--------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

     (Mark One)
     [ x ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2006
                                               ------------------
                                       or

     [   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _____________ to _____________

                        Commission File Number: 000-18464
                                                ---------

                            EMCLAIRE FINANCIAL CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


Pennsylvania                                            25-1606091
--------------------------------------------------------------------------------
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
or organization)


612 Main Street, Emlenton, Pennsylvania                          16373
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)


                                 (724) 867-2311
--------------------------------------------------------------------------------
                         (Registrant's telephone number)


--------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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 []

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer.

     Large accelerated filer []  Accelerated filer []  Non-accelerated filer [X]

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act). Yes [] No [X]

     The  number of shares  outstanding  of the  Registrant's  common  stock was
1,267,835 at November 13, 2006.

--------------------------------------------------------------------------------
<PAGE>


                            EMCLAIRE FINANCIAL CORP.

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q



                         PART I - FINANCIAL INFORMATION
                         ------------------------------

<TABLE>
<CAPTION>
<S>                     <C> <C>               <C> <C>                                                                  <C>

Item 1.       Interim Financial Statements (Unaudited)

              Consolidated Balance Sheets as of
              September 30, 2006 and December 31, 2005..................................................................1

              Consolidated Statements of Income for the three and nine
              months ended September 30, 2006 and 2005..................................................................2

              Condensed Consolidated Statements of Cash Flows for the nine
              months ended September 30, 2006 and 2005..................................................................3

              Consolidated Statements of Changes in Stockholders'
              Equity for the three and nine months ended September 30, 2006 and 2005....................................4

              Notes to Consolidated Financial Statements................................................................5

Item 2.       Management's Discussion and Analysis
              of Financial Condition and Results of Operations..........................................................9

Item 3.       Quantitative and Qualitative Disclosures about Market Risk...............................................21

Item 4.       Controls and Procedures..................................................................................21

                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1.       Legal Proceedings........................................................................................22

Item 1A.      Risk Factors.............................................................................................22

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds..............................................22

Item 3.       Defaults upon Senior Securities..........................................................................22

Item 4.       Submission of Matters to a Vote of Security Holders......................................................22

Item 5.       Other Information........................................................................................22

Item 6.       Exhibits.................................................................................................22

Signatures    .........................................................................................................23
</TABLE>







<PAGE>

                         PART I - FINANCIAL INFORMATION
                         ------------------------------

Item 1.  Interim Financial Statements
-------------------------------------

                     Emclaire Financial Corp. and Subsidiary
                           Consolidated Balance Sheets
           As of September 30, 2006 (Unaudited) and December 31, 2005
              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                       September 30,     December 31,
                                                                          2006               2005
                                                                    -----------------   ----------------

                              Assets
                              ------

<S>                                                                          <C>                <C>
Cash and due from banks                                                      $ 7,020            $ 9,399
Interest-earning deposits with banks                                             472                968
                                                                    -----------------   ----------------
     Cash and cash equivalents                                                 7,492             10,367
Securities available for sale, at fair value                                  52,582             56,289
Securities held to maturity; fair value of $0 and $14                              -                 15
Loans held for sale                                                            2,400                  -
Loans receivable, net of allowance for loan losses of $1,985 and $1,869      214,961            192,526
Federal bank stocks, at cost                                                   2,335              1,773
Bank-owned life insurance                                                      4,748              4,623
Accrued interest receivable                                                    1,472              1,271
Premises and equipment, net                                                    6,962              6,123
Goodwill                                                                       1,422              1,422
Deferred tax asset                                                               451                375
Prepaid expenses and other assets                                                660                733
                                                                    -----------------   ----------------
         Total Assets                                                      $ 295,485          $ 275,517
                                                                    =================   ================

               Liabilities and Stockholders' Equity
               ------------------------------------

Liabilities:
   Deposits:
     Noninterest-bearing                                                    $ 43,223           $ 44,044
     Interest-bearing                                                        195,821            186,459
                                                                    -----------------   ----------------
         Total deposits                                                      239,044            230,503
   Short-term borrowed funds                                                     500              4,500
   Long-term borrowed funds                                                   30,000             15,000
   Accrued interest payable                                                      747                607
   Accrued expenses and other liabilities                                        923              1,292
                                                                    -----------------   ----------------

       Total Liabilities                                                     271,214            251,902
                                                                    -----------------   ----------------

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; 1,267,835 shares outstanding                     1,745              1,745
   Additional paid-in capital                                                 10,871             10,871
   Treasury stock, at cost; 128,017 shares                                    (2,653)            (2,653)
   Retained earnings                                                          14,532             13,678
   Accumulated other comprehensive loss                                         (224)               (26)
                                                                    -----------------   ----------------
       Total Stockholders' Equity                                             24,271             23,615
                                                                    -----------------   ----------------
         Total Liabilities and Stockholders' Equity                        $ 295,485          $ 275,517
                                                                    =================   ================
</TABLE>

See accompanying notes to consolidated financial statements.



                                       1
<PAGE>


                     Emclaire Financial Corp. and Subsidiary
                        Consolidated Statements of Income
   For the three and nine months ended September 30, 2006 and 2005 (Unaudited)
              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                         For the three months ended      For the nine months ended
                                                              September 30,                    September 30,
                                                      -------------------------------  ------------------------------
                                                          2006             2005            2006            2005
                                                      --------------  ---------------  --------------  --------------

Interest and dividend income:
<S>                                                         <C>              <C>            <C>              <C>
    Loans receivable, including fees                        $ 3,670          $ 3,104        $ 10,166         $ 9,119
    Securities:
        Taxable                                                 352              417           1,103           1,301
        Exempt from federal income tax                          176              175             523             523
    Federal bank stocks                                          28               14              68              44
    Deposits with banks                                          14               23              55              72
                                                      --------------  ---------------  --------------  --------------
      Total interest and dividend income                      4,240            3,733          11,915          11,059
                                                      --------------  ---------------  --------------  --------------
Interest expense:
    Deposits                                                  1,530            1,236           4,293           3,620
    Borrowed funds                                              324              169             658             481
                                                      --------------  ---------------  --------------  --------------
      Total interest expense                                  1,854            1,405           4,951           4,101
                                                      --------------  ---------------  --------------  --------------
Net interest income                                           2,386            2,328           6,964           6,958
    Provision for loan losses                                    90               40             168             145
                                                      --------------  ---------------  --------------  --------------
Net interest income after provision for loan losses           2,296            2,288           6,796           6,813
                                                      --------------  ---------------  --------------  --------------

Noninterest income:
    Fees and service charges                                    387              403           1,122           1,024
    Commissions on financial services                           101               88             316             348
    Gains on securities                                         134              290             376             510
    Gain on the sale of loans                                     9                2               9               5
    Earnings on bank-owned life insurance (BOLI)                 53               44             144             144
    Other                                                       109               93             324             302
                                                      --------------  ---------------  --------------  --------------
      Total noninterest income                                  793              920           2,291           2,333
                                                      --------------  ---------------  --------------  --------------
Noninterest expense:
    Compensation and employee benefits                        1,391            1,298           3,988           3,800
    Premises and equipment                                      387              401           1,140           1,082
    Intangible amortization expense                               2                8               7              29
    Other                                                       485              679           1,598           1,893
                                                      --------------  ---------------  --------------  --------------
      Total noninterest expense                               2,265            2,386           6,733           6,804
                                                      --------------  ---------------  --------------  --------------

Income before provision for income taxes                        824              822           2,354           2,342
    Provision for income taxes                                  132              159             474             458
                                                      --------------  ---------------  --------------  --------------

Net income                                                    $ 692            $ 663         $ 1,880         $ 1,884
                                                      ==============  ===============  ==============  ==============
     Basic earnings per share                                $ 0.55           $ 0.52          $ 1.48          $ 1.49

    Average common shares outstanding                     1,267,835        1,267,835       1,267,835       1,267,835
</TABLE>


See accompanying notes to consolidated financial statements.



