--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For Quarter Ended: June 30, 2002
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission File Number: 000-18464
EMCLAIRE FINANCIAL CORP.
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(Exact name of small business issuer as specified in its charter)
Pennsylvania 25-1606091
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
612 Main Street, Emlenton, PA 16373
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(Address of principal executive offices)
(724) 867-2311
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(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since last
report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by the court. Yes No
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS
Number of shares of issuer's common stock outstanding as of July 31, 2002:
Common Stock, $1.25 par value 1,332,835
----------------------------- ---------
(Class) (Outstanding)
-----------------------------
Transitional Small Business Disclosure Format (Check one): Yes X No
---- -----
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1
EMCLAIRE FINANCIAL CORP.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
June 30, 2002 (Unaudited) and December 31, 2001..................1
Consolidated Income Statements for the three and six
months ended June 30, 2002 and 2001 (Unaudited)..................2
Consolidated Statement of Changes in Stockholders'
Equity for the six months ended June 30, 2002 (Unaudited)........3
Consolidated Statements of Cash Flows for the six
months ended June 30, 2002 and 2001 (Unaudited)..................4
Notes to Consolidated Financial Statements.......................5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations.................8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...............................................17
Item 2. Changes in Securities...........................................17
Item 3. Defaults Upon Senior Securities.................................17
Item 4. Submission of Matters to a Vote of Security Holders.............17
Item 5. Other Information...............................................17
Item 6. Exhibits and Reports on Form 8-K................................17
Signatures......................................................18
2
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
-----------------------------
Emclaire Financial Corp. and Subsidiary
Consolidated Balance Sheets
As of June 30, 2002 (Unaudited) and December 31, 2001
(Dollar amounts in thousands, except share data)
June 30, December 31,
2002 2001
(unaudited)
------------ -----------
Assets
Cash and due from banks $ 7,254 $ 7,127
Interest-earning deposits in banks 450 620
Federal funds sold 5,090 1,410
----------- ----------
Cash and cash equivalents 12,794 9,157
Securities available for sale 39,336 38,695
Securities held to maturity; fair value of $51 and $61 50 60
Loans receivable held for sale 1,284 -
Loans receivable, net of allowance for loan losses of
$1,424 and $1,464 165,741 1160,540
Federal bank stocks, at cost 1,338 1,261
Accrued interest receivable 1,321 1,251
Premises and equipment 3,373 3,388
Intangible assets 1,639 1,737
Prepaid expenses and other assets 697 628
----------- ----------
Total assets $ 227,573 $ 216,717
=========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 199,199 $ 189,470
Borrowed funds 5,000 5,000
Accrued interest payable 477 480
Accrued expenses and other liabilities 834 656
----------- ----------
Total liabilities 205,510 195,606
----------- ----------
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 and 1,332,835 shares
outstanding 1,745 1,745
Additional paid-in capital 10,871 10,871
Treasury stock, at cost; 63,017 shares (971) (971)
Retained earnings 9,602 9,094
Accumulated other comprehensive income 816 372
----------- ----------
Total stockholders' equity 22,063 21,111
----------- ----------
Total liabilities and stockholders' equity $ 227,573 $ 216,717
=========== ==========
See accompanying notes to consolidated financial statements.
1
Emclaire Financial Corp. and Subsidiary
Consolidated Income Statements For
the three and six months ended June 30, 2002 and 2001
(Unaudited)
(Dollar amounts in thousands, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
2002 2001 2002 2001
----------- ------------ ------------ ------------
Interest and dividend income:
Loans receivable $ 3,104 $ 3,150 $ 6,247 $ 6,324
Securities:
Taxable 382 299 751 593
Exempt from federal income tax 138 92 279 174
Federal bank stocks 13 26 28 41
Deposits with banks and federal funds sold 18 89 31 172
----------- ------------ ------------ ------------
Total interest income 3,655 3,656 7,336 7,304
----------- ------------ ------------ ------------
Interest expense:
Deposits 1,233 1,571 2,461 3,132
Borrowed funds 57 3 117 32
----------- ------------ ------------ ------------
Total interest expense 1,290 1,574 2,578 3,164
----------- ------------ ------------ ------------
Net interest income 2,365 2,082 4,758 4,140
Provision for loan losses 90 36 201 82
----------- ------------ ------------ ------------
Net interest income after provision for loan losses 2,275 2,046 4,557 4,058
----------- ------------ ------------ ------------
Noninterest income:
Service fees 232 247 462 460
Other 111 97 177 193
----------- ------------ ------------ ------------
Total noninterest income 342 344 639 653
----------- ------------ ------------ ------------
Noninterest expense:
Compensation and employee benefits 985 952 1,999 1,898
Premises and equipment, net 299 268 588 555
Intangible amortization expense 49 69 98 138
Other 535 504 1,098 965
----------- ------------ ------------ ------------
Total noninterest expense 1,868 1,793 3,783 3,556
----------- ------------ ------------ ------------
Net income before provision for income taxes 749 597 1,413 1,155
Provision for income taxes 219 176 400 343
----------- ------------ ------------ ------------
Net income $ 530 $ 421 $ 1,013 $ 812
=========== ============ ============ ============
Net income per share $ 0.40 $ 0.32 $ 0.76 $ 0.61
Dividends per share $ 0.19 $ 0.17 $ 0.38 $ 0.34
Weighted average common shares outstanding 1,332,835 1,332,835 1,332,835 1,332,835
See accompanying notes to consolidated financial statements.
