Emclaire Financial Corp. Reports Record Net Income for 2002 and Fourth Quarter and Announces Annual Meeting Date.

Business Editors

EMLENTON, Pa.--(BUSINESS WIRE)--Jan. 27, 2003

Emclaire Financial Corp. (OTCBB:EMCF), the parent holding company of the Farmers National Bank of Emlenton, reported record consolidated net income of $2.3 million or $1.69 per share for the year ended December 31, 2002, as compared to net income of $1.7 million or $1.28 per share for 2001. This represents a 32% improvement in net income.

The Corporation's return on average equity and return on average assets improved to 10.21% and 0.99%, respectively, for 2002, compared to 8.35% and 0.84%, respectively, in the prior year.

For the fourth quarter ended December 31, 2002, the Corporation realized consolidated net income of $662,000 or $0.50 per share, as compared to net income of $402,000 or $0.30 per share for the same period last year. Return on annualized average equity and assets were 11.68% and 1.11%, respectively, for the quarterly period ended December 31, 2002, as compared to 7.62% and 0.74%, respectively, for the same period in the prior year.

Contributing to the increase in earnings between 2002 and 2001, the Corporation experienced sound balance sheet growth during 2002. Total assets increased $21.9 million or 10.1% to $238.6 million fueled by growth in customer deposits of $15.0 million or 7.9% to $204.4 million at December 31, 2002. Total loans increased $9.0 million or 5.6% for the year to $169.6 million and investment securities increased $10.0 million or 25.9% to $48.7 million at December 31, 2002.

The Corporation remains well capitalized for future growth with stockholders' equity of $22.7 million or 9.5% of total assets. Stockholder's equity increased $1.6 million or 7.4% to $22.7 million at December 31, 2002 from $21.1 million at December 31, 2001. Stockholders equity increased to $17.02 per share from $15.84 per share during 2002.

David L. Cox, Chairman of the Board, President and Chief Executive Officer of the Corporation and the Bank, stated, "The Board of Directors, senior management and I are pleased with the Corporation's record earnings results and the sound growth of the Bank's retail franchise during 2002, particularly in the current difficult economic and interest rate environment. This internal expansion demonstrates that our continued efforts to enhance the existing branch network through local investment, improved customer service, training and product development are being realized. These recent positive earnings results coupled with controlled growth and a solid capital base provide a firm foundation for the realization of future expansion opportunities."

Mr. Cox noted that the Board of Directors continues to improve existing operations and identify growth prospects while maintaining superior customer service. These initiatives have been realized through the opening of the new Butler Meridian office earlier this month, the investment in improvements to the Bank's headquarters in Emlenton and the consolidation of operations in the Clarion market, among other initiatives.

Net income increased $552,000 or 32.4% to $2.3 million for 2002 versus $1.7 million in 2001. Contributing to this increase in earnings was an increase in net interest income and noninterest income of $1.0 million and $62,000, respectively, partially offset by increases in the provision for loan losses, noninterest expense and the provision for income taxes of $227,000, $166,000 and $116,000, respectively.

Net interest income increased as the volume of interest-earning assets, including primarily loans and securities, increased $23.5 million or 12.2% on an average balance basis to $215.8 million for 2002, compared to $192.3 million for 2001, offset by a decrease in the yield on earning assets to 6.93% for 2002 from 7.69% for 2001. The volume of interest-bearing liabilities, including primarily customer deposits, increased $19.8 million or 13.0% to $172.5 million for 2002, compared to $152.7 million for 2001, while the cost of these liabilities decreased to 2.99% for 2002 from 3.99% for 2001. The Corporation's interest rate spread increased to 3.94% for 2002, compared to 3.69% for the preceding year. This increase in net interest income was primarily the result of investing funds generated by customer deposit growth in in-market loans and investment securities and closely monitored product pricing and asset-liability management.

The Corporation experienced balance sheet and earnings growth while noninterest expenses remained relatively stable. Noninterest expenses increased only $166,000 or 2.3% to $7.4 million in 2002, compared to $7.3 million in 2001. This increase in noninterest expense was the result of increases in compensation and benefits expense as a result of normal salary and wage increases, partially offset by staff reductions through routine attrition; premises and equipment expense as a result of new office expansion and planned improvements; and general increases in vendor services and costs; partially offset by the elimination of goodwill amortization expense at the beginning of 2002 as a result of the Corporation's adoption of newly prescribed goodwill accounting rules.

In addition to reporting earnings, the Corporation announced that the regular annual meeting of stockholders is to be held on Tuesday, April 29, 2003 at 7:00 PM at the Holiday Inn, Clarion, PA. The voting record date for the purpose of determining stockholders eligible to vote on proposals presented at the annual meeting is March 3, 2003.

Emclaire Financial Corp. is the parent company of the Farmers National Bank of Emlenton, an independent, nationally chartered, FDIC-insured community commercial bank headquartered in Emlenton, Pennsylvania, operating ten full service offices in Venango, Butler, Clarion, Clearfield, Elk and Jefferson Counties, Pennsylvania. The Corporation's common stock is quoted on and traded through the OTC Electronic Bulletin Board under the symbol "EMCF".

                EMCLAIRE FINANCIAL CORP. AND SUBSIDIARY
                         Financial Highlights
     (Unaudited - Dollar amounts in thousands, except share data)

CONSOLIDATED INCOME STATEMENT DATA:

                                  Year ended      Three month period
                                 December 31,     ended December 31,
                               2002       2001       2002       2001
                             -------    -------    -------    -------

Interest income              $14,653    $14,589    $ 3,664    $ 3,624
Interest expense               5,161      6,097      1,281      1,439
                             -------    -------    -------    -------
 Net interest income           9,492      8,492      2,383      2,185
Provision for loan losses        381        154         90         36
Noninterest income             1,400      1,338        404        343
Noninterest expense            7,420      7,254      1,864      1,931
                             -------    -------    -------    -------
 Net income before provision
  for income taxes             3,091      2,422        833        561
Provision for income taxes       834        718        170        159
                             -------    -------    -------    -------
Net income                   $ 2,257    $ 1,704    $   663    $   402
                             =======    =======    =======    =======

Net income per share         $  1.69    $  1.28    $  0.50    $  0.30
Dividends per share          $  1.03    $  0.70    $  0.46    $  0.19

Return on annualized average
 assets                         0.99%      0.84%      1.11%      0.74%
Return on annualized average
 equity                        10.21%      8.35%     11.68%      7.62%
Yield on average interest
 earning assets                 6.93%      7.68%      6.72%      7.40%
Cost of average interest
 bearing liabilities            2.99%      3.99%      2.82%      3.68%
Net interest margin             4.54%      4.52%      4.43%      4.48%


CONSOLIDATED BALANCE SHEET DATA:

                                         As of               As of
                                      12/31/2002          12/31/2001
                                      -----------         -----------

Total assets                            $238,577            $216,717
Cash and equivalents                       7,716               9,157
Securities                                48,748              38,755
Loans                                    169,557             160,540
Deposits                                 204,425             189,470
Borrowed funds                            10,000               5,000
Stockholders' equity                      22,680              21,111

Book value per share                      $17.02              $15.84

Net loans to deposits                      82.94%              84.73%
Allowance for loan losses to
 total loans                                0.93%               0.90%
Earning assets to total
 assets                                    94.68%              93.48%
Stockholders' equity to
 total assets                               9.51%               9.74%
Shares common stock
 outstanding                           1,332,835           1,332,835

This news release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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 effect 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.