                                       2
<PAGE>

                     Emclaire Financial Corp. and Subsidiary
                 Condensed Consolidated Statements of Cash Flows
        For the nine months ended September 30, 2006 and 2005 (Unaudited)
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>

                                                               For the nine months ended
                                                                     September 30,
                                                              -----------------------------
                                                                  2006            2005
                                                              -------------   -------------

Operating Activities:
<S>                                                                <C>             <C>
   Net income                                                      $ 1,880         $ 1,884
   Adjustments to reconcile net income to net cash provided
     by (used in) operating activities:
       Depreciation and amortization of premises and equipment         557             658
       Provision for loan losses                                       168             145
       Amortization of premiums and accretion of discounts, net         27              88
       Gain on sale of loans                                            (9)             (5)
       Gains on sale of securities available for sale                 (376)           (510)
       Earnings on bank-owned life insurance, net                     (125)           (132)
       Increase in accrued interest receivable                        (201)           (112)
       Decrease in prepaid expenses and other assets                   119             144
       Increase (decrease) in accrued interest payable                 140              (9)
       Decrease in accrued expenses and other liabilities             (369)           (128)
                                                              -------------   -------------
     Net cash provided by operating activities                       1,811           2,023
                                                              -------------   -------------

Investing Activities:
   Loan originations and principal collections, net                (26,049)        (10,110)
   Proceeds from the sale of loans held for sale                     1,016             541
   Available-for-sale securities:
         Sales                                                         814           1,232
         Maturities, repayments and calls                            4,714           5,663
         Purchases                                                  (1,753)         (4,458)
   Held-to-maturity securities:
         Maturities, repayments and calls                               15               1
   Purchase of Federal bank stocks                                    (562)           (151)
   Purchase of premises and equipment                               (1,396)           (870)
                                                              -------------   -------------
     Net cash used in investing activities                         (23,201)         (8,152)
                                                              -------------   -------------

Financing Activities:
   Net increase (decrease) in deposits                               8,542          (4,186)
   Increase in borrowed funds                                       11,000           5,000
   Dividends paid on common stock                                   (1,027)           (950)
                                                              -------------   -------------
     Net cash provided by (used in) financing activities            18,515            (136)
                                                              -------------   -------------

Net decrease in cash and cash equivalents                           (2,875)         (6,265)
Cash and cash equivalents at beginning of period                    10,367          14,624
                                                              -------------   -------------
Cash and cash equivalents at end of period                         $ 7,492         $ 8,359
                                                              =============   =============

Supplemental information:

   Interest paid                                                   $ 4,811         $ 4,110
   Income taxes paid                                                   501             349

Supplemental noncash disclosures:
   Transfers from loans to foreclosed real estate                     $ 20            $ 89
   Transfer of loans receivable to loans held for sale               3,407             150
</TABLE>


See accompanying notes to consolidated financial statements.



                                       3
<PAGE>

                     Emclaire Financial Corp. and Subsidiary
           Consolidated Statements of Changes in Stockholders' Equity
  For the three and nine months ended September 30, 2006 and 2005 (Unaudited)
              (Dollar amounts in thousands, except per share data)


<TABLE>
<CAPTION>
                                                               For the three months ended            For the nine months ended
                                                                     September 30,                         September 30,
                                                           -----------------------------------     -------------------------------
                                                                2006                2005               2006              2005
                                                           ---------------     ---------------     -------------     -------------

<S>                                                               <C>                <C>               <C>               <C>
Balance at beginning of period                                    $ 23,480           $ 23,882          $ 23,615          $ 23,616

Net income                                                             692                663             1,880             1,884

     Change in net unrealized gains (losses) on available
      for sale securities, net of taxes                                529               (360)               51              (536)
     Less reclassification adjustment for gains included
      in net income, net of taxes                                     (88)               (191)             (248)             (337)
                                                           ---------------     ---------------     -------------     -------------
     Other comprehensive income (loss)                                 441               (551)             (197)             (873)
                                                           ---------------     ---------------     -------------     -------------

Total comprehensive income                                           1,133                112             1,683             1,011

Dividends declared                                                    (342)              (317)           (1,027)             (950)
                                                           ---------------     ---------------     -------------     -------------

Balance at end of period                                          $ 24,271           $ 23,677          $ 24,271          $ 23,677
                                                           ===============     ===============     =============     =============

Common cash dividend per share                                    $   0.27           $   0.25          $   0.81          $   0.75
                                                           ===============     ===============     =============     =============
</TABLE>


See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

                    Emclaire Financial Corp. and Subsidiary
                   Notes to Consolidated Financial Statements

1.       Nature of Operations and Basis of Presentation.

         Emclaire Financial Corp. (the "Corporation") is a Pennsylvania company
         organized as the holding company of Farmers National Bank of Emlenton
         (the "Bank"). The Corporation provides a variety of financial services
         to individuals and businesses through its offices in western
         Pennsylvania. Its primary deposit products are checking, savings and
         certificate of deposit accounts and its primary lending products are
         residential and commercial mortgages, commercial business and consumer
         loans.

         The consolidated financial statements include the accounts of the
         Corporation and its wholly owned subsidiary, the Bank. All intercompany
         transactions and balances have been eliminated in preparing the
         consolidated financial statements.

         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 consolidated 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-Q 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, 2005, as contained in the Corporation's 2005
         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. 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.       Basic Earnings per Common Share.

         The Corporation maintains a simple capital structure with no common
         stock equivalents. Basic earnings per common share is calculated using
         net income divided by the weighted average number of common shares
         outstanding during the period.



                                       5
<PAGE>


3.       Securities.

         The Corporation's securities as of the respective dates are summarized
         as follows:
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------

                                                               Amortized        Unrealized        Unrealized          Fair
(Dollar amounts in thousands)                                    cost             gains             losses            value
------------------------------------------------------------------------------------------------------------------------------

Available for sale:
-------------------
     September 30, 2006:
<S>                                                            <C>                 <C>             <C>               <C>
         U.S. Government agencies and related entities         $ 32,353            $    -          $   (671)         $ 31,682
         Mortgage-backed securities                               2,570                 -              (129)            2,441
         Municipal securities                                    14,687               629                 -            15,316
         Corporate securities                                         -                 -                 -                 -
         Equity securities                                        3,310                36              (203)            3,143
                                                           -------------     -------------     -------------     -------------
                                                               $ 52,920           $   665          $ (1,003)         $ 52,582
                                                           =============     =============     =============     =============
     December 31, 2005:
         U.S. Government agencies and related entities         $ 34,353           $     -          $   (818)         $ 33,535
         Mortgage-backed securities                               3,046                 -              (124)            2,922
         Municipal securities                                    14,685               664                 -            15,349
         Corporate securities                                     2,249                 4                (4)            2,249
         Equity securities                                        1,995               383              (144)            2,234
                                                           -------------     -------------     -------------     -------------
                                                               $ 56,328           $ 1,051          $ (1,090)         $ 56,289
                                                           =============     =============     =============     =============
Held to maturity:
-----------------
     September 30, 2006:
         Mortgage-backed securities                            $      -           $     -          $      -          $      -
                                                           -------------     -------------     -------------     -------------
                                                               $      -           $     -          $      -          $      -
                                                           =============     =============     =============     =============
     December 31, 2005:
         Mortgage-backed securities                            $     15           $     -          $     (1)         $     14
                                                           -------------     -------------     -------------     -------------
                                                               $     15           $     -          $     (1)         $     14
                                                           =============     =============     =============     =============

------------------------------------------------------------------------------------------------------------------------------
</TABLE>

4.       Loans Receivable.

         The Corporation's loans receivable as of the respective dates are
         summarized as follows:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------

                                                                               September 30,                    December 31,
(Dollar amounts in thousands)                                                       2006                           2005
-----------------------------------------------------------------------------------------------------------------------------

Mortgage loans on real estate:
<S>                                                                           <C>                         <C>
 Residential first mortgages                                                  $             65,034        $             66,011
 Home equity loans and lines of credit                                                      47,395                      39,933
 Commercial real estate                                                                     61,732                      52,990
                                                                             ---------------------       ---------------------
                                                                                           174,161                     158,934
Other loans:
 Commercial business                                                                        34,964                      27,732
 Consumer                                                                                    7,821                       7,729
                                                                             ---------------------       ---------------------
                                                                                            42,785                      35,461
                                                                             ---------------------       ---------------------
Total loans, gross                                                                         216,946                     194,395
Less allowance for loan losses                                                               1,985                       1,869
                                                                             ---------------------       ---------------------
Total loans, net                                                              $            214,961        $            192,526
                                                                             =====================       =====================