2
Emclaire Financial Corp. and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
For the six months ended June 30, 2002 (Unaudited)
(Dollar amounts in thousands)
Accumulated
Additional Other Total
Common Paid-in Treasury Retained Comprehensive Stockholders'
Stock Capital Stock Earnings Income (Loss) Equity
-------- -------- -------- --------- ------------- ---------
Balance at December 31, 2001 $ 1,745 $10,871 $ (971) $ 9,094 $ 372 $ 21,111
Comprehensive income:
Net income - - - 1,013 - 1,013
Change in net unrealized gain on
securities available for sale, net of
taxes of $229 - - - - 444 444
---------
Comprehensive income 1,457
---------
Dividends paid - - - (505) - (505)
-------- -------- ------- --------- ------ ---------
Balance at June 30, 2002 $ 1,745 $10,871 $ (971) $ 9,602 $ 816 $ 22,063
======== ======== ======== ======== ======== =========
See accompanying notes to consolidated financial statements.
3
Emclaire Financial Corp. and Subsidiary
Consolidated Statements of Cash Flows
For the six months ended June 30, 2002 and 2001 (Unaudited)
(Dollar amounts in thousands)
For the Six Months Ended
June 30,
------------------------
2002 2001
------------ ----------
Operating activities:
Net income $ 1,013 $ 812
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization for premises and
equipment 241 435
Provision for loan losses 201 82
Amortization of premiums and accretion of
discounts, net 119 22
Net change in loans held for sale (1,284) -
Amortization of intangible assets 98 138
Decrease (increase) in accrued interest receivable (70) 81
Decrease (increase) in prepaid expenses and other
assets (69) (2)
Increase (decrease) in accrued interest payable (3) (25)
Increase (decrease) in accrued expenses and other
liabilities l178 (4)
Other (219) (238)
---------- -----------
Net cash provided by operating activities 205 1,301
---------- -----------
Lending and Investing Activities:
Loan originations (32,721) (26,005)
Purchases of securities available for sale (12,706) (4,049)
Purchases of Federal bank stocks (77) (22)
Principal repayments of loans receivable 27,248 23,777
Repayments, maturities and calls of securities
available for sale 12,680 3,951
Principal repayments of securities held to maturity 10 3
Purchases of premises and equipment (226) (92)
---------- -----------
Net cash used in lending and investing activities (5,792) (2,437)
---------- -----------
Deposit and Financing Activities:
Net increase in deposits 9,729 9,435
Net increase (decrease) in borrowed funds - (2,000)
Dividends paid (505) (453)
---------- -----------
Net cash provided by deposit and financing
activities 9,224 6,982
---------- -----------
Net increase in cash equivalents 3,637 5,846
Cash equivalents at beginning of period 9,157 8,510
---------- -----------
Cash equivalents at end of period $ 12,794 $ 14,356
========== ===========
Supplemental information:
Interest paid $ 2,581 $ 3,139
Income taxes paid 245 447
See accompanying notes to consolidated financial statements.
4
Emclaire Financial Corp. and Subsidiary
Notes to Consolidated Financial Statements
1. Basis of Presentation
Emclaire Financial Corp. (the Corporation) is a Pennsylvania
corporation and bank holding company that provides a full range of
retail and commercial financial products and services to customers in
western Pennsylvania through its wholly owned subsidiary bank, the
Farmers National Bank of Emlenton (the Bank), a national banking
association. The consolidated financial statements contained herein
include the accounts of the Corporation and the Bank. All inter-company
amounts have been eliminated.
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 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-QSB 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, 2001, as contained in the Corporation's 2001
Annual Report to Stockholders.
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 and deferred tax assets. 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. Securities
The following table summarizes the Corporation's securities as of the
respective dates:
(In thousands) Amortized Unrealized Unrealized Fair
cost gains losses value
----------------------------------------------------------------------------
Available for sale:
June 30, 2002:
U.S. Government securities $ 13,483 $ 393 $ (7) $ 13,869
Municipal securities 11,444 167 (33) 11,578
Corporate securities 12,201 239 (2) 12,438
Equity securities 971 480 - 1,451
------- ------- ------- -------
$ 38,099 $ 1,279 $ (42) $ 39,336
======= ======= ======= =======
December 31, 2001:
U.S. Government securities $ 12,978 $ 441 $ (14) $ 13,405
Municipal securities 11,919 24 (176) 11,767
Corporate securities 12,264 157 (115) 12,306
Equity securities 971 246 - 1,217
-------- ------- ------- -------
$ 38,132 $ 868 $ (305) $ 38,695
======= ======= ======= =======
Held to maturity:
June 30, 2002:
Mortgage-backed securities $ 50 $ 1 $ - $ 51
------- ------- ------- --------
$ 50 $ 1 $ - $ 51
======= ======= ======= ========
December 31, 2001:
Mortgage-backed securities $ 60 $ 1 $ - $ 61
------- ------- ------- --------
$ 60 $ 1 $ - $ 61
======= ======= ======= ========
5
3. Loans Receivable
The Corporation's loans receivable as of the respective dates are
summarized as follows:
June 30, December 31,
(In thousands) 2002 2001
--------------------------------------------------------------------------------------------------
Mortgage loans:
Residential first mortgage $ 85,290 $ 84,974
Home equity 17,961 15,445
Commercial real estate 30,173 26,470
-------------- --------------
133,424 126,889
Other loans:
Consumer 13,227 16,141
Commercial business 20,514 18,974
-------------- --------------
33,741 35,115
-------------- --------------
Total gross loans 167,165 162,004
Less allowance for loan losses 1,424 1,464
-------------- --------------
$ 165,741 $ 160,540
============== ==============
4. Deposits
The Corporation's deposits as of the respective dates are summarized as
follows:
(Dollar amounts in thousands) June 30, 2002 December 31, 2001
---------------------------------- -----------------------------------
Weighted Weighted
average average
Type of accounts rate Amount % rate Amount %
---------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits - $33,035 16.6% - $29,237 15.4%
Interest-bearing demand deposits 1.11% 72,749 36.5% 1.32% 69,665 36.8%
Time deposits 4.51% 93,415 46.9% 4.83% 90,568 47.8%
---------- ----------- ---------- -----------
2.52% $199,199 100.0% 2.79% $189,470 100.0%
========== =========== ========== ===========
5. Net Income Per Share
The Corporation maintains a simple capital structure with no common
stock equivalents. As such earnings per share computations are based on
the weighted average number of common shares outstanding for the
respective reporting periods.
