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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from _____________________ to _____________________
Commission file Number: 000-18464
---------
EMCLAIRE FINANCIAL CORP.
(Exact Name of small business issuer as specified in its charter)
PENNSYLVANIA 25-1606091
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
612 Main Street
Emlenton, PA 16373
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (724) 867-2311
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
As of May 5, 2000, there were 1,346,883 shares outstanding of the issuer's
common stock, par value $1.25 per share.
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<PAGE>
Emclaire Financial Corp.
INDEX TO QUARTERLY REPORT OF FORM 10-QSB
Part I Financial Information Page
----
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheet, March 31, 2000 and
December 31, 1999 3
Consolidated Statement of Income
Three months ended March 31, 2000 and 1999 4
Consolidated Statement of Changes in
Stockholders' Equity 5
Consolidated Statement of Cash Flows
Three months ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 14
Part II Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Securities Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
<PAGE>
EMCLAIRE FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
(Unaudited - dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------------- ----------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 6,613 $ 8,595
Federal funds sold - -
Investment securities
Available for sale 31,288 33,499
Held to maturity (estimated market value
of $2,264 and $2,269) 2,273 2,278
Loans 146,191 139,462
Less allowance for loan losses 1,354 1,373
---------------- ----------------
Net loans 144,837 138,089
Premises and equipment 3,311 3,369
Accrued interest and other assets 6,263 6,174
---------------- ----------------
TOTAL ASSETS $ 194,585 $ 192,004
================ ================
LIABILITIES
Deposits
Noninterest bearing demand $ 29,940 $ 27,871
Interest bearing demand 20,008 21,628
Savings 23,763 23,021
Money market 21,765 22,254
Time 73,419 73,651
---------------- ----------------
Total deposits 168,895 168,425
Borrowed funds 4,420 2,000
Accrued interest and other liabilities 770 775
---------------- ----------------
TOTAL LIABILITIES 174,085 171,200
---------------- ----------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00; 3,000,000 shares authorized;
none issued - -
Common stock, par value $1.25; 12,000,000 shares authorized;
1,395,852 shares issued 1,745 1,745
Additional paid-in capital 10,871 10,871
Retained earnings 9,339 9,151
Accumulated other comprehensive loss (800) (663)
Treasury stock at cost (42,312 and 19,242 shares in 2000 and 1999, respectively) (655) (300)
---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 20,500 20,804
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 194,585 $ 192,004
================ ================
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE>
EMCLAIRE FINANCIAL CORP.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited - dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
----------------- -----------------
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 2,919 $ 2,702
Interest bearing deposits in other banks 4 25
Federal funds sold 8 119
Investment securities:
Taxable 460 429
Exempt from federal income tax 84 46
----------------- -----------------
Total interest income 3,475 3,321
----------------- -----------------
INTEREST EXPENSE
Deposits 1,327 1,429
Borrowed funds 40 28
----------------- -----------------
Total interest expense 1,367 1,457
----------------- -----------------
NET INTEREST INCOME 2,108 1,864
Provision for loan losses 46 44
----------------- -----------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,062 1,820
----------------- -----------------
OTHER OPERATING INCOME
Service fees on deposit accounts 143 138
Other 60 46
----------------- -----------------
Total other operating income 203 184
----------------- -----------------
OTHER OPERATING EXPENSE
Salaries and employee benefits 886 689
Occupancy, furniture and equipment 244 259
Other 581 487
----------------- -----------------
Total other operating expense 1,711 1,435
----------------- -----------------
Income before income taxes 554 569
Income taxes 163 181
----------------- -----------------
NET INCOME $ 391 $ 388
================= =================
EARNINGS PER SHARE $ 0.29 $ 0.28
DIVIDENDS PER SHARE $ 0.15 $ 0.14
AVERAGE SHARES OUTSTANDING 1,365,079 1,395,852
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
EMCLAIRE FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited - dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid in Retained Comprehensive Treasury
Stock Capital Earnings Loss Stock Total
-------- ---------- --------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 $ 1,745 $ 10,871 $ 9,151 $ (663) $ (300) $ 20,804
Comprehensive income:
Net income 391 391
Other comprehensive loss, net
unrealized loss on securities
net of tax benefit of $70 (137) (137)
---------
Total comprehensive income 254
Dividends declared ($.15 per share) (203) (203)
Treasury stock acquired (355) (355)
-------- ----------- ---------- ------------ ---------- ---------
Balance March 31, 2000 $ 1,745 $ 10,871 $ 9,339 $ (800) $ (655) $ 20,500
======== =========== ========== ============ ========== =========
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
EMCLAIRE FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited - dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
----------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 391 $ 388
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 225 243
Net amortization of investment security
discounts and premiums 19 35
Provision for loan losses 46 44
(Increase) decrease in accrued interest receivable (154) 59
Increase in accrued interest payable 16 19
Other, net 22 (79)
----------------- -----------------
Net cash provided by operating activities 565 709
----------------- -----------------
INVESTING ACTIVITIES
Proceeds from maturities and repayments of investment securities:
Available for sale 2,000 1,500
Held to maturity - 48
Purchases of investment securities:
Available for sale (10) -
Net loan (originations) repayments (6,824) 1,258
Purchases of premises and equipment (45) (26)
Other - 124
----------------- -----------------
Net cash provided by (used for) investing activities (4,879) 2,904
----------------- -----------------
FINANCING ACTIVITIES
Net increase in deposits 470 69
Increase in short-term borrowings 2,420 -
Payments for obligation under capital lease - (11)
Acquisition of treasury stock (355) -
Cash dividends paid, including fractional shares (203) (195)
----------------- -----------------
Net cash provided by (used for) provided by financing activities 2,332 (137)
----------------- -----------------
Increase (decrease) in cash and cash equivalents (1,982) 3,476
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,595 18,689
----------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,613 $ 22,165
================= =================
</TABLE>
See accompanying notes to the consolidated financial statements.
6
<PAGE>
EMCLAIRE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
The accounting and financial reporting polices of Emclaire Financial Corp. and
its wholly-owned subsidiary The Farmers National Bank of Emlenton ("Bank" or
"Farmers"), conform to generally accepted accounting principles and to general
practice within the banking industry. In the opinion of management, the
accompanying unaudited consolidated financial statements of Emclaire Financial
Corp. ("Company" or "Emclaire") contain all adjustments, consisting of only
normal and recurring adjustments, necessary for the fair presentation of the
Company's financial position, results of operations and cash flows for the
periods presented. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.
2. EARNINGS PER SHARE
The Company maintains a simple capital structure; therefore there are no
dilutive effects on earnings per share. As such earnings per share computations
are based on the weighted average number of shares outstanding of 1,365,079 and
1,395,852, and for the three month periods in 2000 and 1999, respectively.
3. COMPREHENSIVE INCOME
The components of comprehensive income consist exclusively of unrealized gains
and losses on securities available for sale. For the three months ended March
31, 2000, this activity is shown under the heading Accumulated Other
Comprehensive Loss as presented in the Consolidated Statement of Changes in
Stockholders' Equity. For the three months ended March 31, 1999 the accumulated
other comprehensive income had a beginning balance of $293,000, a net unrealized
loss of $241,000 and an ending balance of $52,000. This net unrealized loss on
securities resulted in total comprehensive net income of $147,000, for the three
months ended March 31, 1999.
4. LOANS
Major classifications of loans are summarized as follows (in thousands):
March 31, December 31,
2000 1999
---------------- -----------------
Commercial and industrial $ 17,875 $ 14,660
Real estate mortgages
Residential 90,890 90,232
Commercial and other 22,918 20,360
Consumer 14,508 14,210
---------------- -----------------
146,191 139,462
Less allowance for loan losses 1,354 1,373
---------------- -----------------
$ 144,837 $ 138,089
================ =================
7
<PAGE>
The Bank's primary business activity is with customers located within Venango,
Clarion, Butler, Elk, Clearfield and Jefferson Counties. Commercial,
residential, personal, and agricultural loans are granted. Although the Bank has
a diversified loan portfolio at March 31, 2000 and December 31, 1999, loans
outstanding to individuals and businesses are dependent upon the local economic
conditions within the immediate trade area.