-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>

5.       Deposits.

         The Corporation's deposits as of the respective dates are summarized as
         follows:
<TABLE>
<CAPTION>


-----------------------------------------------------------------------------------------------------------------------------

(Dollar amounts in thousands)
-----------------------------------------------------------------------------------------------------------------------------

                   Type of accounts                  Amount                %                 Amount                  %
---------------------------------------------------------------------------------     ---------------------------------------

<S>                                                   <C>                  <C>                  <C>                    <C>
Noninterest-bearing deposits                          $43,223              18.1%                $44,044                19.1%
Interest-bearing demand deposits                       72,732              30.4%                 74,067                32.1%
Time deposits                                         123,089              51.5%                112,392                48.8%
                                            ------------------  -----------------     ------------------   ------------------
                                                     $239,044             100.0%               $230,503               100.0%
                                            ==================  =================     ==================   ==================

-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


6.       Guarantees.

         The Corporation does not issue any guarantees that would require
         liability recognition or disclosure, other than its standby letters of
         credit. Standby letters of credit are conditional commitments issued by
         the Corporation to guarantee the performance of a customer to a third
         party. Of these letters of credit at September 30, 2006, $76,000
         automatically renews within the next twelve months, $308,000 will
         expire within the next twelve months and $176,000 will expire within
         thirteen to thirty-seven months. The Corporation, generally, holds
         collateral and/or personal guarantees supporting these commitments.
         Management believes that the proceeds obtained through a liquidation of
         collateral and the enforcement of guarantees would be sufficient to
         cover the potential amount of future payments required under the
         corresponding guarantees. The credit risk involved in issuing letters
         of credit is essentially the same as those that are involved in
         extending loan facilities to customers. The current amount of the
         liability as of September 30, 2006 for guarantees under standby letters
         of credit issued is not material.

7.       Employee Benefit Plans.

         Defined Contribution Plan.
         --------------------------

         The Corporation maintains a defined contribution 401(k) Plan. Employees
         are eligible to participate by providing tax-deferred contributions up
         to 20% of qualified compensation. Employee contributions are vested at
         all times. The Corporation makes matching contributions as approved by
         the Board of Directors. Matching contributions for the three months
         ended September 30, 2006 and 2005 amounted to $21,000 and $19,000,
         respectively. Matching contributions for the nine months ended
         September 30, 2006 and 2005 amounted to $63,000 and $56,000,
         respectively.

         The Corporation provides pension benefits for eligible employees
         through a defined benefit pension plan. Substantially all employees
         participate in the retirement plan on a non-contributing basis and are
         fully vested after five years of service.

         The Corporation uses a December 31 measurement date for its plans.


                                       7
<PAGE>


7.       Employee Benefit Plans (continued).

         The components of the periodic pension cost are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                           For the three months ended                 For the nine months ended         Year ended
                                                 September 30,                            September 30,                 December 31,
                                    -------------------------------------------    ---------------------------------  --------------
(Dollar amounts in thousands)             2006                    2005                2006                  2005            2005
-------------------------------------------------------   --------------------- -------------------  ---------------- --------------

<S>                                   <C>                    <C>                   <C>                 <C>            <C>
Service cost                          $             56       $              57     $           160     $         141  $        188
Interest cost                                       62                      58                 178               160           214
Expected return on plan assets                     (69)                    (62)               (201)             (184)         (246)
Transition asset                                    (2)                     (2)                 (6)               (6)           (8)
Prior service costs                                 (7)                     (8)                (23)              (24)           19
Recognized net actuarial (gain) loss                23                      18                  47                36             -
                                    -------------------   --------------------- -------------------  ---------------  --------------

Net periodic pension cost             $             63       $              61     $           155     $         123  $        167
                                    ===================   ===================== ===================  ===============  ==============

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


         The expected rate of return on plan assets was 8.50% for the periods
         ended September 30, 2006 and 2005. The Corporation contributed $280,000
         to its pension plan for the 2006 plan year during the quarter ended
         September 30, 2006.

8.       Effect of Recently Issued Accounting Standards.

         In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing
         of Financial Assets - An Amendment of FASB Statement No. 140" ("SFAS
         156"). SFAS 156 requires that all separately recognized servicing
         assets and servicing liabilities be initially measured at fair value,
         if practicable. The statement permits, but does not require, the
         subsequent measurement of servicing assets and servicing liabilities at
         fair value. SFAS 156 is effective as of the beginning of an entity's
         first fiscal year that begins after September 15, 2006, which for the
         Corporation will be as of the beginning of fiscal 2007. The Corporation
         does not believe that the adoption of SFAS 156 will have a significant
         effect on its consolidated financial statements.

         In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting
         for Uncertainty in Income Taxes." The interpretation clarifies the
         accounting for uncertainty in income taxes recognized in a company's
         financial statements in accordance with Statement of Financial
         Accounting Standards No. 109, "Accounting for Income Taxes."
         Specifically, the pronouncement prescribes a recognition threshold and
         a measurement attributable for the financial statement recognition and
         measurement of a tax position taken or expected to be taken in a tax
         return. The interpretation also provides guidance on the related
         derecognition, classification, interest and penalties, accounting for
         interim periods, disclosure and transition of uncertain tax positions.
         The interpretation is effective for fiscal years beginning after
         December 15, 2006. The Corporation is evaluating the impact of this new
         pronouncement on its consolidated financial statements.

         In September 2006, the FASB issued FASB Statement No. 157, Fair Value
         Measurements, which defines fair value, establishes a framework for
         measuring fair value under GAAP, and expands disclosures about fair
         value measurements. FASB Statement No. 157 applies to other accounting
         pronouncements that require or permit fair value measurements. The new
         guidance is effective for financial statements issued for fiscal years
         beginning after November 15, 2007, and for interim periods within those
         fiscal years. We are currently evaluating the potential impact, if any,
         of the adoption of FASB Statement No. 157 on our consolidated financial
         position, results of operations and cash flows.

                                       8
<PAGE>


8.       Effect of Recently Issued Accounting Standards (continued).

         On September 29, 2006, the Financial Accounting Standards Board "FASB"
         issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension
         and Other Postretirement Plans ("SFAS 158"), which amends SFAS 87 and
         SFAS 106 to require recognition of the overfunded or underfunded status
         of pension and other postretirement benefit plans on the balance sheet.
         Under SFAS 158, gains and losses, prior service costs and credits, and
         any remaining transition amounts under SFAS 87 and SFAS 106 that have
         not yet been recognized through net periodic benefit cost will be
         recognized in accumulated other comprehensive income, net of tax
         effects, until they are amortized as a component of net periodic cost.
         The measurement date -- the date at which the benefit obligation and
         plan assets are measured -- is required to be the company's fiscal year
         end. SFAS 158 is effective for publicly-held companies for fiscal years
         ending after December 15, 2006, except for the measurement date
         provisions, which are effective for fiscal years ending after December
         15, 2008. The Company is currently analyzing the effects of SFAS 158
         but does not expect its implementation will have a significant impact
         on the Company's financial condition or results of operations.

         On September 13, 2006, the Securities and Exchange Commission "SEC"
         issued Staff Accounting Bulleting No. 108 ("SAB 108"). SAB 108 provides
         interpretive guidance on how the effects of the carryover or reversal
         of prior year misstatements should be considered in quantifying a
         potential current year misstatement. Prior to SAB 108, Companies might
         evaluate the materiality of financial-statement misstatements using
         either the income statement or balance sheet approach, with the income
         statement approach focusing on new misstatements added in the current
         year, and the balance sheet approach focusing on the cumulative amount
         of misstatement present in a company's balance sheet. Misstatements
         that would be material under one approach could be viewed as immaterial
         under another approach, and not be corrected. SAB 108 now requires that
         companies view financial statement misstatements as material if they
         are material according to either the income statement or balance sheet
         approach. SAB 108 is effective for fiscal years ending after November
         15, 2006. The Company is currently analyzing the effects of SAB 108 on
         the reported results of operations or financial condition.