6
6. Comprehensive Income
Total comprehensive income was comprised of the following for the three
and six-month periods ended June 30:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
In thousands 2002 2001 2002 2001
-------------------------------------------------------------------------------------------------------------
Net income $ 530 $ 421 $ 1,013 $ 812
Change in net unrealized gain on securities available
for sale, net of taxes 513 (7) 444 209
----------- ------------ ------------ ------------
Comprehensive income $ 1,043 $ 414 $ 1,457 $ 1,021
=========== ============ ============ ============
7. Goodwill
On January 1, 2002, the Corporation adopted the Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards
(SFAS) No. 142, "Goodwill and Other Intangible Assets." This statement
changed the accounting for goodwill from an amortization method to an
impairment-only approach. Thus amortization of goodwill, including
goodwill recorded in past business combinations, ceased upon adoption
of this statement. However, this statement did not amend SFAS No. 72,
"Accounting for Certain Acquisitions of Banking or Thrift
Institutions," which requires recognition and amortization of
unidentified assets relating to the acquisitions of certain financial
institutions or branches thereof. The FASB has undertaken a limited
scope project to reconsider the provisions of SFAS No. 72 and a final
determination as to the treatment of goodwill associated with SFAS No.
72 acquisitions should be derived by the end of 2002. At June 30, 2002
and December 31, 2001, the Corporation had $460,000 and $484,000,
respectively, in SFAS No. 72 goodwill resulting in intangible
amortization expense of $12,000 and $24,000 for the three and six-month
periods ended June 30, 2002, respectively.
Had SFAS No. 142 been in effect for all periods presented,
previously reported net income and net income per share would have
been as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
In thousands, except per share data 2002 2001 2002 2001
-------------------------------------------------------------------------------------------------------------
Net income:
Reported net income $ 530 $ 421 $ 1,013 $ 812
Add back goodwill amortization - 20 - 40
----------- ------------ ------------ ------------
Adjusted net income $ 530 $ 441 $ 1,013 $ 852
=========== ============ ============ ============
Net income per share:
Reported net income per share $ 0.40 $ 0.32 $ 0.76 $ 0.61
Add back goodwill amortization - 0.01 - 0.03
----------- ------------ ------------ ------------
Adjusted net income per share $ 0.40 $ 0.33 $ 0.76 $ 0.64
=========== ============ ============ ============
7
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
and six-month periods ended June 30, 2002 and should be read in conjunction with
the accompanying consolidated financial statements and notes presented on pages
1 through 7.
Discussions of certain matters in this Report on Form 10-QSB may constitute
forward-looking statements within the meaning of the Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and as such, may involve
risks and uncertainties. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies, and expectations, are
generally identifiable by the use of words or phrases such as "believe", "plan",
"expect", "intend", "anticipate", "estimate", "project", "forecast", "may
increase", "may fluctuate", "may improve" and similar expressions of future or
conditional verbs such as "will", "should", "would", and "could". These
forward-looking statements relate to, among other things, expectations of the
business environment in which the Corporation operates, projections of future
performance, potential future credit experience, perceived opportunities in the
market, and statements regarding the Corporation's mission and vision. The
Corporation's actual results, performance, and achievements may differ
materially from the results, performance, and achievements expressed or implied
in such forward-looking statements due to a wide range of factors. These factors
include, but are not limited to, changes in interest rates, general economic
conditions, the demand for the Corporation's products and services, accounting
principles or guidelines, legislative and regulatory changes, monetary and
fiscal policies of the US Government, US Treasury, and Federal Reserve, real
estate markets, competition in the financial services industry, attracting and
retaining key personnel, performance of new employees, regulatory actions,
changes in and utilization of new technologies, and other risks detailed in the
Corporation's reports filed with the Securities and Exchange Commission (SEC)
from time to time, including the Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2001. These factors should be considered in evaluating
the forward-looking statements, and undue reliance should not be placed on such
statements. 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
General. The Corporation's total assets increased $10.9 million or 5.0% to
$227.6 million at June 30, 2002 from $216.7 million at December 31, 2001. This
net increase was primarily the result of increases in cash equivalents,
securities, and loans receivable of $3.6 million, $631,000, and $6.5 million,
respectively. The increase in total assets reflects a corresponding increase in
total liabilities and total stockholders' equity of $9.9 million or 5.1% and
$952,000 or 4.5%, respectively. The increase in total liabilities was primarily
the result of an increase in deposits of $9.7 million or 5.1%. The increase in
stockholders' equity was primarily the result of increases in retained earnings
and accumulated other comprehensive income of $508,000 or 5.6% and $444,000 or
119.4%, respectively.