5. COMMON STOCK
On May 8, 2000 the Company announced it was extending the completion date of its
stock repurchase plan until November 6, 2000. Under the terms of the plan dated
October 20, 1999, the Company is authorized to repurchase up to 69,792 shares of
common stock. As of March 31, 2000, 42,312 shares have been acquired at a total
cost of $655,000.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Emclaire Financial Corp. ("Emclaire" or the "Company") is the parent holding
company for the Farmers National Bank of Emlenton ("Farmers" or the "Bank"). The
following discussion and analysis is intended to provide information about the
financial condition and results of operation of the Company and should be read
in conjunction with the consolidated financial statements and the related notes
thereto appearing elsewhere in this quarterly report.
Certain information presented in this report and other statements concerning
future performance, developments or events, and expectations for growth and
market forecasts constitute forward-looking statements which are subject to a
number of risks and uncertainties, including interest rate fluctuations, changes
in local or national economic conditions, and government and regulatory actions
which might cause actual results to differ materially from stated expectations
or estimates. The Company 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.
Comparison of the Three Months Ended March 31, 2000 and 1999
Net Income - Net income for the three months ended March 31,2000 totaled
$391,000 or $.29 per share, as compared to $388,000 or $.28 per share recorded
during the same period in 1999. The 2000 quarterly earnings equaled those
reported in 1999, as the rise in net interest income related to the increase in
the yield on earning assets was offset by increased overhead particularly
increased employee costs.
The net income reported resulted in annualized returns on average assets and
average equity of .82% and 7.58% for the quarter ended March 31, 2000, as
compared to returns of .81% and 7.43% for the same period in 1999.
Net Interest Income - Tax-equivalent net interest income increased $282,000 or
15% during the first quarter of 2000 as compared to the same period in 1999.
This increase resulted primarily from the loan portfolio, which showed increases
in both volume and yield. Coupled with this improvement were decreases in the
volume and cost of interest-bearing liabilities. The net tax-equivalent yield on
earning assets for the quarter was 4.92%, a 58 basis point improvement from the
4.34% yield earned during the same period in 1999.
Average earning assets totaled $179.3 for the first three months of 2000
representing 93.3% of total average assets. For the same period in 1999, average
earning assets totaled $178.9 million and represented 92.4% of total average
assets. Average loans increased $8.2 million or 6.1% to $141.7 million for the
first quarter of 2000 as compared to first three months of 1999. Average
investment securities rose $5.5 million during the same period, as available
funds were transferred from interest-bearing bank deposits and federal funds
sold, resulting in decreases in the average balances of $5.0 and $8.2 million,
respectively.
Tax equivalent interest income rose $192,000 or 5.7% during the first three
months of 2000, as compared to the same period in 1999, due to the increased
loan volume combined with generally higher interest rates. The tax-equivalent
yield on the loan portfolio for the first quarter of 2000
9
<PAGE>
rose 12 basis points to 8.40%, reflecting the effects of recent increases in the
prime interest rate along with an increase in commercial and commercial real
estate loans. Due to the effect of securities purchased during the second and
third quarters of 1999, the tax-equivalent yield on tax-exempt investment
securities was 7.07% for the first quarter of 2000, an increase of 39 basis
points from 1999. The slight increase in average volume, combined with the shift
in average earning assets from short-term bank deposits and federal funds to
loans and investment securities; along with the rise in interest rates resulted
in a tax-equivalent yield of 7.99% for the first quarter of 2000, as compared to
7.64% during the same period in 1999.
Interest expense fell $90,000 or 6.2% to $1.4 million during the first quarter
of 2000, as compared to the same period in 1999. The decrease in the volume of
average interest-bearing liabilities, which fell $4.1 million to $142.4 million,
was the principal factor for the decline in interest expense. As a result, the
cost of funds fell 17 basis points to 3.86%.
With the continuing upward pressure on interest rates, combined with an ongoing
need to attract and retain funds to support loan demand, it is expected the cost
of funds, specifically time deposits will increase. In addition, approximately
$39.1 million of time deposits will mature within the next 12 months, while only
$41.7 million of investment securities and loans are scheduled to mature or
reprice during the same period. Depending on the mix of future deposit and loan
growth, it is likely that the net yield on earning assets will decline in the
near-term.
