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

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

                                    FORM 10-Q

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                For the quarterly period ended September 30, 2005

                        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                                (IRS Employer
incorporation or organization)                               Identification No.)


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 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 an  accelerated  filer (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 14, 2005.

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

<PAGE>


                            EMCLAIRE FINANCIAL CORP.

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q


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

<TABLE>
<CAPTION>

Item 1.       Interim Financial Statements (Unaudited)
<S>           <C>                                                                                       <C>

              Consolidated Balance Sheets as of
              September 30, 2005 and December 31, 2004...................................................1

              Consolidated Statements of Income for the three and nine
              months ended September 30, 2005 and 2004...................................................2

              Condensed Consolidated Statements of Cash Flows for the nine
              months ended September 30, 2005 and 2004...................................................3

              Consolidated Statements of Changes in Stockholders'
              Equity for the three and nine months ended September 30, 2005 and 2004.....................4

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

Item 2.       Management's Discussion and Analysis
              of Financial Condition and Results of Operations...........................................7

Item 3.       Quantitative and Qualitative Disclosures about Market Risk................................19

Item 4.       Controls and Procedures...................................................................19

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

Item 1.       Legal Proceedings.........................................................................20

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds...............................20

Item 3.       Defaults upon Senior Securities...........................................................20

Item 4.       Submission of Matters to a Vote of Security Holders.......................................20

Item 5.       Other Information.........................................................................20

Item 6.       Exhibits..................................................................................20

Signatures    ..........................................................................................21

</TABLE>


<PAGE>


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

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

                     Emclaire Financial Corp. and Subsidiary
                           Consolidated Balance Sheets
           As of September 30, 2005 (Unaudited) and December 31, 2004
              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                             September 30,     December 31,
                                                                                  2005              2004
                                                                            ---------------   ---------------
                                  Assets
                                  ------
<S>                                                                                    <C>             <C>
Cash and due from banks                                                    $         7,401   $         7,769
Interest earning deposits with banks                                                   958             6,855
                                                                            ---------------   ---------------
  Cash and cash equivalents                                                          8,359            14,624
Securities available for sale                                                       60,030            63,346
Securities held to maturity; fair value of $15 and $16                                  15                16
Loans held for sale                                                                      -               386
Loans receivable, net of allowance for loan losses of $1,893 and $1,810            189,280           179,575
Federal bank stocks, at cost                                                         1,882             1,731
Bank-owned life insurance                                                            4,580             4,448
Accrued interest receivable                                                          1,315             1,203
Premises and equipment, net                                                          5,890             5,678
Goodwill                                                                             1,422             1,422
Other intangibles                                                                        9                38
Prepaid expenses and other assets                                                    1,336               913
                                                                            ---------------   ---------------

    Total Assets                                                           $       274,118   $       273,380
                                                                            ===============   ===============

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

Liabilities:
 Deposits:
  Noninterest bearing                                                      $        41,509   $        40,511
  Interest bearing                                                                 187,179           192,363
                                                                            ---------------   ---------------
    Total deposits                                                                 228,688           232,874
 Short term borrowed funds                                                           5,000                 -
 Long term borrowed funds                                                           15,000            15,000
 Accrued interest payable                                                              568               577
 Accrued expenses and other liabilities                                              1,185             1,313
                                                                            ---------------   ---------------

   Total Liabilities                                                               250,441           249,764
                                                                            ---------------   ---------------

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                                                                  13,332            12,398
 Accumulated other comprehensive income                                                382             1,255
                                                                            ---------------   ---------------

   Total Stockholders' Equity                                                       23,677            23,616
                                                                            ---------------   ---------------

    Total Liabilities and Stockholders' Equity                             $       274,118   $       273,380
                                                                            ===============   ===============


</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, 2005 and 2004 (Unaudited)
              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                               Three months ended                  Nine months ended
                                                                 September 30,                       September 30,
                                                       ----------------------------------  ----------------------------------
                                                              2005              2004              2005              2004
                                                        ---------------   ---------------   ---------------   ---------------
<S>                                                    <C>               <C>               <C>               <C>
Interest and dividend income:
 Loans receivable, including fees                      $         3,104   $         2,961   $         9,119   $         8,827
 Securities:
   Taxable                                                         417               360             1,301               990
   Exempt from federal income tax                                  175               175               523               524
 Federal bank stocks                                                14                 8                44                29
 Deposits with banks                                                23                17                72                32
                                                        ---------------   ---------------   ---------------   ---------------
  Total interest and dividend income                             3,733             3,521            11,059            10,402
                                                        ---------------   ---------------   ---------------   ---------------

Interest expense:
 Deposits                                                        1,236             1,129             3,620             3,322
 Borrowed funds                                                    169               158               481               475
                                                        ---------------   ---------------   ---------------   ---------------
  Total interest expense                                         1,405             1,287             4,101             3,797
                                                        ---------------   ---------------   ---------------   ---------------

Net interest income                                              2,328             2,234             6,958             6,605
 Provision for loan losses                                          40                95               145               170
                                                        ---------------   ---------------   ---------------   ---------------

Net interest income after provision for loan losses              2,288             2,139             6,813             6,435
                                                        ---------------   ---------------   ---------------   ---------------

Noninterest income:
 Fees and service charges                                          403               282             1,024               836
 Commissions on financial services                                  88                11               348                11
 Gains on sales of securities                                      290                88               510               257
 Gain on the sale of loans                                           2                39                 5                37
 Earnings on bank-owned life insurance                              44                56               144               167
 Other                                                              93               100               302               269
                                                        ---------------   ---------------   ---------------   ---------------
  Total noninterest income                                         920               576             2,333             1,577
                                                        ---------------   ---------------   ---------------   ---------------

Noninterest expense:
 Compensation and employee benefits                              1,298             1,087             3,800             3,259
 Premises and equipment, net                                       401               315             1,082               919
 Intangible amortization expense                                     8                 9                29                25
 Other                                                             679               538             1,893             1,704
                                                        ---------------   ---------------   ---------------   ---------------
  Total noninterest expense                                      2,386             1,949             6,804             5,907
                                                        ---------------   ---------------   ---------------   ---------------