Cash equivalents. Cash on hand, interest-earning deposits and federal funds sold
represent cash equivalents and increased a combined $3.6 million or 39.7% to
$12.8 million at June 30, 2002 from $9.2 million at December 31, 2001. The net
increase between June 30, 2002 and December 31, 2001 can be attributed primarily
to the increase in the Corporation's deposits and maturities of securities,
partially offset by net loan originations.
Securities. The Corporation's securities portfolio increased $631,000 or 1.6% to
$39.4 million at June 30, 2002 from $38.7 million at December 31, 2001. This net
increase was primarily the result of security purchases of $12.7 million, during
the six months ended June 30, 2002. Partially offsetting these purchases were
security maturities of $12.6 million, during the period.
8
Loans receivable. Net loans receivable increased $6.5 million or 4.0% to $167.0
million at June 30, 2002 from $160.5 million at December 31, 2001. This increase
was comprised of an increase in mortgage loans of $7.8 million or 6.2%,
partially offset by a decrease in other loans of $1.4 million during the six
months ended June 30, 2002. This overall increase in loans receivable can be
attributed primarily to higher customer demand for loans in the current lower
interest rate environment as well as the introduction of new consumer mortgage
loan products.
During the quarter ended June 30, 2002, management identified and designated
$1.3 million of residential mortgage loans for sale in the secondary market.
These loans were originated for sale and met certain interest rate and term
parameters established by management in connection with managing the
Corporation's asset and liability mix and interest rate risk. The loans were
originated during the first half of 2002 and the sale of these loans is expected
to be consummated in July 2002. The servicing of these loans will be retained,
and future loans sales are expected in light of expected origination levels,
product pricing and anticipated market interest rates.
Non-performing assets. Non-performing assets include non-accrual loans and real
estate acquired through foreclosure. Non-performing assets amounted to $1.1
million or 0.47% and $1.3 million or 0.57% of total assets at June 30, 2002 and
December 31, 2001, respectively.
Deposits. Total deposits increased $9.7 million or 5.1% to $199.2 million at
June 30, 2002 from $189.5 million at December 31, 2001. This increase was
comprised of increases in noninterest bearing, interest bearing and time
deposits of $3.8 million, $3.1 million, and $2.8 million, respectively. The
general increase in deposits during the period can be attributed primarily to:
(1) an overall movement of funds in the marketplace by customers from mutual
fund and stock investments into FDIC insured bank deposits as a result of recent
national economic instability, and (2) the Corporation's development and
promotion of new depository products including money market accounts and special
certificate of deposit programs, among other initiatives.
Stockholders' equity. Stockholders' equity increased $952,000 or 4.5% to $22.1
million at June 30, 2002 from $21.1 million at December 31, 2001. This increase
was principally the result of an increase in retained earnings of $508,000,
comprised of net income of $1.0 million offset by dividends paid of $505,000,
and an increase in accumulated other comprehensive income of $444,000.
RESULTS OF OPERATIONS
Comparison of Results for the Three-Month Periods Ended June 30, 2002 and 2001
General. The Corporation reported net income of $530,000 and $421,000 for the
three months ended June 30, 2002 and 2001, respectively. The $109,000 or 25.9%
increase in net income for the three months ended June 30, 2002, as compared to
the three months ended June 30, 2001, was attributable to an increase in net
interest income of $283,000, partially offset by a decrease in noninterest
income of $2,000 and increases in the provision for loan losses, noninterest
expense and the provision for income taxes of $54,000, $75,000 and $43,000,
respectively.
During 2001, the Corporation and the nation experienced a historically unusual
drop in national market interest rates with the federal funds discount rate
decreasing 375 basis points to 1.75% in December 2001 from 5.50% in January
2001. Over the same period, the national prime-lending rate has declined
similarly from 9.50% to 4.75%. The prime rate and short-term interest rates have
remained relatively consistent during the six months ended June 30, 2002.
As outlined in detail below, this declining and lower rate environment has
resulted in a significant repricing of the Corporation's loan and deposit
products, reducing the yield of the Corporation's interest-earning assets as new
loan production and refinancing of existing loans during 2001 and early 2002 has
resulted in lower yielding assets. Since the Corporation's time deposit products
don't afford a call feature, the cost of funds during 2001, did not decrease as
quickly as the yield on interest-earning assets, however, such repricing of
deposits is expected to approach that of interest-earning assets, particularly
as the current lower interest rate environment continues. The Corporation
continues to evaluate the pricing of interest-bearing demand deposits (checking,
savings and
9
money market products) in light of the current rate environment and
will adjust pricing to reflect current market conditions. During the first half
of 2002, the Corporation's cost of funds experienced a similar decrease to that
of loans prior and in light of the lower market interest rate environment.
Average Balance Sheet and Yield/Rate Analysis. The following table sets forth,
for periods indicated, information concerning the total dollar amounts of
interest income from interest-earning assets and the resultant 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.
