interest-bearing 0.85%       1.30%        1.02%      1.36%
liabilities
Cost of funds                    0.66%       1.02%        0.79%      1.08%
Net interest margin              3.49%       3.32%        3.40%      3.34%
Efficiency ratio                 71.43%      65.99%       70.48%     67.41%
____________________                                              
(1) Returns are annualized for the three month periods ended December 31, 2013
and 2012.
                                                                 
CONSOLIDATED BALANCE SHEET DATA:            As of        As of      
                                             12/31/2013   12/31/2012
                                                                 
Total assets                                $525,842   $509,014 
Cash and equivalents                        16,658      20,424    
Securities                                  117,304     120,206   
Loans, net                                  352,430     333,801   
Deposits                                    432,006     432,459   
Borrowed funds                              44,150      20,000    
Common stockholders' equity                 40,072      41,725    
Stockholders' equity                        45,072      51,725    
                                                                 
Book value per common share                 $22.66       $23.72     
Tangible book value per common              $20.04       $20.93     
share
                                                                 
Net loans to deposits                       81.58%       77.19%     
Allowance for loan losses to                1.36%        1.58%      
total loans
Nonperforming assets to total               1.01%        1.41%      
assets
Earning assets to total assets              94.16%       95.16%     
Stockholders' equity to total               8.57%        10.16%     
assets
Shares of common stock                      1,768,658   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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