Income before provision for income taxes                           822               766             2,342             2,105
 Provision for income taxes                                        159                81               458               333
                                                        ---------------   ---------------   ---------------   ---------------

Net income                                             $           663   $           685   $         1,884   $         1,772
                                                        ===============   ===============   ===============   ===============

  Basic earnings per share                             $          0.52   $          0.54   $          1.49   $          1.40

 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, 2005 and 2004 (Unaudited)
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>

                                                                           For the nine months ended
                                                                                 September 30,
                                                                       ----------------------------------
                                                                             2005               2004
                                                                       ---------------    ---------------
<S>                                                                   <C>                <C>
Operating activities:
 Net income                                                           $         1,884    $         1,772
 Adjustments to reconcile net income to net cash provided
  by operating activities:
   Depreciation and amortization of premises and equipment                        658                518
   Provision for loan losses                                                      145                170
   Amortization of premiums and accretion of discounts, net                        88                175
   (Gain) on sale of loans                                                         (5)               (37)
   Loans originated for sale                                                     (150)              (436)
   Proceeds from sales of loans held for sale                                     541                  -
   (Gains) on sale of securities                                                 (510)              (257)
   Earnings on bank-owned life insurance, net                                    (132)              (155)
   Amortization of intangible assets and mortgage servicing rights                 34                 32
   Change in accrued interest receivable                                         (112)                79
   Change in prepaid expenses and other assets                                    110                372
   Change in accrued interest payable                                              (9)                26
   Change in accrued expenses and other liabilities                              (128)              (406)
                                                                       ---------------    ---------------
  Net cash from operating activities                                            2,414              1,853
                                                                       ---------------    ---------------

Investing Activities:
 Loan originations and principal collections, net                              (9,960)             6,971
 Available-for-sale securities:
    Sales                                                                       1,232                704
    Maturities, prepayments and calls                                           5,663             10,303
    Purchases                                                                  (4,458)           (21,264)
 Held-to-maturity securities:
    Maturities, prepayments and calls                                               1                  1
 Redemption (purchases) of Federal bank stocks                                   (151)               290
 Purchase of customer relationship intangible                                       -                (20)
 Purchases of premises and equipment                                             (870)            (1,281)
                                                                       ---------------    ---------------
  Net cash from investing activities                                           (8,543)            (4,296)
                                                                       ---------------    ---------------

Financing Activities:
 Net (decrease) increase in deposits                                           (4,186)            13,021
 Increase (decrease) in overnight borrowed funds                                5,000             (5,700)
 Dividends paid on common stock                                                  (950)              (875)
                                                                       ---------------    ---------------
  Net cash from financing activities                                             (136)             6,446
                                                                       ---------------    ---------------

Net (decrease) increase in cash equivalents                                    (6,265)             4,003
Cash equivalents at beginning of period                                        14,624              7,703
                                                                       ---------------    ---------------
Cash equivalents at end of period                                     $         8,359    $        11,706
                                                                       ===============    ===============

Supplemental information:

 Interest paid                                                        $         4,110    $         3,771
 Income taxes paid                                                                349                232

Supplemental noncash disclosures:
 Transfers from loans to foreclosed real estate                       $            89    $             -

</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, 2005 and 2004 (Unaudited)
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>

                                                          For the three months ended        For the nine months ended
                                                                 September 30,                     September 30,
                                                              2005             2004             2005             2004
<S>                                                    <C>              <C>              <C>              <C>
Balance at beginning of period                         $       23,882   $       22,559   $       23,616   $       22,655

  Net income                                                      663              685            1,884            1,772

  Change in net unrealized gain on available for sale
  securities, net of taxes                                       (360)             506             (536)              18
  Less reclassification adjustment for gains included
  in net income, net of taxes                                    (191)             (58)            (337)            (169)
                                                        --------------   --------------   --------------   --------------
  Other comprehensive income (loss)                              (551)             448             (873)            (151)
                                                        --------------   --------------   --------------   --------------

Total comprehensive income (loss)                                 112            1,133            1,011            1,621

Dividends declared                                               (317)            (291)            (950)            (875)
                                                        ---------------- ---------------- ---------------- --------------

Balance at end of period                               $       23,677   $       23,401   $       23,677   $       23,401
                                                        ==============   ==============   ==============   ==============

Common cash dividend per share                         $         0.25   $         0.23   $         0.75   $         0.69
                                                        ==============   ==============   ==============   ==============

</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
     mortgage, 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  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,
     2004, as contained in the Corporation's 2004 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.

3.   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,
     2005 and 2004  amounted  to $19,000  and  $17,000,  respectively.  Matching
     contributions  for the  nine  months  ended  September  30,  2005  and 2004
     amounted to $56,000 and $50,000, respectively.


                                       5

<PAGE>


3.   Employee Benefit Plans (Continued).

     Defined Benefit Plan.
     ---------------------

     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.

     Information pertaining to the components of the periodic pension cost is 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)                   2005           2004           2005           2004          2004
-----------------------------------------------------   ------------   ------------   ------------  ------------
<S>                                     <C>            <C>            <C>            <C>           <C>
Service cost                            $         57   $         41   $        141   $        123  $        158
Interest cost                                     58             46            160            138           187
Expected return on plan assets                   (62)           (53)          (184)          (159)         (209)
Transition asset                                  (2)            (2)            (6)            (6)           (8)
Prior service costs                               (8)            (8)           (24)           (24)          (10)
Recognized net actuarial (gain) loss              18              8             36             24             -
                                         ------------   ------------   ------------   ------------  ------------

Net periodic pension cost               $         61   $         32   $        123   $         96  $        118
                                         ============   ============   ============   ============  ============

</TABLE>


     The expected  rate of return on plan assets is 8.50% for the periods  ended
     September 30, 2005 and 2004. The  Corporation  contributed  $135,000 to its
     pension plan for the nine month period ending September 30, 2005.