10
(Dollar amounts in thousands) Three months ended June 30,
2002 2001
-------------------------------------- --------------------------------------
Average Yield / Average Yield /
Balance Interest Rate Balance Interest Rate
---------------------------------------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans 167,135 $ 3,104 7.45% $ 152,611 $ 3,150 8.28%
Securities, taxable 28,422 382 5.39% 19,105 299 6.28%
Securities, tax exempt 11,685 196 6.72% 7,831 131 6.69%
------------- ------------- ---------- ------------- ------------- ----------
40,107 578 5.78% 26,936 430 6.40%
------------- ------------- ---------- ------------- ------------- ----------
Interest-earning cash equivalents 3,747 18 1.93% 8,114 89 4.40%
Federal bank stocks 1,325 13 3.94% 1,239 26 8.42%
------------- ------------- ---------- ------------- ------------- ----------
5,072 31 2.45% 9,353 115 4.93%
------------- ------------- ---------- ------------- ------------- ----------
Total interest-earning assets 212,314 3,713 7.01% 188,900 3,695 7.84%
Cash and due from banks 6,842 6,094
Other noninterest-earning assets 5,662 6,008
------------- ------------- ---------- ------------- ------------- ----------
Total assets $ 224,818 $ 3,713 6.62% $ 201,002 $ 3,695 7.37%
============= ============= ========== ============= ============= ==========
Interest-bearing liabilities:
Interest-bearing demand deposits $ 72,144 $ 202 1.12% $ 67,279 $ 409 2.44%
Time deposits 91,910 1,031 4.50% 82,769 1,162 5.63%
------------- ------------- ---------- ------------- ------------- ----------
164,054 1,233 3.01% 150,048 1,571 4.20%
------------- ------------- ---------- ------------- ------------- ----------
Borrowed funds, term 5,000 57 4.57% 222 3 5.42%
Borrowed funds, overnight - - 0.00% - - 0.00%
------------- ------------- ---------- ------------- ------------- ----------
5,000 57 4.57% 222 3 5.42%
------------- ------------- ---------- ------------- ------------- ----------
Total interest-bearing liabilities 169,054 1,290 3.06% 150,270 1,574 4.20%
Noninterest-bearing demand deposits 32,235 - - 28,982 -
------------- ------------- ---------- ------------- ------------- ----------
Funding and cost of funds 201,289 1,290 2.57% 179,252 1,574 3.52%
Other noninterest-bearing liabilities 1,335 1,055
------------- -------------
Total liabilities 202,624 180,307
Stockholders' equity 21,794 20,695
------------- ------------- ---------- ------------- ------------- ----------
Total liabilities and stockholders' equity $ 224,418 $ 1,290 2.57% $ 201,002 $ 1,574 3.52%
============= ============= ========== ============= ============= ==========
Net interest income $ 2,423 $ 2,121
============= =============
Interest rate spread (difference between 3.95% 3.64%
========== ==========
weighted average rate on interest-earning
assets and interest-bearing liabilities)
Net interest margin (net interest 4.58% 4.50%
========== ==========
income as a percentage of average
interest-earning assets)
11
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.
(In thousands) Three months ended June 30,
2002 versus 2001
Increase (decrease) due to
-----------------------------
Volume Rate Total
-------------------------------------------------------------------------------
Interest income:
Loans $ 285 $ (331) $ (46)
Securities 193 (45) 148
Interest-earning cash equivalents (35) (36) (71)
Federal bank stocks 2 (15) (13)
------ ------ -------
------ ------ -------
Total interest-earning assets 445 (427) 18
------ ------ -------
------ ------ -------
Interest expense:
Deposits 136 (474) (338)
Borrowed funds 54 - 54
------ ------ -------
------ ------ -------
Total interest-bearing liabilities 190 (474) (284)
------ ------ -------
------ ------ -------
Net interest income $ 255 $ 47 $ 302
====== ====== =======
Net interest income. Net interest income on a tax equivalent basis increased
$302,000 or 14.2% to $2.4 million for the three months ended June 30, 2002,
compared to $2.1 million for the same period in the prior year. This increase
can be attributed to an increase in interest income of $18,000 and a decrease in
interest expense of $284,000.
Interest income. Interest income on a tax equivalent basis increased $18,000 to
$3.71 million for the three months ended June 30, 2002, compared to $3.70
million for the same period in the prior year. This net increase in interest
income can be attributed to an increase in interest earned on securities of
$148,000, partially offset by a decrease in interest earned on loans, cash
equivalents and federal bank stocks of $46,000, $71,000 and $13,000,
respectively.
Contributing to the increase in net interest income was an increase in average
interest-earning assets of $23.4 million or 12.4% to $212.3 million for the
three months ended June 30, 2002, compared to $188.9 million for the same period
in the prior year. The increase in average interest-earning assets can be
attributed to increases in average loans receivable and average securities of
$14.5 million and $13.2 million, respectively, partially offset by a decrease in
interest-earning cash equivalents of $4.4 million. Average loans receivable
increased to $167.1 million and average securities increased to $40.1 million
during the three months ended June 30, 2002, compared to $152.6 million and
$26.9 million, respectively, during the same period in the prior year. Partially
offsetting the increase in interest income due to the increase in volume of
interest-earning assets was a decrease in the yield on interest earning assets
of 83 basis points to 7.01% for the three months ended June 30, 2002, compared
to 7.84% for the same period in the prior year. The yield on average loans,
securities and interest-earning deposits decreased to 7.45%, 5.78% and 1.93%,
respectively, during the three months ended June 30, 2002, compared to 8.28%,
6.40%, and 4.40%, respectively, for the same period in the prior year.
12
Interest expense. Interest expense decreased $284,000 or 18.0% to $1.3 million
for the three months ended June 30, 2002, compared to $1.6 million for the same
period in the prior year. This decrease in interest expense can be attributed to
a 114 basis point decline in the interest rate on average interest-bearing
liabilities to 3.06% during the three months ended June 30, 2002, compared to
4.20% for the same period in the prior year. The average cost of deposits and
borrowed funds decreased to 3.01% and 4.57%, respectively, during the three
months ended June 30, 2002, compared to 4.20% and 5.42%, respectively, for the
same period in the prior year.