         In September 2006, the FASB issued FASB Staff Position AUG AIR-1,
         "Accounting for Planned Major Maintenance Activities" which is
         effective for fiscal years beginning after December 15, 2006. This
         position statement eliminates the accrue-in-advance method of
         accounting for planned major maintenance activities. We do not expect
         this pronouncement to have a significant impact on the determination or
         reporting of our financial results.

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 nine month periods ended September 30, 2006 and should be read in
conjunction with the Corporation's Annual Report of Form 10-K filed with the
Securities and Exchange Commission and with the accompanying consolidated
financial statements and notes presented on pages 1 through 8 of this Form 10-Q.

The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes," "anticipates," "contemplates" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. Those risks and uncertainties include changes
in interest rates, the ability to control costs and expenses and general
economic conditions. 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.


                                       9
<PAGE>


CHANGES IN FINANCIAL CONDITION

Total assets increased $20.0 million or 7.3% to $295.5 million at September 30,
2006 from $275.5 million at December 31, 2005. This increase was primarily due
to increases in loans receivable, federal bank stocks and premises and equipment
of $22.5 million, $562,000 and $839,000, respectively. Partially offsetting this
increase were decreases in cash and cash equivalents and securities of $2.9
million and $3.7 million, respectively.

Loans receivable increased $22.5 million or 11.7% to $215.0 million at September
30, 2006 from $192.5 million at December 31, 2005. Loan production gained
momentum during the first nine months of 2006 as commercial loans increased
$16.0 million or 19.8% due to the continued focus by management on commercial
lending. Also contributing to this increase was an increase in home equity loans
of $7.5 million or 18.7% as a result of home equity advertising campaigns set
forth in the first nine months of 2006.

During the quarter ended September 30, 2006, management identified $3.4 million
in 30 year fixed rate conforming mortgage loans to sell to manage the
Corporation's interest rate risk position. In September 2006, the Corporation
sold $1.0 million of these mortgage loans.
Federal bank stocks increased $562,000 or 31.7% to $2.3 million at September 30,
2006 from $1.8 million at December 31, 2005 due to an increase in Federal Home
Loan Bank capital stock requirements resulting from borrowing three additional
$5.0 million term advances.

Premises and equipment increased $839,000 or 13.7% to $7.0 million at September
30, 2006 from $6.1 million at December 31, 2005. This increase was primarily due
to constructing a new drive-thru facility in Brookville and a new branch
facility proposed to open in November 2006.

Cash and cash equivalents decreased $2.9 million or 27.7% to $7.5 million at
September 30, 2006 from $10.4 million at December 31, 2005. The decrease in cash
and cash equivalents was primarily due to funding loan originations.

Securities decreased $3.7 million or 6.6% to $52.6 million at September 30, 2006
from $56.3 million at December 31, 2005 as a result of security maturities,
sales and repayments of $5.5 million and an increase in unrealized losses on
available for sale securities of $298,000, offset by security purchases of $1.8
million. The decrease in securities was primarily due to funding loan
originations.

Long-term borrowed funds, consisting of Federal Home Loan Bank term advances,
increased $15.0 million or 100.0% to $30.0 million at September 30, 2006 from
$15.0 million at December 31, 2005. During June and July 2006, the Corporation
entered into two separate agreements with the Federal Home Loan Bank to borrow
two $5.0 million 10 year term advances at initial interest rates of 4.98% and
4.8275%, respectively. The interest rates are fixed for the first two years of
the term after which the rates may adjust at the option of the Federal Home Loan
Bank to the then three month LIBOR rate plus 24 basis points. During August
2006, the Corporation entered into an agreement with the Federal Home Loan Bank
to borrow a $5.0 million 10 year term advance at an initial rate of 4.68%. The
interest rate is fixed for the first two years of the initial term after which
the rates may adjust at the option of the Federal Home Loan Bank to the then
three month LIBOR rate plus 24 basis points, but only if the three month LIBOR
exceeds 6.0%. If these advances convert to an adjustable rate borrowing, the
Corporation has the opportunity to repay the advances without penalty at the
conversion date.

Short-term borrowed funds, consisting of overnight Federal Home Loan Bank
borrowings, decreased $4.0 million or 88.9% to $500,000 at September 30, 2006
from $4.5 million at December 31, 2005. The repayment of these overnight
borrowings was funded by additional term advances, maturities of securities and
growth in deposits.

Deposits increased $8.5 million or 3.7% to $239.0 million at September 30, 2006
from $230.5 million at December 31, 2005 as a result of an increase in time
deposits due to marketing campaigns set forth in the first nine months of 2006.


                                       10
<PAGE>


Stockholders' equity increased $656,000 to $24.3 million at September 30, 2006
from $23.6 million at December 31, 2005. This increase was the result of net
income of $1.9 million offset by dividends declared of $1.0 million and an
increase in accumulated other comprehensive loss of $197,000, net of taxes. The
increase in accumulated other comprehensive loss was the result of a decrease in
the market value of available for sale securities.

RESULTS OF OPERATIONS

Comparison of Results for the Three Month Periods Ended September 30, 2006 and
2005

General. Net income increased $29,000 or 4.4% to $692,000 for the three months
ended September 30, 2006 from $663,000 for the same period in 2005. This
increase was a result of an increase in net interest income of $58,000 and
decreases in noninterest expense and the provision for income taxes of $121,000
and $27,000, respectively, offset by an increase in the provision for loan
losses of $50,000 and a decrease in noninterest income of $127,000.

Net interest income. Net interest income on a tax equivalent basis increased
$65,000 or 2.7% to $2.5 million for the three months ended September 30, 2006
from $2.4 million for the same period in 2005. This net increase can be
attributed to an increase in interest income of $515,000 offset by an increase
in interest expense of $450,000.

Interest income. Interest income on a tax equivalent basis increased $515,000 or
13.4% to $4.4 million for the three months ended September 30, 2006, compared to
$3.8 million for the same period in the prior year. This increase can be
attributed to increases in interest earned on loans and federal bank stocks of
$567,000 and $14,000, respectively, offset by decreases in interest earned on
securities and interest-earning deposits with banks of $57,000 and $9,000,
respectively.

The average balance of loans receivable increased $26.9 million or 14.2% to
$216.4 million for the three months ended September 30, 2006, compared to $189.5
million for the same period in the prior year primarily due to increases in
commercial mortgage loans, business loans and home equity loans as loan
production increased throughout 2005 and the first nine months of 2006. The
increase in volume contributed an additional $457,000 in interest income. Also
contributing to this increase in volume was an increase in the yield on average
loans receivable of 22 basis points to 6.79% during the three months ended
September 30, 2006, compared to 6.57% for the same period in the prior year. The
increased yield on the loan portfolio was driven by increased commercial loan
production. Commercial loans are typically higher priced from an interest rate
perspective. The increase in the average yield contributed an additional
$110,000 in interest income.

The average balance of interest-earning cash equivalents decreased $1.2 million
or 27.2% to $3.3 million for the three months ended September 30, 2006, compared
to $4.6 million for the same period in the prior year. The decrease in the
average balance was primarily due to funding requirements for loan originations.
The decrease in the average balance resulted in a $12,000 reduction in interest
income. Offsetting this decrease in volume was the increase in the yield on
average interest-earning cash equivalents of 180 basis points to 5.02% during
the three months ended September 30, 2006, compared to 3.22% for the same period
in the prior year. The increase in yield, which was primarily due to increases
in market rates, contributed an additional $17,000 to interest income.

The average balance of securities decreased $10.0 million or 16.1% to $51.8
million for the three months ended September 30, 2006, compared to $61.8 million
for the same period in the prior year. The decrease in volume resulted in a
$113,000 reduction in interest income. The decrease in the average balance of
securities was primarily due to funding requirements for loan originations.
Offsetting this decrease in volume was the increase in the yield on average
securities of 38 basis points to 4.65% during the three months ended September
30, 2006, compared to 4.27% for the same period in the prior year. The increase
in yield contributed an additional $56,000 to interest income.