4.   Loans Receivable.

     The  Corporation's   loans  receivable  as  of  the  respective  dates  are
     summarized as follows:

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

                                               September 30,       December 31,
(Dollar Amounts In thousands)                      2005                2004
--------------------------------------------------------------------------------

Mortgage loans:
Residential first mortgage                   $       66,238      $       69,310
Home equity                                          39,617              31,548
Commercial real estate                               52,627              48,539
                                              --------------      --------------
                                                    158,482             149,397
Other loans:
Commercial business                                  24,656              23,898
Consumer                                              8,035               8,090
                                              --------------      --------------
                                                     32,691              31,988
                                              --------------      --------------

Total loans, gross                                  191,173             181,385

Less allowance for loan losses                        1,893               1,810
                                              --------------      --------------

Total loans, net                             $      189,280      $      179,575
                                              ==============      ==============
--------------------------------------------------------------------------------


                                       6

<PAGE>


5.   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,  2005,  $180,000  automatically
     renews within the next twelve  months,  $87,000 will expire within the next
     twelve  months and  $310,000  will expire  within  thirteen  to  forty-nine
     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
     payment  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, 2005 for  guarantees  under  standby
     letters of credit issued is not material.

6.   Effect of Recently Issued Accounting Standards
     ----------------------------------------------

     In January 2003, the FASB's  Emerging  Issues Task Force (EITF) issued EITF
     Issue No. 03-1,  "The Meaning of  Other-Than-Temporary  Impairment  and Its
     Application to Certain  Investors"  ("EITF  03-1"),  and in March 2004, the
     EITF   issued   an   update.   EITF   03-1   addresses   the   meaning   of
     other-than-temporary  impairment  and its  application  to certain debt and
     equity securities.  EITF 03-1 aids in the determination of impairment of an
     investment and gives guidance as to the  measurement of impairment loss and
     the recognition and disclosures of other-than-temporary  investments.  EITF
     03-1 also  provides a model to  determine  other-than-temporary  impairment
     using  evidence-based  judgment  about the recovery of the fair value up to
     the cost of the investment by considering  the severity and duration of the
     impairment  in relation to the  forecasted  recovery of the fair value.  In
     July 2005,  FASB  adopted  the  recommendation  of its staff to nullify key
     parts  of EITF  03-1.  The  staff's  recommendations  were to  nullify  the
     guidance on the  determination  of whether an investment is impaired as set
     forth  in  paragraphs  10-18 of Issue  03-1 and not to  provide  additional
     guidance on the meaning of  other-than-temporary  impairment.  Instead, the
     staff recommends  entities  recognize  other-than-temporary  impairments by
     applying existing accounting literature such as paragraph 16 of SFAS 115.

     In July  2005,  the  FASB  issued  a  proposed  interpretation  of FAS 109,
     "Accounting for Income Taxes", to clarify certain aspects of accounting for
     uncertain tax positions,  including  issues related to the  recognition and
     measurement   of  those  tax  positions.   If  adopted  as  proposed,   the
     interpretation  would be effective in the fourth  quarter of 2005,  and any
     adjustments   required  to  be  recorded  as  a  result  of  adopting   the
     interpretation  would be reflected as a cumulative  effect from a change in
     accounting  principle.  We are currently in the process of determining  the
     impact of adoption  of the  interpretation  as  proposed  on our  financial
     position or results of operations.

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,  2005  and  should  be  read in
conjunction  with the  Corporation's  Annual  Report or Form 10-K filed with the
Securities  and  Exchange  Commission  and  with the  accompanying  consolidated
financial statements and notes presented on pages 1 through 7 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.


                                       7

<PAGE>


CHANGES IN FINANCIAL CONDITION

Total assets  increased  $738,000 to $274.1  million at September  30, 2005 from
$273.4  million at December 31, 2004.  This  increase  was  primarily  due to an
increase in loans receivable of $9.7 million. Partially offsetting this increase
were decreases in cash and cash  equivalents  and securities of $6.3 million and
$3.3 million, respectively.

Cash and cash  equivalents  decreased  $6.3  million or 42.8% to $8.4 million at
September 30, 2005 from $14.6 million at December 31, 2004 primarily to fund the
increase in loans receivable of $9.7 million.

Loans held for sale  decreased  $386,000 or 100.0% to $0 at  September  30, 2005
from  $386,000 at December 31, 2004.  During 2005,  the  Corporation  originated
$150,000 in additional  student loans. In June, the Corporation  sold the entire
student loan portfolio of $536,000 resulting in a gain of $5,000.

Loans  receivable  increased $9.7 million or 5.4% to $189.3 million at September
30, 2005 from $179.6  million at December 31, 2004 due primarily to increases in
commercial  and home equity  loans.  The increase in  commercial  mortgages  and
business loans was a result of the growth in the commercial  real estate market,
the lower  interest rate  environment  and the continued  focus by management on
commercial lending.  The increase in home equity loans was due primarily to loan
campaigns  put forth  during  the year,  offering  rates from 4.99% to 5.24% for
qualified individuals.

Stockholders'  equity  increased  $61,000 to $23.7 million at September 30, 2005
from $23.6  million at December  31, 2004.  This  increase was the result of net
income of $1.9 million  offset by dividends  declared of $950,000 and a decrease
in  accumulated  other  comprehensive  income  of  $873,000.   The  decrease  in
accumulated  other  comprehensive  income was primarily due to 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, 2005 and
2004

General.  Net income decreased  $22,000 or 3.2% to $663,000 for the three months
ended  September  30,  2005 from  $685,000  for the same  period  in 2004.  This
decrease was a result of increases in noninterest  expense and the provision for
income taxes of $437,000 and $78,000,  respectively,  offset by increases in net
interest  income and noninterest  income of $94,000 and $344,000,  respectively,
and the decrease in the provision for loan losses of $55,000.

Net interest  income.  Net interest  income on a tax equivalent  basis increased
$92,000 or 3.9% to $2.4 million for the three months  ended  September  30, 2005
from  $2.3  million  for the same  period  in 2004.  This  net  increase  can be
attributed to an increase in interest  income of $210,000  offset by an increase
in interest expense of $118,000.

Interest income. Interest income on a tax equivalent basis increased $210,000 or
5.8% to $3.8 million for the three months ended September 30, 2005,  compared to
$3.6  million for the same period in the prior year.  This  increase in interest
income can be attributed  to an increase in the average  total  interest-earning
assets of $6.2  million or 2.5% and a 17 basis point  increase  in the  interest
rate on average  interest-earning  assets to 5.95% during the three months ended
September 30, 2005, compared to 5.78% for the same period in the prior year.