Lastly, the Company will introduce bundled account products during the later
half of the second quarter. These products will allow consumer deposit customers
who meet certain combined deposit limits to take advantage of specific products
and services at reduced or no charge. In addition, checking accounts designated
by customers participating in these new products will earn interest. Previously,
these funds would most likely have been held in regular noninterest-bearing
checking accounts. In addition, participants will be eligible for certain
interest rate preferences on selected time deposit and loan products. While the
introduction of these products is not expected to have a significant impact on
the overall cost of funds, it could contribute an increase in the volume of
interest-bearing liabilities and the related cost of those funds.
Provision for Loan Losses - Based upon management's ongoing assessment of the
quality of the loan portfolio, and considering the growth experienced by the
loan portfolio, combined with the continuing moderation of non-performing loans,
the provision for loan losses for the first quarter of 2000 totaled $46,000, as
compared to $44,000 provided during the same period in 1999.
Other operating income - Other operating income increased $19,000 or 10% for the
first quarter of 2000, due to an increase of approximately $6,000 in overdraft
fees, related to the increase in the number of deposit accounts. In addition,
ATM convenience fees and fees generated from the MasterMoney(TM) debit card
increased due to increased customer usage, along with a slight increase in the
ATM convenience fee. Combined, these fees accounted for $13,000 of the total
increase in other operating income.
As part of the introduction of bundled account products, the Company
restructured its deposit service fee schedule in an attempt to offset the ever
rising cost of servicing customer deposit accounts. As a result, certain fees
will be implemented or adjusted effective June 2000. While the bundled account
products and a newly created basic checking account product will allow most
customers to continue to bank at little or no monthly charge; customers who do
not wish to
10
<PAGE>
participate in these new products, but wish to take advantage of products and
services offered by the Company will be subject to minimum balance and usage
charges for certain account products and services. The implementation of these
fees has the potential to significantly impact other operating income. However,
the final result will be based on a number of factors such as the level of
acceptance of the bundled and basic checking products, combined with the volume
of usage of products and services by customers who chose to pay for such
services.
Other Operating Expense - Other operating expense for the first quarter of 2000
totaled $1.7 million an increase of $276,000 or 19% from the same period in
1999. As discussed in the annual report to shareholders the Company increased
staffing during the third and fourth quarters of 1999. These additional
employees are the largest reason for the increase in other operating expense.
Salaries and employee benefits increased $197,000 or 29% to $886,000 for the
first quarter of 2000. As discussed above, the employees added during the third
and fourth quarters of 1999, coupled with normal annual salary adjustments are
the principal reason for the increase. During the first quarter the Company's
health care coverage was converted to a health maintenance organization
sponsored by the same provider. This change should result in a premium cost
decrease of approximately 15%, or $60,000 per year. The effects of this change
will be realized starting with the second quarter of 2000.
Occupancy and equipment costs decreased approximately $15,000 or 6% to $244,000
during the first quarter of 2000, as compared to the same period in 1999. A
reduction in costs associated with equipment rental and equipment and software
maintenance contracts is principally responsible for this decrease. Due to
pending renewals of certain maintenance contracts and expected increases
resulting from these renewals, it is expected that occupancy and equipment costs
for future periods will increase.
Other operating expense increased $94,000 or 19% during the three months ended
March 31, 2000, as compared to the same period in 1999 and totaled $581,000.
Recurring costs increased during the comparative quarter due to items such as:
increased ATM and debit card processing fees which increased $9,000 due to the
increased number of cards and the resulting usage; Pennsylvania shares tax
expense increased approximately $6,000, due to prior increases in Bank capital.
As a result of the strategic planning process undertaken in 1999, additional
resources were dedicated to training, advertising and promotion, and customer
development. Due to these strategic initiatives, training and the related travel
costs increased approximately $16,000, while advertising, promotion and customer
development costs increased $11,000. In addition, losses resulting from teller
shortages and other miscellaneous losses increased $29,000. Of these losses,
$10,000 resulted from activity by a single customer, which is considered to be
non-recurring. Fees for legal and accounting services increased approximately
$20,000. Legal fees rose due to increased loan originations and collection
efforts, while accounting and auditing fees increased due to normal fee
adjustments combined with increased or additional services.