Interest expense. Interest expense increased $450,000 or 32.0% to $1.9 million
for the three months ended September 30, 2006, compared to $1.4 million for the
same period in the prior year. This increase in interest expense can be
attributed to increases in interest incurred on deposits and borrowed funds of
$294,000 and $156,000, respectively.

                                       11
<PAGE>


Interest expense incurred on deposits increased $294,000 or 23.8% to $1.5
million for the three months ended September 30, 2006, compared to $1.2 million
for the same period in the prior year. The average balance of interest-bearing
deposits increased $4.4 million to $193.4 million for the three months ended
September 30, 2006, compared to $189.0 million for the same period in the prior
year. The average rate of interest-bearing deposits increased 55 basis points to
3.14% at September 30, 2006 from 2.59% for the same period in the prior year.
The increases in volume and rate resulted in additional interest expense of
$29,000 and $265,000, respectively.

Interest expense incurred on borrowed funds increased $156,000 or 92.3% to
$325,000 for the three months ended September 30, 2006, compared to $169,000 for
the same period in the prior year. This increase in interest expense can be
attributed to the increase in the average balance of long-term and short-term
borrowed funds of $10.6 million and $1.5 million, respectively, to $25.6 million
and $2.5 million, respectively, for the three months ended September 30, 2006,
compared to $15.0 million and $1.0 million, respectively, for the same period in
the prior year which resulted in an additional $138,000 in interest expense. The
increase in the average balance of long-term and short-term borrowed funds was
primarily due to funding increased loan production. The average rate on the
average balance of borrowed funds increased 40 basis points to 4.58% for the
three months ended September 30, 2006 from 4.18% for the same period in the
prior year and resulted in an additional $18,000 in interest expense. The
increase in the average rate of borrowings was primarily due to increases in
market rates.


                                       12
<PAGE>


Average Balance Sheet and Yield/Rate Analysis. The following table sets forth,
for the periods indicated, information concerning the total dollar amounts of
interest income from interest-earning assets and the resulting 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 costs. Interest and yields on tax-exempt loans and securities (tax-exempt
for federal income tax purposes) are shown on a fully tax equivalent basis. The
information is based on average daily balances during the periods presented.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                      Three months ended September 30,
                                                     ------------------------------------------------------------------------------

                                                                   2006                                    2005
                                                     --------------------------------------  --------------------------------------
                                                        Average                   Yield /       Average                   Yield /
(Dollar amounts in thousands)                           Balance      Interest      Rate         Balance      Interest      Rate
-----------------------------------------------------------------------------------------------------------------------------------

Interest-earning assets:
<S>                                                     <C>             <C>          <C>        <C>             <C>          <C>
    Loans, taxable                                      $ 209,615       $ 3,593      6.80%      $ 182,540       $ 3,025      6.58%
    Loans, tax exempt                                       6,797           111      6.47%          7,008           112      6.32%
                                                     ------------- -------------             ------------- -------------
        Total loans receivable                            216,412         3,704      6.79%        189,548         3,137      6.57%
                                                     ------------- -------------             ------------- -------------

    Securities, taxable                                    36,706           352      3.80%         46,262           417      3.58%
    Securities, tax exempt                                 15,118           255      6.70%         15,513           247      6.33%
                                                     ------------- -------------             ------------- -------------
        Total securities                                   51,824           607      4.65%         61,775           664      4.27%
                                                     ------------- -------------             ------------- -------------

    Interest-earning deposits with banks                    1,121            14      4.95%          2,922            23      3.12%
    Federal bank stocks                                     2,201            28      5.05%          1,639            14      3.39%
                                                     ------------- -------------             ------------- -------------
        Total interest-earning cash equivalents             3,322            42      5.02%          4,561            37      3.22%
                                                     ------------- -------------             ------------- -------------

    Total interest-earning assets                         271,558         4,353      6.36%        255,884         3,838      5.95%
        Cash and due from banks                             6,711                                   6,952
        Other noninterest-earning assets                   13,740                                  12,376
                                                     -------------                           -------------

        Total Assets                                    $ 292,009                               $ 275,212
                                                     =============                           =============

Interest-bearing liabilities:
    Interest-bearing demand deposits                    $  73,362           224      1.21%      $  78,998           153      0.77%
    Time deposits                                         120,047         1,306      4.32%        110,033         1,083      3.90%
                                                     ------------- -------------             ------------- -------------
        Total interest-bearing deposits                   193,409         1,530      3.14%        189,031         1,236      2.59%
                                                     ------------- -------------             ------------- -------------

    Borrowed funds, short-term                              2,479            34      5.44%          1,028            11      4.25%
    Borrowed funds, long-term                              25,645           291      4.50%         15,000           158      4.18%
                                                     ------------- -------------             ------------- -------------
        Total borrowed funds                               28,124           325      4.58%         16,028           169      4.18%
                                                     ------------- -------------             ------------- -------------

    Total interest-bearing liabilities                    221,533         1,855      3.32%        205,059         1,405      2.72%
                                                     ------------- -------------             ------------- -------------

        Noninterest-bearing demand deposits                44,674             -          -         43,107             -          -
                                                     ------------- -------------             ------------- -------------

        Funding and cost of funds                         266,207         1,855      2.76%        248,166         1,405      2.25%

        Other noninterest-bearing liabilities               2,105                                   2,549
                                                     -------------                           -------------

        Total Liabilities                                 268,312                                 250,715
        Stockholders' Equity                               23,697                                  24,497
                                                     -------------                           -------------

        Total Liabilities and Stockholders' Equity      $ 292,009                               $ 275,212
                                                     =============                           =============

Net interest income                                                     $ 2,498                                 $ 2,433
                                                                   =============                           =============

Interest rate spread (difference between
    weighted average rate on interest-earning
    assets and interest-bearing liabilities)                                         3.04%                                   3.23%

Net interest margin (net interest
    income as a percentage of average
    interest-earning assets)                                                         3.65%                                   3.77%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       13
<PAGE>


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.
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------
                                                             Three months ended September 30,
                                                                   2006 versus 2005
                                                                Increase (Decrease) due to
                                               -----------------------------------------------------------
 (Dollar amounts in thousands)                         Volume                Rate                 Total
----------------------------------------------------------------------------------------------------------
 Interest income:
<S>                                                       <C>                   <C>                  <C>
    Loans                                                 $ 457                 $ 110                $ 567
    Securities                                             (113)                   56                  (57)
    Interest-earning deposits with banks                    (18)                    9                   (9)
    Federal bank stocks                                       6                     8                   14
                                               -----------------    ------------------    -----------------
    Total interest-earning assets                           332                   183                  515
                                               -----------------    ------------------    -----------------

 Interest expense:
    Deposits                                                 29                   265                  294
    Borrowed funds                                          138                    18                  156
                                               -----------------    ------------------    -----------------
    Total interest-bearing liabilities                      167                   283                  450
                                               -----------------    ------------------    -----------------
 Net interest income                                      $ 165                $ (100)                $ 65
                                               =================    ==================    =================

----------------------------------------------------------------------------------------------------------
</TABLE>


Provision for loan losses. The Corporation records provisions for loan losses to
maintain a level of total allowance for loan losses that management believes, to
the best of its knowledge, covers all known and inherent losses that are both
probable and reasonably estimable at each reporting date. Management considers
historical loss experience, the present and prospective financial condition of
borrowers, current 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.

Information pertaining to the allowance for loan losses and non-performing
assets for the quarters ended September 30, 2006 and 2005 is as follows:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------
                                                                At or for the three months ended
                                                                            September 30,
                                                             ----------------------------------------
                                                             ----------------------------------------
(Dollar amounts in thousands)                                      2006                   2005
-----------------------------------------------------------------------------------------------------
<S>                                                                   <C>                    <C>
Balance at the beginning of the period                                $ 1,898                $ 1,875
Provision for loan losses                                                  90                     40
Charge-offs                                                                (7)                   (32)
Recoveries                                                                  4                     10
                                                             -----------------      -----------------
Balance at the end of the period                                      $ 1,985                $ 1,893
                                                             =================      =================

Non-performing loans                                                  $ 1,653                $ 1,608
Non-performing assets                                                   1,739                  1,705
Non-performing loans to total loans                                     0.75%                  0.84%
Non-performing assets to total assets                                   0.59%                  0.62%
Allowance for loan losses to total loans                                0.90%                  0.99%
Allowance for loan losses to non-performing loans                     120.08%                117.72%
-----------------------------------------------------------------------------------------------------
</TABLE>

                                       14
<PAGE>


The provision for loan losses increased $50,000 or 125.0% to $90,000 for the
three month period ended September 30, 2006 from $40,000 for the same period in
the prior year. Management's evaluation of the loan portfolio, including the
changing composition of the portfolio as well as economic trends, regulatory
considerations and other factors contributed to the recognition of $90,000 in
the provision for loan losses during the three months ended September 30, 2006.