The  average  balance  of  securities  increased  $4.2  million or 7.3% to $61.8
million for the three months ended September 30, 2005, compared to $57.6 million
for the same period in the prior year.  The  increase in volume  contributed  an
additional  $46,000 to interest  income.  The increase in the average balance of
securities  was a  result  of  investing  deployable  funds  into US  government
agencies and mortgage-backed securities to supplement loan originations.


                                       8

<PAGE>


The average balance of interest-earning  cash equivalents decreased $1.9 million
or 29.7% to $4.6 million for the three months ended September 30, 2005, compared
to $6.5  million  for the same  period in the prior  year.  The yield on average
interest-earning cash equivalents increased 169 basis points to 3.22% during the
three months ended September 30, 2005,  compared to 1.53% for the same period in
the prior year. The increase in yield, which was primarily due to an increase in
market rates, contributed an additional $15,000 to interest income. The decrease
in the  average  balance  was  primarily  due to funding  requirements  for loan
originations.

The average balance of loans receivable increased $3.9 million or 2.1% to $189.5
million  for the three  months  ended  September  30,  2005,  compared to $185.7
million  for the same period in the prior year  primarily  due to  increases  in
commercial  mortgages  and business  loans and home equity  loans.  The yield on
average  loans  receivable  increased  15 basis points to 6.57% during the three
months ended  September  30, 2005,  compared to 6.42% for the same period in the
prior year.  The increase in the average  yield was  primarily  due to increased
originations  of higher yielding  commercial  loans and 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 $63,000 and $80,000, respectively, to interest income.

Interest expense.  Interest expense  increased  $118,000 or 9.2% to $1.4 million
for the three months ended September 30, 2005,  compared to $1.3 million for the
same  period in the  prior  year.  This  increase  in  interest  expense  can be
attributed to an increase in the average balance of overnight  borrowed funds of
$1.0 million and the increase in the interest  rate on average  interest-bearing
liabilities of 22 basis points to 2.72% for the three months ended September 30,
2005 from  2.50% for the same  period in the prior  year.  The  average  cost of
deposits was 2.59% and 2.37% for the three months ended  September  30, 2005 and
2004,  respectively.  The  increase  in  rate  and  volume  of  interest-bearing
liabilities  contributed  an additional  $110,000 and $8,000,  respectively,  to
interest income.


                                       9

<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.

<TABLE>
<CAPTION>

                                                                    Three months ended September 30,
                                               --------------------------------------------------------------------------

                                                              2005                                  2004
                                                -----------------------------------   -----------------------------------
                                                        Average             Yield /           Average            Yield /
(Dollar amounts in thousands)                     Balance       Interest     Rate       Balance       Interest     Rate
-------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>              <C>    <C>           <C>              <C>
Interest-earning assets:
------------------------
 Loans, taxable                                $   182,540   $     3,025      6.58%  $   178,302   $     2,878      6.42%
 Loans, tax exempt                                   7,008           112      6.32%        7,388           117      6.32%
                                                -----------   -----------             -----------   -----------
   Total Loans
    Receivable                                     189,548         3,137      6.57%      185,690         2,995      6.42%
                                                -----------   -----------             -----------   -----------

 Securities, taxable                                46,262           417      3.58%       42,262           360      3.39%
 Securities, tax exempt                             15,513           247      6.33%       15,291           248      6.44%
                                                -----------   -----------             -----------   -----------
   Total Securities                                 61,775           664      4.27%       57,553           608      4.20%
                                                -----------   -----------             -----------   -----------

 Interest-earning cash equivalents                   2,922            23      3.12%        4,794            17      1.41%
 Federal bank stocks                                 1,639            14      3.39%        1,690             8      1.88%
                                                -----------   -----------             -----------   -----------
   Total Interest-Earning Cash Equivalents           4,561            37      3.22%        6,484            25      1.53%
                                                -----------   -----------             -----------   -----------

 Total interest-earning assets                     255,884         3,838      5.95%      249,727         3,628      5.78%
   Cash and due from banks                           6,952                                 7,744
   Other noninterest-earning assets                 12,376                                12,263
                                                -----------                           -----------

   Total Assets                                $   275,212                           $   269,734
                                                ===========                           ===========

Interest-bearing
 liabilities:
------------------------
 Interest-bearing demand deposits              $    78,998   $       153      0.77%  $    77,829   $       106      0.54%
 Time deposits                                     110,033         1,083      3.90%      111,698         1,023      3.64%
                                                -----------   -----------             -----------   -----------
   Total Interest-Bearing Deposits                 189,031         1,236      2.59%      189,527         1,129      2.37%
                                                -----------   -----------             -----------   -----------

 Borrowed funds, term                               15,000           158      4.18%       15,000           158      4.19%
 Borrowed funds,
  overnight                                          1,028            11      4.25%            -             -      0.00%
                                                -----------   -----------             -----------   -----------
   Total Borrowed Funds                             16,028           169      4.18%       15,000           158      4.19%
                                                -----------   -----------             -----------   -----------

 Total interest-bearing liabilities                205,059         1,405      2.72%      204,527         1,287      2.50%
   Noninterest-bearing demand deposits              43,107             -         -        40,168                       -
                                                -----------   -----------             -----------  ------------

   Funding and cost of funds                       248,166         1,405      2.25%      244,695         1,287      2.09%
   Other noninterest-bearing liabilities             2,549                                 2,002
                                                -----------                           -----------

   Total Liabilities                               250,715                               246,697
   Stockholders' Equity                             24,497                                23,037
                                                -----------                           -----------

   Total Liabilities and Stockholders' Equity  $   275,212                           $   269,734
                                                ===========  ------------             ===========  ------------

Net interest income                                          $     2,433                           $     2,341
                                                              ===========                           ===========

Interest rate spread (difference between                                      3.23%                                 3.28%
 weighted average rate on interest-earning
 assets and interest-bearing liabilities)