The decrease in interest expense due to rate was partially offset by an increase
in the average balance of interest-bearing liabilities, as average
interest-bearing deposits and borrowed funds increased to $164.1 million and
$5.0 million, respectively, during the three months ended June 30, 2002,
compared to $150.0 million and $222,000, respectively, during the same period in
the prior year.
Provision for loan losses. The Corporation records provisions for loan losses to
bring the total allowance for loan losses to a level deemed adequate to cover
probable losses inherent in the loan portfolio. In determining the appropriate
level of allowance for loan losses, management considers historical loss
experience, the present and prospective financial condition of borrowers,
current and prospective economic 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.
The $54,000 increase in the Corporation's provision for loans losses between the
three-month periods ended June 30, 2002 and 2001 was primarily the result of
continued loan portfolio growth and the charge-off of certain nonperforming
loans during 2002.
Noninterest income. Noninterest income, comprised primarily of fees on
depository accounts, general transactional income, certain loan transaction
costs and other miscellaneous income, remained relatively stable between the
three months ended June 30, 2002 and the same period in the prior year.
Noninterest expense. Noninterest expense increased $75,000 or 4.2% to $1.9
million during the three months ended June 30, 2002, compared to $1.8 million
during the same period in the prior year. This increase in noninterest expense
can be attributed to increases in compensation and employee benefits, premises
and equipment and other expenses of $33,000, $31,000 and $31,000, respectively,
partially offset by a decrease in intangible amortization expense of $20,000.
See "Note 7 - Goodwill" on page 7.
Compensation and employee benefits expense increased $33,000 or 3.5% to $985,000
during the three months ended June 30, 2002, compared to $952,000 for the same
period in the prior year. This increase can be attributed primarily to normal
and expected salary and benefit cost increases and increased management and
employee incentive costs between the two periods.
Premises and equipment costs increased $31,000 or 11.6% to $299,000 during the
three months ended June 30, 2002, compared to $268,000 for the same period in
the prior year. This increase can be attributed to the realization of certain
bank equipment repairs and branch office improvement expenditures during the
past year.
Other noninterest expense increased $31,000 or 6.2% to $535,000 during the three
months ended June 30, 2002, compared to $504,000 for the same period in the
prior year. This increase can primarily be attributed to increased professional
fee and telephone cost expenses between the two periods. Professional fees
increased as a result of the Corporation retaining a transfer agent during late
2001, costs associated with the recently announced dividend reinvestment plan
and enhanced financial reporting requirements.
Provision for income taxes. The provision for income taxes increased $43,000 or
24.4% to $219,000 for the three months ended June 30, 2002, compared to $176,000
for the same period in the prior year. This increase is a direct result of the
increase in net income before taxes between the two periods, partially offset by
a decrease in the Corporation's effective tax rate as a result of increased
investment in tax-free municipal securities.
13
Comparison of Results for the Six-Month Periods Ended June 30, 2002 and 2001
General. The Corporation reported net income of $1.0 million and $812,000 for
the six months ended June 30, 2002 and 2001, respectively. The $201,000 or 24.8%
increase in net income for the six months ended June 30, 2002, as compared to
the six months ended June 30, 2001, was attributable to an increase in net
interest income of $618,000, partially offset by a decrease in noninterest
income of $14,000 and increases in the provision for loan losses, noninterest
expense and the provision for income taxes of $119,000, $227,000 and $57,000,
respectively.
Average Balance Sheet and Yield/Rate Analysis.
(Dollar amounts in thousands) Six months ended June 30,
2002 2001
-------------------------------------- --------------------------------------
------------------------------------------------------------------------------
Average Yield / Average Yield /
Balance Interest Rate Balance Interest Rate
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans $ 165,538 $ 6,247 7.61% $ 152,332 $ 6,324 8.37%
Securities, taxable 28,152 751 5.38% 18,812 593 6.36%
Securities, exempt from Federal tax 11,486 397 6.97% 7,417 247 6.71%
------------- ------------- ---------- ------------- ------------- ----------
39,638 1,148 5.84% 26,229 840 6.46%
------------- ------------- ---------- ------------- ------------- ----------
Interest-earning cash equivalents 2,656 31 2.35% 7,147 172 4.85%
Federal bank stocks 1,923 28 2.94% 1,261 41 6.56%
------------- ------------- ---------- ------------- ------------- ----------
4,579 59 2.60% 8,408 213 5.11%
------------- ------------- ---------- ------------- ------------- ----------
Total interest-earning assets 209,755 7,454 7.17% 186,969 7,377 7.96%
Cash and due from banks 6,547 6,110
Other noninterest-earning assets 4,953 6,008
------------- ------------- ---------- ------------- ------------- ----------
Total assets $ 221,255 $ 7,454 6.79% $ 199,087 $ 7,377 7.47%
============= ============= ========== ============= ============= ==========
Interest-bearing liabilities:
Interest-bearing demand deposits $ 71,182 $ 405 1.15% $ 65,237 $ 756 2.34%
Time deposits 91,039 2,056 4.55% 82,761 2,376 5.79%
------------- ------------- ---------- ------------- ------------- ----------
162,221 2,461 3.06% 147,998 3,132 4.27%
------------- ------------- ---------- ------------- ------------- ----------
Borrowed funds, term 5,000 116 4.68% 1,105 32 5.84%
Borrowed funds, overnight 342 1 0.59% - - 0.00%
------------- ------------- ---------- ------------- ------------- ----------
5,342 117 4.42% 1,105 32 5.84%
------------- ------------- ---------- ------------- ------------- ----------
Total interest-bearing liabilities 167,563 2,578 3.10% 149,103 3,164 4.28%
Noninterest-bearing demand deposits 30,643 - - 28,370 - -
------------- ------------- ---------- ------------- ------------- ----------
Total financial liabilities/cost of funds 198,206 2,578 2.62% 177,473 3,164 3.60%
Other noninterest-bearing liabilities 1,443 1,097
------------- -------------
Total liabilities 199,649 178,570
Stockholders' equity 21,606 20,517
------------- ------------- ---------- ------------- ------------- ----------
Total liabilities and stockholders' equity $ 221,255 $ 2,578 2.62% $ 199,087 $ 3,164 3.60%
============= ============= ========== ============= ============= ==========
Net interest income $ 4,876 $ 4,213
============= =============
Interest rate spread (difference between 4.07% 3.68%
========== ==========
weighted average rate on interest-earning
assets and interest-bearing liabilities)
Net interest margin (net interest 4.69% 4.54%
========== ==========
income as a percentage of average
interest-earning assets)
14
Analysis of Changes in Net Interest Income.