Income Taxes - Income tax expense for the first three months of 2000 totaled
$163,000 or 29.4% of pre-tax income, as compared to $181,000 or 31.8% for the
same period in 1999. The tax-exempt income from securities purchased during the
second and third quarters of 1999 helped to reduce the effective tax rate.
11
<PAGE>
Financial Condition
At March 31, 2000 the Company reported total consolidated assets of $194.6
million, an increase of 1% from the $192.0 million reported at December 31,
1999. This modest increase was due largely to the increase in loan demand
particularly commercial loans, which was primarily funded by investment
maturities, and short-term borrowings Total loans increased $6.7 million or 5%,
to $146.2 million, as commercial loans rose $3.2 million or 22%, and commercial
and other real estate loans increased $2.6 million or 13% from December 31,
1999. The increase in commercial loans was due principally to a single loan
extended late in the first quarter.
Total deposits showed a slight increase of $470,000 or .3% during the first
quarter of 2000. Increases in regular checking accounts totaling $2.1 million
offset declines in NOW accounts, which amounted to $1.6 million. Time deposits
remained largely unchanged from December 31, 1999, showing a slight decline of
$232,000.
Stockholders' equity declined $304,000 or 2% from December 31, 1999, and totaled
$20.5 million at March 31, 2000. The decline is due largely to the repurchase of
approximately 23,000 shares of common stock during the quarter at a total cost
of $355,000. The stock repurchase plan approved by the board of directors in
October 1999 was recently extended until November 6, 2000. The plan allows for
the repurchase of up to 69,792 shares of common stock. Through May 5, 2000,
48,969 shares have been acquired at a total cost of $756,000.
Liquidity
For the first quarter of 2000 operating activities as presented in the statement
of cash flows provided $565,000 in cash as compared to $709,000 in 1999. These
funds were generated principally from net income, depreciation and amortization.
Investing activities used $4.9 million during the first quarter of 2000 as
compared to $2.9 provided in 1999. During the first three months of 2000,
investment maturities of $2.0 million combined with borrowed funds were used to
fund net loan originations of $6.8 million. During the same period in 1999 net
loan repayments and investment maturities provided cash of $1.3 million and $1.5
million, respectively.
During the second quarter of the year, the Company plans to complete the
relocation of its DuBois operation to a newly constructed leased facility. In
addition, the renovation of the Brookville facility is scheduled to commence
pending final approval of the plans. It is estimated the total capital
expenditures for these projects is estimated at approximately $300,000.
Financing activities for the first three months of 2000 provided approximately
$2.3 million, due principally to short-term borrowings of $2.4 million.
Financing activities during the first quarter of 2000 used $355,000 for the
repurchase of common stock and $203,000 for dividend payments. During the same
period of 1999, financing activities used $137,000 due to principally to the
payment of dividends totaling $195,000.
Aside from liquidity available from customer deposits or through sales and
maturities of the investment portfolio, the Company has alternative sources of
funds such as a line of credit
12
<PAGE>
available with a correspondent bank. At March 31, 2000, a short-term revolving
credit facility of $10 million was available through the Federal Home Loan Bank
of Pittsburgh.
Management is not aware of any conditions, including any regulatory
recommendations or requirements, which would adversely affect its liquidity or
its ability to meet funding needs in the ordinary course of business.
Risk Elements
At March 31, 2000, non-performing loans, including those past due ninety days or
more, and loans on non-accrual status totaled approximately $693,000.
Of the non-performing loan total, $515,000 is considered to be impaired for
financial reporting purposes. These impaired loans consist of four commercial
loans to a single borrower, secured by real estate. The borrower continues to
operate under Chapter 11 bankruptcy protection. As part of management's ongoing
assessment of the loan portfolio, $40,000 of the allowance for loan losses at
March 31, 2000, has been allocated for these loans. During the first quarter of
2000, the borrower made payments totaling $13,000, which were recorded as
interest income. Management believes the underlying collateral adequately
secures the Company.