Net interest margin (net interest                                             3.77%                                 3.73%
 income as a percentage of average
 interest-earning
  assets)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       10

<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,
                                                               2005 versus 2004
                                                          Increase (Decrease) due to
                                                  ------------------------------------------
 (Dollar amounts in thousands)                       Volume          Rate          Total
--------------------------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>
 Interest income:
    Loans                                         $         63   $         79   $       142
    Securities                                              45             11            56
    Interest-earning cash equivalents                       (9)            15             6
    Federal bank stocks                                      -              6             6
                                                   ------------   ------------   -----------

    Total interest-earning assets                           99            111           210
                                                   ------------   ------------   -----------

 Interest expense:
    Deposits                                                (3)           110           107
    Borrowed funds                                          11              -            11
                                                   ------------   ------------   -----------

    Total interest-bearing liabilities                       8            110           118
                                                   ------------   ------------   -----------

 Net interest income                              $         91   $          1   $        92
                                                   ============   ============   ===========
--------------------------------------------------------------------------------------------

</TABLE>

Provision for loan losses. The Corporation records provisions for loan losses to
bring the total  allowance  for loan losses to a level deemed  adequate to cover
probable losses  inherent in the loan portfolio.  In determining the appropriate
level of the allowance for loan losses,  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, 2005 and 2004 is as follows:

<TABLE>
<CAPTION>

                                                             At or for the three months ended
                                                                      September 30,
                                                       --------------------------------------------
(Dollar amounts in thousands)                                          2005                   2004
---------------------------------------------------------------------------------------------------
<S>                                                    <C>                    <C>
Balance at the beginning of the period                 $              1,875   $              1,809
Provision for Loan Losses                                                40                     95
Charge-Offs                                                             (32)                  (196)
Recoveries                                                               10                      8
                                                        --------------------   --------------------
Balance at the end of the period                       $              1,893   $              1,716
                                                        ====================   ====================

Non-performing loans                                   $              1,608   $              1,244
Non-performing assets                                                 1,705                  1,314
Non-performing loans to total loans                                    0.84%                  0.67%
Non-performing assets to total assets                                  0.62%                  0.49%
Allowance for loan losses to total loans                               0.99%                  0.93%
Allowance for loan losses to non-performing loans                    117.72%                137.94%
---------------------------------------------------------------------------------------------------

</TABLE>


                                       11

<PAGE>


The provision for loan losses  decreased  $55,000 to $40,000 for the three month
period  ended  September  30, 2005 from $95,000 for the same period in the prior
year. Management's evaluation of the loan portfolio,  including economic trends,
regulatory  considerations  and other factors  contributed to the recognition of
$40,000 in the provision for loan losses during the three months ended September
30, 2005.

Noninterest  income.  Noninterest income increased $344,000 or 59.7% to $920,000
during the three months ended  September 30, 2005,  compared to $576,000  during
the same period in the prior year.  This increase can be attributed to increases
in customer fees and service charges,  commissions  earned on financial services
and  gains  on the  sale  of  securities  of  $121,000,  $77,000  and  $202,000,
respectively.  Offsetting this increase in noninterest  income were decreases in
the gains on the sale of loans,  earnings on bank-owned life insurance and other
noninterest income of $37,000, $12,000 and $7,000, respectively.

The  increase  in  customer  fees and  service  charges of $121,000 or 42.9% was
primarily a result of the new overdraft privilege program, which was implemented
in April 2005.

The increase in commissions  earned on financial  services of $77,000 to $88,000
during the three months ended September 30, 2005, compared to $11,000 during the
same  period in the prior year was the result of our efforts  made in  providing
investment  advisory  services  to our  customers.  These  services  consist  of
investments,   insurance,  wealth  management,  advisory  services,  estate  and
retirement planning and account consolidation.

The  increase  in the gains on the sale of  securities  of  $202,000 to $290,000
during the three months ended September 30, 2005, compared to $88,000 during the
same  period in the prior year was the result of the sale of  marketable  equity
securities.  The  sale  of  securities  resulted  from  management's  change  in
philosophy  of investing in large  regional  banks to becoming  shareholders  in
local community financial institutions.

Noninterest  expense.  Noninterest  expense increased  $437,000 or 22.4% to $2.4
million  during the three months  ended  September  30,  2005,  compared to $1.9
million  during the same period in the prior year.  This increase in noninterest
expense can be attributed to increases in  compensation  and employee  benefits,
premises and equipment and other  noninterest  expense of $211,000,  $86,000 and
$141,000, respectively.

Compensation and employee benefits expense  increased  $211,000 or 19.4% to $1.3
million  during the three months  ended  September  30,  2005,  compared to $1.1
million  for the same period in the prior year.  Normal  annual  salary and wage
adjustments,  additional  wages paid to summer  part-time  employees,  increased
health  insurance  costs,  higher  director's  fees  and  commissions  paid to a
financial  services  representative of $44,000 were the major components of this
increase. Also contributing to the increase was the addition of a new compliance
officer and a new credit analyst in November 2004 and  additional  accruals made
for the Bank's  incentive  program  and  pension  plan of $77,000  and  $30,000,
respectively.

Premises and equipment expense increased $86,000 or 27.3% to $401,000 during the
three months ended September 30, 2005,  compared to $315,000 for the same period
in the prior year. This increase can be primarily  attributed to a change in the
estimated  useful life of an asset which will be replaced in the fourth  quarter
2005. Additional depreciation of $81,000 was recognized during the third quarter
2005 as a result of this change. Another $27,000 of depreciation associated with
this asset will be recorded in October  2005 for a total of $135,000  recognized
during the year.  Also  contributing to this increase were increases in building
and equipment  depreciation  expenses,  utilities,  repairs and  maintenance and
other building and equipment expenses.

Other  noninterest  expense  increased  $141,000 or 26.2% to $679,000 during the
three months ended September 30, 2005,  compared to $538,000 for the same period
in the prior year.  This  increase can be  attributed  primarily to increases in
telephone  and  communications,  travel  and  entertainment  expenses  and other
noninterest  expenses.  Partially  offsetting  these increases were decreases in
marketing expenses and printing and office supplies between the two periods,  as
discussed below.