Noninterest income. Noninterest income decreased $127,000 or 13.8% to $793,000
during the three months ended September 30, 2006, compared to $920,000 during
the same period in the prior year. This decrease can be attributed to decreases
in customer fees and service charges and gains on the sale of securities of
$16,000 and $156,000, respectively. Offsetting this decrease in noninterest
income were increases in commissions earned on financial services, gains on the
sale of loans, earnings on bank-owned life insurance and other noninterest
income of $13,000, $7,000, $9,000 and $16,000, respectively.

Noninterest expense. Noninterest expense decreased $121,000 or 5.1% to $2.3
million during the three months ended September 30, 2006, compared to $2.4
million during the same period in the prior year. This decrease in noninterest
expense can be attributed to decreases in intangible amortization, premises and
equipment and other noninterest expenses of $6,000, $14,000 and $194,000,
respectively. Offsetting this decrease in noninterest expense was an increase in
compensation and employee benefits of $93,000.

Other noninterest expense decreased $194,000 or 28.6% to $485,000 during the
three months ended September 30, 2006, compared to $679,000 for the same period
in the prior year. This decrease can be attributed primarily to decreases in
telephone and communication, Pennsylvania use tax expense and other expenses.
Partially offsetting these decreases were increases in MAC processing expense,
printing and office supplies, postage, marketing and Pennsylvania shares tax
expense between the two periods.

Provision for income taxes. The provision for income taxes decreased $27,000 or
17.0% to $132,000 for the three months ended September 30, 2006, compared to
$159,000 for the same period in the prior year due primarily to the decrease in
the effective tax rate to 16.0% in 2006 from 19.3% in 2005. The difference
between the statutory rate of 34% and the Corporation's effective tax rate is
due to tax-exempt income earned on loans, securities and bank-owned life
insurance.

Comparison of Results for the Nine Month Periods Ended September 30, 2006 and
2005

General. Net income remained stable at $1.9 million for the nine month periods
ended September 30, 2006 and 2005. This was a result of an increase in net
interest income of $6,000 and a decrease in noninterest expenses of $71,000,
offset by an increase in the provisions for loan losses and income taxes of
$23,000 and $16,000, respectively, and a decrease in noninterest income of
$42,000.

Net interest income. Net interest income on a tax equivalent basis increased
$28,000 to $7.30 million for the nine months ended September 30, 2006 from $7.27
million for the same period in 2005. This net increase can be attributed to an
increase in interest income of $878,000 offset by an increase in interest
expense of $850,000.

Interest income. Interest income on a tax equivalent basis increased $878,000 or
7.7% to $12.3 million for the nine months ended September 30, 2006, compared to
$11.4 million for the same period in the prior year. This increase can be
attributed to increases in interest earned on loans and federal bank stocks of
$1.1 million and $24,000, respectively, offset by decreases in interest earned
on securities and interest-earning deposits with banks of $180,000 and $17,000,
respectively.


                                       15
<PAGE>


The average balance of loans receivable increased $17.3 million or 9.3% to
$203.8 million for the nine months ended September 30, 2006, compared to $186.5
million for the same period in the prior year primarily due to increases in
commercial mortgage loans, business loans and home equity loans as loan
production increased throughout 2005 and the first nine months of 2006. The
yield on average loans receivable increased 13 basis points to 6.74% during the
nine months ended September 30, 2006, compared to 6.61% for the same period in
the prior year. The increase in the average yield was primarily due to the
origination of loans with higher yields relative to portfolio loans as a result
of the recent increase in interest rates. The increase in volume and yield
contributed an additional $869,000 and $182,000, respectively, to interest
income.

The average balance of interest-earning cash equivalents decreased $1.8 million
or 34.5% to $3.4 million for the nine months ended September 30, 2006, compared
to $5.2 million for the same period in the prior year. The decrease in the
average balance was primarily due to funding requirements for loan originations
and resulted in a $54,000 reduction in interest income. Offsetting this decrease
in volume was an increase in the yield on average interest-earning cash
equivalents of 183 basis points to 4.79% during the nine months ended September
30, 2006, compared to 2.96% for the same period in the prior year. The increase
in yield, which was primarily due to increases in market rates, contributed an
additional $37,000 to interest income.

The average balance of securities decreased $10.1 million or 15.9% to $53.6
million for the nine months ended September 30, 2006, compared to $63.7 million
for the same period in the prior year. The decrease in volume resulted in a
$343,000 reduction in interest income. The decrease in the average balance of
securities was primarily due to funding requirements for loan originations.
Offsetting this decrease in volume was an increase in the yield on average
securities of 36 basis points to 4.64% during the nine months ended September
30, 2006, compared to 4.28% for the same period in the prior year. The increase
in yield contributed an additional $163,000 to interest income.

Interest expense. Interest expense increased $850,000 or 20.7% to $5.0 million
for the nine months ended September 30, 2006, compared to $4.1 million for the
same period in the prior year. This increase in interest expense can be
attributed to increases in interest incurred on deposits and borrowed funds of
$673,000 and $177,000, respectively.

Interest expense incurred on deposits increased $673,000 or 18.6% to $4.3
million for the nine months ended September 30, 2006, compared to $3.6 million
for the same period in the prior year. This increase in interest expense can be
attributed to an increase in the average rate of interest-bearing deposits of 46
basis points to 3.00% for the nine months ended September 30, 2006 from 2.54%
for the same period in the prior year. This increase in rate resulted from
increases in market rates and resulted in an additional $664,000 of interest
expense between the nine month period ended September 30, 2006 and 2005. Also
contributing to the increase in interest expense was the increase in the average
balance of interest-bearing deposits of $497,000 to $191.3 million at September
30, 2006, compared to $190.8 million for the same period in the prior year
resulting in an additional $9,000 of interest expense.

Interest expense incurred on borrowed funds increased $177,000 or 36.8% to
$658,000 for the nine months ended September 30, 2006, compared to $481,000 for
the same period in the prior year. This increase in interest expense can be
attributed to the increase in the average balance of borrowed funds of $4.8
million or 31.5% to $20.2 million for the nine months ended September 30, 2006,
compared to $15.4 million for the same period in the prior year which resulted
in an additional $157,000 in interest expense. The increase in the average
balance of long-term and short-term borrowed funds was primarily due to funding
increased loan originations. The average rate on the average balance of borrowed
funds increased 17 basis points to 4.36% for the nine months ended September 30,
2006 from 4.19% for the same period in the prior year and resulted in an
additional $20,000 in interest expense. The increase in the average rate of
borrowing was primarily due to increases in market rates.