The following table presents the components of non-performing loans and other
non-performing assets as of the five most recent quarters ended:
<TABLE>
<CAPTION>
2000 1999
--------- ----------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
--------- ------------ ------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Non-performing loans
Loans past due 90 days or more $ 84 $ 86 $ 95 $ 114 $ 238
Non-accrual loans 609 617 739 874 1,032
--------- ---------- ---------- ------------ ------------
Total non-performing loans 693 703 834 988 1,270
Other non-performing assets
Repossessed assets - - - 3 -
Real estate acquired through
foreclosure 113 104 22 25 56
--------- ---------- ---------- ------------ ------------
Total other non-performing assets 113 104 22 28 56
--------- ---------- ---------- ------------ ------------
Total non-performing assets $ 806 $ 807 $ 856 $ 1,016 $ 1,326
========= ========== ========== ============ ============
Non-performing loans as a percentage
of total loans .47% .50% .61% .74% .96%
Non-performing assets to total assets .41 .42 .44 .53 .68
</TABLE>
Subsequent to March 31, 2000, several parcels of foreclosed real estate were
sold reducing the remaining total to $55,000.
At March 31, 2000, based on the ongoing quarterly review and assessment of
credit quality, management is not aware of any trends or uncertainties related
to any accounts which might have
13
<PAGE>
a material adverse impact on future earnings, liquidity or capital resources.
Based on the results of the quarterly internal loan review process, and
considering the trend of past loan losses and recoveries, and current risk
elements in the loan portfolio, management believes the allowance for loan
losses at March 31, 2000 is adequate.
Year 2000
The transition to the century date change was successfully managed. For the
remainder of 2000, several dates previously determined to be susceptible to
programming problems related to the century date change remain. One such date
February 29, 2000 was successfully navigated during the first quarter.
Although considered unlikely, problems in core business processes, including
problems associated with noncompliant third parties and disruptions to the
economy in general, could still occur despite efforts to date to remediate
affected systems and develop contingency plans. The Company continues to monitor
all business processes, including business customers, vendors and other third
parties to address any issues and to ensure all processes continue to function
properly.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
(None)
Item 2. Changes in Securities
(None)
Item 3. Defaults Upon Senior Securities
(None)
Item 4. Submission of Matters to a Vote of Security Holders
(None)
Item 5. Other Information
On May 8, 2000 the Company announced the Board of Directors had
approved extending the expiration date of its first stock repurchase plan until
November 6, 2000. See EXHIBIT 99.1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule (in electronic filing only)
Exhibit 99.1 - Press Release
(b) Reports on Form 8-K
(None)
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Emclaire Financial Corp.
- ------------------------
(Registrant)
Date: May 15, 2000 By: /s/ David L. Cox
------------------- ---------------------------
David L. Cox
President and CEO
Date: May 15, 2000 By: /s/ John J. Boczar
------------------- ---------------------------
John J. Boczar
Treasurer
16
Exhibit 99.1
EMCLAIRE FINANCIAL CORP.
- --------------------------------------------------------------------------------
612 Main Street
Emlenton, PA 16373
Emclaire Financial Corp. Extends Stock Repurchase
For Immediate Release
Monday, May 8, 2000
Contact: David L. Cox, President or,
John J. Boczar, Chief Financial Officer
Emclaire Financial Corp.
724/867-2311
Emlenton, PA -- Emclaire Financial Corp. (OTC Bulletin Board - "EMCF"), the
parent holding company of The Farmers National Bank of Emlenton, today announced
that it has received the necessary Board approval to extend its repurchase plan
covering up to 5% or 69,792 shares of the Company's common stock. Under the
terms of the plan announced November 4, 1999 the shares are to be purchased from
time-to-time in open market and privately negotiated transactions subject to the
availability of stock, the terms of the plan and other financial and market
conditions.
As of May 5, 2000 the original expiration date of the plan, 48,969 shares have
been repurchased at a total cost of approximately $756,000, representing an
average cost of $15.44 per share.
Emclaire Financial Corp. with consolidated total assets of $194.6 million at
March 31, 2000, is the parent company of The Farmers National Bank of Emlenton,
a community commercial bank operating eleven offices in Venango, Butler,
Clarion, Clearfield, Elk and Jefferson counties, Pennsylvania. Emclaire's common
stock is quoted on the OTC Electronic Bulletin Board under the symbol "EMCF".
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