(In thousands) Six months ended June 30,
2002 versus 2001
Increase (decrease) due to
-----------------------------
Volume Rate Total
-------------------------------------------------------------------------------
Interest income:
Loans $ 524 $ (601) $ (77)
Securities 395 (87) 308
Interest-earning cash equivalents (78) (63) (141)
Federal bank stocks 16 (29) (13)
------ ------ -------
Total interest-earning assets 857 (780) 77
------ ------ -------
Interest expense:
Deposits 279 (950) (671)
Borrowed funds 95 (10) 85
------ ------ -------
Total interest-bearing liabilities 374 (960) (586)
------ ------ -------
Net interest income $ 483 $ 180 $ 663
====== ====== =======
Net interest income. Net interest income on a tax equivalent basis increased
$663,000 or 15.7% to $4.9 million for the six months ended June 30, 2002,
compared to $4.2 million for the same period in the prior year. This increase
can be attributed to an increase in interest income of $77,000 and a decrease in
interest expense of $586,000.
Aside from changes in the volume and rates of interest-earning assets and
interest-bearing liabilities discussed herein, $93,000 of the increase in net
interest income between the periods can be attributed to the payoff of a
previously non-performing commercial real estate loan in March 2002 that had
been on non-accrual status. In connection with the loan payoff, the Corporation
received all principal and interest due under the contractual terms of the loan
agreement and therefore interest collected was recorded as loan interest income
during the current period.
Interest income. Interest income on a tax equivalent basis increased $77,000 to
$7.5 million for the six months ended June 30, 2002, compared to $7.4 million
for the same period in the prior year. This net increase in interest income can
be attributed to the aforementioned $93,000 collection and recognition of
interest on a non-performing commercial real estate loan and an increase in
interest earned on securities of $308,000; partially offset by decreases in
interest earned on loans, cash equivalents and federal bank stocks of $77,000,
$141,000 and $13,000, respectively.
Contributing to the increase in net interest income was an increase in average
interest-earning assets of $22.8 million or 12.2% to $209.8 million for the six
months ended June 30, 2002, compared to $187.0 million for the same period in
the prior year. The increase in average interest-earning assets can be
attributed to increases in average loans receivable and average securities of
$13.2 million and $13.4 million, respectively, partially offset by a decrease in
interest-earning cash equivalents of $4.5 million. Average loans receivable
increased to $165.5 million and average securities increased to $39.6 million
during the six months ended June 30, 2002, compared to $152.3 million and $26.2
million, respectively, during the same period in the prior year. Partially
offsetting the increase in interest income due to the increase in volume of
interest-earning assets was a decrease in the yield on interest earning assets
of 79 basis points to 7.17% for the six months ended June 30, 2002, compared to
7.96% for the same period in the prior year. The yield on average loans,
securities and interest-earning cash equivalents decreased to 7.61%, 5.84% and
2.35%, respectively, during the six months ended June 30, 2002, compared to
8.37%, 6.46%, and 5.11%, respectively, for the same period in the prior year.
15
Interest expense. Interest expense decreased $586,000 or 18.5% to $2.6 million
for the six months ended June 30, 2002, compared to $3.2 million for the same
period in the prior year. This decrease in interest expense can be attributed to
a 118 basis point decline in the interest rate on average interest-bearing
liabilities to 3.10% during the six months ended June 30, 2002, compared to
4.28% for the same period in the prior year. The average cost of deposits and
borrowed funds decreased to 3.06% and 4.42%, respectively, during the six months
ended June 30, 2002, compared to 4.27% and 5.84%, respectively, for the same
period in the prior year.
The decrease in interest expense due to rate was partially offset by an increase
in the average balance of interest-bearing liabilities as average
interest-bearing deposits and borrowed funds increased to $162.2 million and
$5.3 million, respectively, during the six months ended June 30, 2002, compared
to $148.0 million and $1.1 million, respectively, during the same period in the
prior year.
Provision for loan losses. The $119,000 increase in the Corporation's provision
for loans losses between the six-month periods ended June 30, 2002 and 2001 was
primarily the result of continued loan portfolio growth and the charge-off of
certain nonperforming loans during the current year.
Noninterest income. Noninterest income decreased $14,000 or 2.1% to $639,000 for
the six months ended June 30, 2002 compared to $653,000 for the same period in
the prior year. This decrease was the result of lower overdraft and other
transactional fees in 2002 versus 2001.