                                       16
<PAGE>


Average Balance Sheet and Yield/Rate Analysis. The following table sets forth,
for the periods indicated, information concerning the total dollar amounts of
interest income from interest-earning assets and the resulting 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 costs. Interest and yields on tax-exempt loans and securities (tax-exempt
for federal income tax purposes) are shown on a fully tax equivalent basis. The
information is based on average daily balances during the periods presented.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                    Nine months ended September 30,
                                                 --------------------------------------------------------------------------------

                                                             2006                                          2005
                                                 ----------------------------------------  --------------------------------------
                                                    Average                     Yield /       Average                     Yield /
(Dollar amounts in thousands)                       Balance       Interest       Rate         Balance       Interest       Rate
---------------------------------------------------------------------------------------------------------------------------------

Interest-earning assets:
<S>                                                 <C>              <C>           <C>         <C>             <C>           <C>
    Loans, taxable                                  $ 196,972        $ 9,938       6.75%       $ 179,402       $ 8,882       6.62%
    Loans, tax exempt                                   6,835            330       6.46%           7,104           335       6.30%
                                                 ------------- -------------- -----------  -------------- ------------- -----------
         Total loans receivable                       203,807         10,268       6.74%         186,506         9,217       6.61%
                                                 ------------- -------------- -----------  -------------- ------------- -----------
    Securities, taxable                                38,332          1,103       3.85%          48,246         1,301       3.61%
    Securities, tax exempt                             15,235            758       6.65%          15,480           740       6.39%
                                                 ------------- -------------- -----------  -------------- ------------- -----------
         Total securities                              53,567          1,861       4.64%          63,726         2,041       4.28%
                                                 ------------- -------------- -----------  -------------- ------------- -----------
    Interest-earning deposits with banks                1,585             55       4.64%           3,657            72       2.63%
    Federal bank stocks                                 1,850             68       4.91%           1,584            44       3.71%
                                                 ------------- -------------- -----------  -------------- ------------- -----------
         Total interest-earning cash equivalents        3,435            123       4.79%           5,241           116       2.96%
                                                 ------------- -------------- -----------  -------------- ------------- -----------

    Total interest-earning assets                     260,809         12,252       6.28%         255,473        11,374       5.95%
         Cash and due from banks                        6,908                                      7,466
         Other noninterest-earning assets              13,295                                     12,270
                                                 -------------                             --------------

         Total assets                               $ 281,012                                  $ 275,209
                                                 =============                             ==============

Interest-bearing liabilities:
    Interest-bearing demand deposits                $  73,103            545       1.00%       $  79,977           434       0.73%
    Time deposits                                     118,220          3,748       4.24%         110,849         3,186       3.84%
                                                 ------------- -------------- -----------  -------------- ------------- -----------
         Total interest-bearing deposits              191,323          4,293       3.00%         190,826         3,620       2.54%
                                                 ------------- -------------- -----------  -------------- ------------- -----------

    Borrowed funds, long-term                          18,663            600       4.30%          15,000           470       4.19%
    Borrowed funds, short-term                          1,528             58       5.07%             358            11       4.11%
                                                 ------------- -------------- -----------  -------------- ------------- -----------
         Total borrowed funds                          20,191            658       4.36%          15,358           481       4.19%
                                                 ------------- -------------- -----------  -------------- ------------- -----------

    Total interest-bearing liabilities                211,514          4,951       3.13%         206,184         4,101       2.66%
         Noninterest-bearing demand deposits           43,604              -           -          42,249             -          -
                                                 ------------- -------------- -----------  -------------- ------------- -----------

      Funding and cost of funds                       255,118          4,951       2.59%         248,433         4,101       2.21%
         Other noninterest-bearing liabilities          2,271                                      2,551
                                                 -------------                             --------------

         Total liabilities                            257,389                                    250,984
         Stockholders' equity                          23,623                                     24,225
                                                 -------------                             --------------

         Total liabilities and stockholders'
          equity                                    $ 281,012                                  $ 275,209
                                                 =============                             ==============

Net interest income                                                  $ 7,301                                   $ 7,273
                                                                =============                              ============

Interest rate spread (difference between
    weighted average rate on interest-earning
    assets and interest-bearing liabilities)                                       3.15%                                     3.29%
                                                                               ==========                                ==========
Net interest margin (net interest
    income as a percentage of average
    interest-earning assets)                                                       3.74%                                     3.81%
                                                                               ==========                                ==========
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       17
<PAGE>


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.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                   Nine months ended September 30,
                                                                                         2006 versus 2005
                                                                                     Increase (Decrease) due to
                                                                       -------------------------------------------------------
 (Dollar amounts in thousands)                                           Volume                Rate                 Total
                                                              ----------------------------------------------------------------
 Interest income:
<S>                                                                          <C>                  <C>                 <C>
    Loans                                                                    $ 869                $ 182               $ 1,051
    Securities                                                                (343)                 163                  (180)
    Interest-earning deposits with banks                                       (54)                  37                   (17)
    Federal bank stocks                                                          8                   16                    24
                                                                       ------------         ------------         -------------
    Total interest-earning assets                                              480                  398                   878
                                                                       ------------         ------------         -------------

 Interest expense:
    Deposits                                                                     9                  664                   673
    Borrowed funds                                                             157                   20                   177
                                                                       ------------         ------------         -------------
    Total interest-bearing liabilities                                         166                  684                   850
                                                                       ------------         ------------         -------------
 Net interest income                                                         $ 314               $ (286)                 $ 28
                                                                       ============         ============         =============

------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Provision for loan losses. The Corporation records provisions for loan losses to
maintain a level of total allowance for loan losses that management believes, to
the best of its knowledge, covers all known and inherent losses that are both
probable and reasonably estimable at each reporting date. Management considers
historical loss experience, the present and prospective financial condition of
borrowers, current 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.

Information pertaining to the allowance for loan losses and non-performing
assets for the nine months ended September 30, 2006 and 2005 is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------

                                                     At or for the nine months ended
                                                                 September 30,
                                                    -----------------------------------
(Dollar amounts in thousands)                            2006                2005
---------------------------------------------------------------------------------------
<S>                                                        <C>                 <C>
Balance at the beginning of the period                     $ 1,869             $ 1,810
Provision for loan losses                                      168                 145
Charge-offs                                                    (74)                (99)
Recoveries                                                      22                  37
                                                    ---------------     ---------------
Balance at the end of the period                           $ 1,985             $ 1,893
                                                    ===============     ===============

Non-performing loans                                       $ 1,653             $ 1,608
Non-performing assets                                        1,739               1,705
Non-performing loans to total loans                          0.75%               0.84%
Non-performing assets to total assets                        0.59%               0.62%
Allowance for loan losses to total loans                     0.90%               0.99%
Allowance for loan losses to non-performing loans          120.08%             117.72%
---------------------------------------------------------------------------------------
</TABLE>

                                       18
<PAGE>


The provision for loan losses increased $23,000 or 15.9% to $168,000 for the
nine month period ended September 30, 2006 from $145,000 for the same period in
the prior year. Management's evaluation of the loan portfolio, including the
changing composition of the portfolio as well as economic trends, regulatory
considerations and other factors contributed to the recognition of $168,000 in
the provision for loan losses during the nine months ended September 30, 2006.

Noninterest income. Noninterest income decreased $42,000 or 1.8% to $2.29
million during the nine months ended September 30, 2006, compared to $2.33
million during the same period in the prior year. This decrease can be
attributed to decreases in commissions earned on financial services and gains on
the sale of securities of $32,000 and $134,000, respectively. Offsetting this
decrease in noninterest income were increases in customer fees and service
charges, gains on the sale of loans and other noninterest income of $98,000,
$4,000 and $22,000, respectively.

Noninterest expense. Noninterest expense decreased $71,000 or 1.0% to $6.7
million during the nine months ended September 30, 2006, compared to $6.8
million during the same period in the prior year. This decrease in noninterest
expense can be attributed to decreases in intangible amortization and other
noninterest expenses of $22,000 and $295,000, respectively. Offsetting this
decrease in noninterest expense were increases in compensation and employee
benefits and premises and equipment of $188,000 and $58,000, respectively.

Compensation and employee benefits expense increased $188,000 or 5.0% to $4.0
million during the nine months ended September 30, 2006, compared to $3.8
million for the same period in the prior year. Normal annual salary and wage
adjustments, the increase in full-time equivalents, increased employee
retirement costs, additional wages paid to temporary employees, higher
director's fees and commissions paid to a financial services representative were
the major components of this increase.

Premises and equipment expense increased $58,000 or 5.4% to $1.14 million during
the nine months ended September 30, 2006, compared to $1.08 million for the same
period in the prior year. The increase was primarily due to increased occupancy
costs related to our new drive-thru facility in Brookville, as well as costs
related to the construction of a new branch location.

Other noninterest expense decreased $295,000 or 15.6% to $1.6 million during the
nine months ended September 30, 2006, compared to $1.9 million for the same
period in the prior year. This decrease can be attributed primarily to decreases
in professional fees, telephone and communication expenses, Pennsylvania use tax
expense, travel and entertainment expenses and other noninterest expenses.
Partially offsetting these decreases were increases in Pennsylvania shares tax
expense, printing and office supplies, postage and marketing expenses between
the two periods.