                                       12

<PAGE>


o    Telephone and communication  expenses  increased $48,000 as a result of the
     recognition  of refunds  associated to the  resolution  of contract  issues
     related to two telephone vendors during the third quarter 2004.
o    Travel  and  entertainment  expenses  increased  $9,000  as a result of the
     increased  efforts in the Corporate Banking area and travel associated with
     training  throughout  the  organization  as well as the increase in the IRS
     mileage rate in 2005.

Provision for income taxes. The provision for income taxes increased  $78,000 or
96.3% to $159,000  for the three months ended  September  30, 2005,  compared to
$81,000  for the same period in the prior year due  primarily  to an increase in
the  Corporation's  pre-tax  earnings base between the third quarter of 2005 and
2004.  Also  contributing  to the increase was the increase in the effective tax
rate to 19.3% in 2005 from  10.6% in 2004.  The  effective  tax rate in 2004 was
lower as a result of the generation of general  business  credits related to the
renovation  of our main  headquarters.  There were no general  business  credits
generated 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, 2005 and
2004

General.  Net income  increased  $112,000  or 6.3% to $1.9  million for the nine
months ended  September  30, 2005 from $1.8 million for the same period in 2004.
This increase was a result of increases in net interest  income and  noninterest
income of $353,000 and $756,000, respectively, and the decrease in the provision
for loan losses of $25,000. Offsetting the increase in net income were increases
in the  provision  for income  taxes and  noninterest  expense of  $125,000  and
$897,000, respectively.

Net interest  income.  Net interest  income on a tax equivalent  basis increased
$347,000 or 5.0% to $7.3  million for the nine months ended  September  30, 2005
from  $6.9  million  for the same  period  in 2004.  This  net  increase  can be
attributed to an increase in interest  income of $651,000  offset by an increase
in interest expense of $304,000.

Interest income. Interest income on a tax equivalent basis increased $651,000 or
6.1% to $11.4 million for the nine months ended September 30, 2005,  compared to
$10.7  million for the same period in the prior year.  This increase in interest
income can be attributed  to an increase in the average  total  interest-earning
assets  of $9.2  million  or 3.5% as well as a 13 basis  point  increase  in the
interest rate on average interest-earning assets to 5.95% during the nine months
ended  September  30,  2005,  compared to 5.82% for the same period in the prior
year.

The  average  balance of  securities  increased  $9.9  million or 18.4% to $63.7
million for the nine months ended September 30, 2005,  compared to $53.8 million
for the same period in the prior year.  The  increase in volume  contributed  an
additional  $319,000 to interest income. The increase in securities was a result
of investing  deployable funds into US government  agencies and  mortgage-backed
securities to supplement loan originations.

The average balance of interest-earning  cash equivalents  increased $147,000 or
2.9% to $5.2 million for the nine months ended  September 30, 2005,  compared to
$5.1  million  for the same  period in the prior  year.  The  increase in volume
contributed  an  additional  $3,000 to  interest  income.  The yield on  average
interest-earning  cash  equivalents  also  increased  136 basis  points to 2.96%
during the nine months ended September 30, 2005,  compared to 1.60% for the same
period in the prior year.  The increase in yield,  which was primarily due to an
increase in market rates, contributed an additional $34,000 to interest income.

Offsetting the increase in average interest-earning assets was a decrease in the
average  balance of loans  receivable of $849,000 to $186.5 million for the nine
months ended September 30, 2005,  compared to $187.4 million for the same period
in the prior year.  Offsetting the decrease due to volume was an increase in the
average  yield of  loans  receivable  to 6.61%  during  the  nine  months  ended
September 30, 2005,  compared to 6.37% during the same period in the prior year.
The increase in the yield contributed an additional $328,000 to interest income.


                                       13

<PAGE>


During the second  quarter  of 2005,  the  Corporation  recognized  $160,000  of
additional  interest  income which consisted of $140,000 of interest income on a
commercial  lending  relationship  that  had  been in  nonaccrual  status  for a
significant  period of time and a $20,000  prepayment  penalty  on a  commercial
mortgage.  These amounts are included in interest income and affect the yield on
the loan portfolio for the period.  Net of this additional  income, the yield on
the loan portfolio and the net interest  margin would have been 6.49% and 3.72%,
respectively, during the nine month period ending September 30, 2005 compared to
6.37% and 3.76%, respectively, during the same period in the prior year.

Interest expense.  Interest expense  increased  $304,000 or 8.0% to $4.1 million
for the nine months ended  September 30, 2005,  compared to $3.8 million for the
same  period in the  prior  year.  This  increase  in  interest  expense  can be
attributed   to  an  increase  in  the  average   balance  of   interest-bearing
liabilities,  as average  interest-bearing  deposits increased to $190.8 million
during the nine months  ended  September  30, 2005,  compared to $186.3  million
during  the  same  period  in  the  prior  year.  Offsetting  this  increase  in
interest-bearing  liabilities  was a decrease in the average balance of borrowed
funds to $15.4 million during the nine months ended September 30, 2005, compared
to $15.7 million  during the same period in the prior year. The interest rate on
average  interest-bearing  liabilities  was 2.66% and 2.51% for the nine  months
ended  September 30, 2005 and 2004,  respectively.  The average cost of deposits
was 2.54%  and 2.38% for the nine  months  ended  September  30,  2005 and 2004,
respectively.  The  increase in rate is  primarily a result of $13.8  million of
step up certificates of deposit that were originally opened in 2001 and 2002 and
have reached that final step in the product  cycle.  The average  yield of these
certificates is 6.02%. They are scheduled to mature throughout 2006.


                                       14

<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.