Noninterest expense. Noninterest expense increased $227,000 or 6.4% to $3.8
million during the six months ended June 30, 2002, compared to $3.6 million
during the same period in the prior year. This increase in noninterest expense
can be attributed to increases in compensation and employee benefits, premises
and equipment and other expenses of $101,000, $33,000 and $133,000,
respectively, partially offset by a decrease in intangible amortization expense
of $40,000.
Compensation and employee benefits expense increased $101,000 or 5.3% to $2.0
million during the six months ended June 30, 2002, compared to $1.9 million for
the same period in the prior year. This increase can be attributed primarily to
normal and expected salary and benefit cost increases and increased management
and employee incentive costs between the two periods.
Other noninterest expense increased $133,000 or 13.8% to $1.1 million during the
six months ended June 30, 2002, compared to $965,000 for the same period in the
prior year. This increase can primarily be attributed to increased professional
fee and telephone cost expenses between the two periods. Professional fees
increased as a result of the Corporation retaining a transfer agent during late
2001, costs associated with the recently announced dividend reinvestment plan
and enhanced financial reporting requirements.
Provision for income taxes. The provision for income taxes increased $57,000 or
16.6% to $400,000 for the six months ended June 30, 2002, compared to $343,000
for the same period in the prior year. This increase is a direct result of the
increase in net income before taxes between the two periods, partially offset by
a decrease in the Corporation's effective tax rate as a result of increased
investment in tax-free municipal securities during the latter half of 2001.
16
LIQUIDITY
The Corporation's primary sources of funds generally have been deposits obtained
through the offices of the Bank, borrowings from the Federal Home Loan Bank of
Pittsburgh (FHLB), and amortization and prepayments of outstanding loans and
maturing securities. During the six months ended June 30, 2002, the Corporation
used its sources of funds primarily to fund loan commitments and, to a lesser
extent, purchase securities. As of such date, the Corporation had outstanding
loan commitments, including undisbursed loans and amounts available under credit
lines, totaling $14.6 million, and standby letters of credit totaling $737,000.
At June 30, 2002, time deposits amounted to $93.4 million or 46.9% of the
Corporation's total consolidated deposits, including approximately $38.1
million, which were 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 line of credit and term borrowing capacity from the FHLB and, to a limited
and rare extent, the sale of loans. At June 30, 2002, the Corporation's
borrowing capacity with the FHLB, net of funds borrowed, was approximately $90.0
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.
RECENT REGULATORY DEVELOPMENTS
On July 30, 2002, President Bush signed into law new legislation that addresses
accounting oversight and corporate governance. The new law creates a five member
oversight board appointed by the Securities and Exchange Commission (SEC) that
will set standards for accountants and have investigative and disciplinary
powers. The new legislation bars accounting firms from providing a number of
consulting services to audit clients and requires accounting firms to rotate
partners among client assignments every five years. The new legislation also
increases penalties for financial crimes, requires expanded disclosure of
corporate operations and internal controls, enhances controls on and reporting
of insider trading, expands the SEC's budget, and places statutory separations
between investment bankers and analysts. Various aspects of the new legislation
are dependent upon subsequent rulemaking by the SEC. Management is currently
evaluating what impacts the new legislation will have upon the Corporation. The
Corporation utilizes its external attestation auditor only for audit services
and assistance with the preparation of tax returns.
17
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 2. Changes in Securities
------------------------------
None.
Item 3. Defaults Upon Senior Securities
----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
(a) The annual meeting of stockholders of the Corporation was held May 21,
2002. Of 1,332,835 common shares eligible to vote, 1,145,860 or 85.97%
were voted in person or by proxy.
(b) The following Class B directors were elected for a three year term
expiring in 2005:
Name Shares For Shares Withheld
---- --------- ---------------
Bernadette H. Crooks 1,100,828 45,032
Robert L. Hunter 1,072,562 73,298
John B. Mason 1,091,400 54,460
In addition to the above listed individuals, the following persons
continue to serve as directors: Ronald L. Ashbaugh, David L. Cox,
George W. Freeman, Rodney C. Heeter, J. Michael King, Brian C.
McCarrier and Elizabeth C. Smith.
(c) The recommendation of the Board of Directors to ratify the appointment
of Crowe, Chizek and Company, LLP as the Corporation's independent
auditors, as described in the proxy statement for the annual meeting,
was approved with 1,135,321 shares in favor and 10,539 shares against.
Item 5. Other Information
--------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
Exhibit 99.1 CEO Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Exhibit 99.2 CFO Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None.
18
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.
Date: August 13, 2002 By: /s/ David L. Cox
---------------------------------------------
David L. Cox
Chairman of the Board,
President and Chief Executive Officer
Date: August 13, 2002 By: /s/ William C. Marsh
---------------------------------------------
William C. Marsh
Treasurer/Secretary
(Principal Financial and Accounting Officer)
19
Exhibit 99.1
CEO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Emclaire Financial Corp. (the
Corporation) on Form 10-QSB for the period ending June 30, 2002 as filed with
the Securities and Exchange Commission on the date here (the Report), I, David
L. Cox, Chief Executive Officer of the Corporation, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ David L. Cox
-----------------
David L. Cox
Chief Executive Officer
August 13, 2002
20
Exhibit 99.2
CFO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Emclaire Financial Corp. (the
Corporation) on Form 10-QSB for the period ending June 30, 2002 as filed with
the Securities and Exchange Commission on the date here (the Report), I, William
C. Marsh, Chief Financial Officer of the Corporation, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ William C. Marsh
---------------------
William C. Marsh
Chief Financial Officer
August 13, 2002
21