Provision for income taxes. The provision for income taxes increased $16,000 or
3.5% to $474,000 for the nine months ended September 30, 2006, compared to
$458,000 for the same period in the prior year due to an increase in the
Corporation's pre-tax earnings base between the first nine months of 2006 and
2005. Also contributing to the increase was the increase in the effective tax
rate to 20.1% in 2006 from 19.6% in 2005 due to the expiration of tax credits
generated in previous years. The difference between the statutory rate of 34%
and the Corporation's effective tax rate is due to tax-exempt income earned on
loans, securities and bank-owned life insurance.

                                       19
<PAGE>


LIQUIDITY

The Corporation's primary sources of funds generally have been deposits obtained
through the offices of the Bank, borrowings from the FHLB and amortization and
prepayments of outstanding loans and maturing securities. During the nine months
ended September 30, 2006, the Corporation used its sources of funds primarily to
fund loan originations and for the repayment of short-term borrowed funds. As of
such date, the Corporation had outstanding loan commitments, including
undisbursed loans and amounts available under credit lines, totaling $22.0
million, and standby letters of credit totaling $560,000.

At September 30, 2006, time deposits amounted to $123.1 million or 51.5% of the
Corporation's total consolidated deposits, including approximately $44.9 million
of which are 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 term borrowing capacity from the FHLB and, to a limited and rare extent,
the sale of loans. At September 30, 2006, the Corporation's borrowing capacity
with the FHLB, net of funds borrowed, was $106.7 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.

CRITICAL ACCOUNTING POLICIES

Management views critical accounting policies to be those which are highly
dependent on subjective or complex judgments, estimates and assumptions and
where changes in those estimates and assumptions could have a significant impact
on the financial statements. Management currently views the determination of the
allowance for loan losses as a critical accounting policy.

The allowance for loan losses provides for an estimate of probable losses in the
loan portfolio. In determining the appropriate level of the allowance for loan
loss, the loan portfolio is separated into risk-rated and homogeneous pools.
Migration analysis/historical loss rates, adjusted for relevant trends, have
been applied to these pools. Qualitative adjustments are then applied to the
portfolio to allow for quality of lending policies and procedures, national and
local economic and business conditions, changes in the nature and volume of the
portfolio, experience, ability and depth of lending management, changes in the
trends, volumes and severity of past due, non-accrual and classified loans and
loss and recovery trends, quality of the Corporation's loan review system,
concentrations of credit, and external factors. The methodology used to
determine the adequacy of the Corporation's allowance for loan losses is
comprehensive and meets regulatory and accounting industry standards for
assessing the allowance, however it is still an estimate. Loan losses are
charged against the allowance while recoveries of amounts previously charged-off
are credited to the allowance. Loan loss provisions are charged against current
earnings based on management's periodic evaluation and review of the factors
indicated above.

                                       20
<PAGE>


Item 3.  Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

Market risk for the Corporation consists primarily of interest rate risk
exposure and liquidity risk. Since virtually all of the interest-earning assets
and paying liabilities are at the Bank, virtually all of the interest rate risk
and liquidity risk lies at the Bank level. The Bank is not subject to currency
exchange risk or commodity price risk, and has no trading portfolio, and
therefore, is not subject to any trading risk. In addition, the Bank does not
participate in hedging transactions such as interest rate swaps and caps.
Changes in interest rates will impact both income and expense recorded and also
the market value of long-term interest-earning assets. Interest rate risk and
liquidity risk management is performed at the Bank level. Although the Bank has
a diversified loan portfolio, loans outstanding to individuals and businesses
depend upon the local economic conditions in the immediate trade area.

One of the primary functions of the Corporation's asset/liability management
committee is to monitor the level to which the balance sheet is subject to
interest rate risk. The goal of the asset/liability committee is to manage the
relationship between interest rate sensitive assets and liabilities, thereby
minimizing the fluctuations in the net interest margin, which achieves
consistent growth of net interest income during periods of changing interest
rates.

Interest rate sensitivity is the result of differences in the amounts and
repricing dates of the Bank's rate sensitive assets and rate sensitive
liabilities. These differences, or interest rate repricing "gap", provide an
indication of the extent that the Corporation's net interest income is affected
by future changes in interest rates. A gap is considered positive when the
amount of interest rate-sensitive assets exceeds the amount of interest
rate-sensitive liabilities and is considered negative when the amount of
interest rate-sensitive liabilities exceeds the amount of interest
rate-sensitive assets. Generally, during a period of rising interest rates, a
negative gap would adversely affect net interest income while a positive gap
would result in an increase in net interest income. Conversely, during a period
of falling interest rates, a negative gap would result in an increase in net
interest income and a positive gap would adversely affect net interest income.
The closer to zero that gap is maintained, generally, the lesser the impact of
market interest rate changes on net interest income.

Based on certain assumptions provided by a federal regulatory agency, which
management believes most accurately represents the sensitivity of the
Corporation's assets and liabilities to interest rate changes, at September 30,
2006, the Corporation's interest-earning assets maturing or repricing within one
year totaled $74.7 million while the Corporation's interest-bearing liabilities
maturing or repricing within one-year totaled $80.8 million, providing an excess
of interest-bearing liabilities over interest-earning assets of $6.1 million or
a negative 2.1% of total assets. At September 30, 2006, the percentage of the
Corporation's assets to liabilities maturing or repricing within one year was
92.5%.

For more information, see "Market Risk Management" in Exhibit 13 to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2005.

Item 4.  Controls and Procedures
--------------------------------

The Corporation maintains disclosure controls and procedures that are
designed  to  ensure  that   information   required  to  be   disclosed  in  the
Corporation's  Exchange  Act  reports is  recorded,  processed,  summarized  and
reported  within the time periods  specified  in the SEC's rules and forms,  and
that such  information  is accumulated  and  communicated  to the  Corporation's
management,  including its Chief Executive Officer and Chief Financial  Officer,
as appropriate,  to allow timely decisions  regarding required  disclosure based
closely on the  definition  of  "disclosure  controls  and  procedures"  in Rule
13a-15(e).

There has been no change made in the Corporation's internal control over
financial reporting during the period covered by this report that has materially
affected,  or is  reasonably  likely to  materially  affect,  the  Corporation's
internal control over financial reporting.

                                       21
<PAGE>


As of the quarter ended September 30, 2006, the Corporation carried out an
evaluation,   under  the   supervision  and  with  the   participation   of  the
Corporation's  management,  including the Corporation's  Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
the Corporation's  disclosure  controls and procedures.  Based on the foregoing,
the Corporation's  Chief Executive Officer and Chief Financial Officer concluded
that the Corporation's disclosure controls and procedures were effective.  There
have been no significant  changes in the  Corporation's  internal controls or in
other factors that could  significantly  affect the internal controls subsequent
to the date the Corporation completed its evaluation.

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 1A.  Risk Factors
----------------------

There have been no material changes from risk factors as previously disclosed in
the 2005 Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
--------------------------------------------------------------------

None.

Item 3.  Defaults Upon Senior Securities
----------------------------------------

None.

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

None.

Item 5.  Other Information
--------------------------

(a) Not applicable.

(b) Not applicable.



Item 6.  Exhibits
-----------------

Exhibit 31.1  Rule 13a-14(a) Certification of Chief Executive Officer
Exhibit 31.2  Rule 13a-14(a) Certification of Chief Financial Officer
Exhibit 32.1  CEO Certification Pursuant to 18 U.S.C. Section 1350
Exhibit 32.2  CFO Certification Pursuant to 18 U.S.C. Section 1350


                                       22
<PAGE>


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. AND SUBSIDIARY



Date:  November 13, 2006            By:      /s/ David L. Cox
                                    --------------------------------------------
                                    David L. Cox
                                    Chairman of the Board,
                                    President and Chief Executive Officer

Date:  November 13, 2006            By:      /s/ William C. Marsh
                                    --------------------------------------------
                                    William C. Marsh
                                    Chief Financial Officer


                                       23