<TABLE>
<CAPTION>

                                                                      Nine months ended September 30,
                                                --------------------------------------------------------------------------------

                                                                   2005                                    2004
                                                ---------------------------------------  ---------------------------------------
                                                  Average                     Yield /      Average                     Yield /
(Dollar amounts in thousands)                     Balance       Interest       Rate        Balance       Interest       Rate
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>         <C>          <C>             <C>         <C>
Interest-earning assets:
------------------------
 Loans, taxable                                $    179,402  $      8,882         6.62% $    179,929  $      8,578         6.37%
 Loans, tax exempt                                    7,104           335         6.30%        7,426           352         6.33%
                                                ------------  ------------ ------------  ------------  ------------ ------------
   Total Loans Receivable                           186,506         9,217         6.61%      187,355         8,930         6.37%
                                                ------------  ------------ ------------  ------------  ------------ ------------

 Securities, taxable                                 48,246         1,301         3.61%       38,495           990         3.44%
 Securities, tax exempt                              15,480           740         6.39%       15,330           742         6.46%
                                                ------------  ------------ ------------  ------------  ------------ ------------
   Total Securities                                  63,726         2,041         4.28%       53,825         1,732         4.30%
                                                ------------  ------------ ------------  ------------  ------------ ------------

 Interest-earning cash equivalents                    3,657            72         2.63%        3,331            32         1.28%
 Federal bank stocks                                  1,584            44         3.71%        1,763            29         2.20%
                                                ------------  ------------ ------------  ------------  ------------ ------------
   Total Interest-Earning Cash Equivalents            5,241           116         2.96%        5,094            61         1.60%
                                                ------------  ------------ ------------  ------------  ------------ ------------

 Total interest-earning assets                      255,473        11,374         5.95%      246,274        10,723         5.82%
   Cash and due from banks                            7,466                                   7,007
   Other noninterest-earning assets                  12,270                                  11,904
                                                ------------                            ------------

   Total assets                                $    275,209                            $    265,185
                                                ============                            ============

Interest-bearing liabilities:
-----------------------------
 Interest-bearing demand deposits              $     79,977  $        434         0.73% $     76,373  $        318         0.56%
 Time deposits                                      110,849         3,186         3.84%      109,894         3,004         3.65%
                                                ------------  ------------ ------------  ------------  ------------ ------------
   Total Interest-Bearing Deposits                  190,826         3,620         2.54%      186,267         3,322         2.38%
                                                ------------  ------------ ------------  ------------  ------------ ------------

 Borrowed funds, term                                15,000           470         4.19%       15,000           470         4.19%
 Borrowed funds, overnight                              358            11         4.11%          672             5         0.99%
                                                ------------  ------------ ------------  ------------  ------------ ------------
   Total Borrowed Funds                              15,358           481         4.19%       15,672           475         4.05%
                                                ------------  ------------ ------------  ------------  ------------ ------------

 Total interest-bearing liabilities                 206,184         4,101         2.66%      201,939         3,797         2.51%
   Noninterest-bearing demand deposits               42,249             -            -        38,326             -            -
                                                ------------  ------------ ------------  ------------  ------------ ------------

  Funding and cost of funds                         248,433         4,101         2.21%      240,265         3,797         2.11%
   Other noninterest-bearing liabilities              2,551                                   2,016
                                                ------------                            ------------

   Total liabilities                                250,984                                 242,281
   Stockholders' equity                              24,225                                  22,904
                                                ------------                            ------------

   Total liabilities and stockholders' equity  $    275,209                            $    265,185
                                                ============ ------------               ============ ------------

Net interest income                                          $      7,273                             $      6,926
                                                              ============                             ============

Interest rate spread (difference between                                          3.29%                                    3.31%
                                                                           ============                             ============
 weighted average rate on interest-earning
 assets and interest-bearing liabilities)

Net interest margin (net interest                                                 3.81%                                    3.76%
                                                                           ============                             ============
 income as a percentage of average
 interest-earning assets)

</TABLE>


                                       15

<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,
                                                         2005 versus 2004
                                                   Increase (Decrease) due to
                                         ----------------------------------------------
 (Dollar amounts in thousands)               Volume           Rate           Total
                                        -----------------------------------------------
<S>                                      <C>             <C>             <C>
 Interest income:
    Loans                                $         (41)  $         328   $         287
    Securities                                     317              (8)            309
    Interest-earning cash equivalents                3              37              40
    Federal bank stocks                             (3)             18              15
                                          -------------   -------------   -------------

    Total interest-earning assets                  276             375             651
                                          -------------   -------------   -------------

 Interest expense:
    Deposits                                        83             215             298
    Borrowed funds                                 (10)             16               6
                                          -------------   -------------   -------------

    Total interest-bearing liabilities              73             231             304
                                          -------------   -------------   -------------

 Net interest income                     $         203   $         144   $         347
                                          =============   =============   =============

</TABLE>

Provision for loan losses. The Corporation records provisions for loan losses to
bring the total  allowance  for loan losses to a level deemed  adequate to cover
probable losses  inherent in the loan portfolio.  In determining the appropriate
level of the allowance for loan losses,  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, 2005 and 2004 is as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                                         At or for the
                                                     At or for the nine months ended       year ended
                                                              September 30,               December 31,
                                                    ----------------------------------  ----------------
(Dollar amounts in thousands)                              2005              2004              2004
--------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>                         <C>
Balance at the beginning of the period              $         1,810   $         1,777             1,777
Provision for Loan Losses                                       145               170               290
Charge-Offs                                                     (99)             (273)             (318)
Recoveries                                                       37                42                61
                                                     ---------------   ---------------   ---------------
Balance at the end of the period                    $         1,893   $         1,716   $         1,810
                                                     ===============   ===============   ===============

Non-performing loans                                $         1,608   $         1,244               840
Non-performing assets                                         1,705             1,314               911
Non-performing loans to total loans                            0.84%             0.67%             0.46%
Non-performing assets to total assets                          0.62%             0.49%             0.33%
Allowance for loan losses to total loans                       0.99%             0.93%             1.00%
Allowance for loan losses to non-performing loans            117.72%           137.94%           215.48%
--------------------------------------------------------------------------------------------------------

</TABLE>


                                       16

<PAGE>


The  provision  for loan losses  decreased  $25,000 or 14.7% to $145,000 for the
nine month period ended  September 30, 2005 from $170,000 for the same period in
the  prior  year.  Management's  evaluation  of the  loan  portfolio,  including
economic trends,  regulatory considerations and other factors contributed to the
recognition  of $145,000 in the provision for loan losses during the nine months
ended September 30, 2005.

Noninterest  income.  Noninterest  income  increased  $756,000  or 47.9% to $2.3
million  during the nine  months  ended  September  30,  2005,  compared to $1.6
million  during  the  same  period  in the  prior  year.  This  increase  can be
attributed  to increases  in customer  fees and  services  charges,  commissions
earned on financial services, gains on sales of securities and other noninterest
income  of  $188,000,  $337,000,  $253,000  and  $33,000,  respectively.   These
increases  were  offset  by  decreases  in the  gains on the  sale of loans  and
earnings on bank-owned life insurance of $32,000 and $23,000, respectively.

The  increase in  customer  fees and  services  charges of $188,000 or 22.5% was
primarily a result of the new overdraft privilege program, which was implemented
in April 2005.

In  July  2004  the  Corporation  entered  into  an  agreement  with  Blue  Vase
Securities,  LLC to provide investment  advisory services to our customers,  and
operates as Farmers National Financial Services. Blue Vase Securities,  LLC is a
nation-wide,   full-service,   independent  broker/dealer  that  offers  various
services such as investments,  insurance, wealth management,  advisory services,
estate and retirement planning and account  consolidation.  This partnership has
enabled  the Bank to provide  customers  with  financial  solutions  that extend
outside the Bank's ordinary deposit products and services. The Corporation earns
commissions from providing this service and recognized  $348,000 during the nine
months ended  September 30, 2005 and $11,000 during the same period in the prior
year.

The  increase  in the gains on the sale of  securities  of  $253,000 to $510,000
during the nine months ended September 30, 2005, compared to $257,000 during the
same  period in the prior year was the result of the sale of  marketable  equity
securities.  The  sale  of  securities  resulted  from  management's  change  in
philosophy  of investing in large  regional  banks to becoming  shareholders  in
local community financial institutions.

The  increase in other  noninterest  income of $33,000 or 12.3% can be primarily
attributed to the sale of foreclosed real estate in the first quarter 2005 which
resulted in a $30,000 gain.

Noninterest  expense.  Noninterest  expense increased  $897,000 or 15.2% to $6.8
million  during the nine  months  ended  September  30,  2005,  compared to $5.9
million  during the same period in the prior year.  This increase in noninterest
expense can be attributed to increases in  compensation  and employee  benefits,
premises and equipment and other noninterest expenses of $541,000,  $163,000 and
$189,000, respectively.

Compensation and employee benefits expense  increased  $541,000 or 16.6% to $3.8
million  during the nine  months  ended  September  30,  2005,  compared to $3.3
million  for the same period in the prior year.  Normal  annual  salary and wage
adjustments,  additional  wages paid to summer  part-time  employees,  increased
health  insurance  costs,  higher  director's  fees  and  commissions  paid to a
financial services  representative of $144,000 were the major components of this
increase. Also contributing to the increase was the addition of a new compliance
officer and a new credit analyst in November 2004 and  additional  accruals made
for the Bank's  incentive  program and pension  plan of  $126,000  and  $30,000,
respectively.

Premises  and  equipment  expense  increased  $163,000 or 17.7% to $1.1  million
during the nine months ended  September  30, 2005,  compared to $919,000 for the
same period in the prior year.  This  increase can be primarily  attributed to a
change in the  estimated  useful  life of an asset which will be replaced in the
fourth quarter 2005.  Additional  depreciation related to this asset of $108,000
was recorded during the nine months ended September 30, 2005 as a result of this
change and will continue  through  October 2005 for a total expense of $135,000.
Also  contributing  to this  increase  were  increases in building and equipment
depreciation expenses, utilities, repairs and maintenance and other building and
equipment expenses.


                                       17

<PAGE>


Other noninterest expense increased $189,000 or 11.1% to $1.9 million during the
nine months  ended  September  30,  2005,  compared to $1.7 million for the same
period in the prior year. This increase can be attributed primarily to increases
in professional fees, software  depreciation,  travel and entertainment expenses
and other  noninterest  expenses.  Partially  offsetting  these  increases  were
decreases in  telephone  and  communication  expenses,  Pennsylvania  use taxes,
marketing and postage, as discussed below.

     o    Telephone and communication  expenses decreased $56,000 as a result of
          the  resolution of contract  issues  related to two telephone  vendors
          during 2004.
     o    Postage  decreased $11,000 as a result of a new automail system placed
          in  service  in the  fourth  quarter  2004  which  allows  us to  take
          advantage of discounted mail rates on first class postage.
     o    Travel and entertainment expenses increased $49,000 as a result of the
          increased  efforts in the Corporate Banking area and travel associated
          with training  throughout the  organization as well as the increase in
          the IRS mileage  rate in 2005.  Also  contributing  to the increase in
          entertainment  expenses was the first annual golf outing hosted by the
          Corporate Banking department in the second quarter of 2005.
     o    Professional  fees increased  $76,000 as a result of costs  associated
          with Sarbanes-Oxley compliance and the resolution of sales and use tax
          issues.

Provision for income taxes. The provision for income taxes increased $125,000 or
37.5% to $458,000 for the nine months  ended  September  30,  2005,  compared to
$333,000 for the same period in the prior year due  primarily to the increase in
the Corporation's pre-tax earnings base between the periods ending September 30,
2005 and  2004.  Also  contributing  to the  increase  was the  increase  in the
effective tax rate to 19.6% in 2005 compared to 15.8% in 2004. The effective tax
rate in 2004 was lower as a result of the generation of general business credits
related  to the  renovation  of our main  headquarters.  There  were no  general
business credits generated 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.

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, 2005, the Corporation used its sources of funds primarily to
fund loan  originations.  As of such date, the Corporation had outstanding  loan
commitments,  including  undisbursed  loans and amounts  available  under credit
lines, totaling $18.1 million, and standby letters of credit totaling $577,000.

At September 30, 2005, time deposits  amounted to $110.6 million or 48.3% of the
Corporation's total consolidated deposits, including approximately $43.7 million
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, 2005, the Corporation's  borrowing  capacity
with the FHLB, net of funds borrowed, was $111.5 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.


                                       18

<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,
2005, the Corporation's interest-earning assets maturing or repricing within one
year totaled $78.1 million while the Corporation's  interest-bearing liabilities
maturing or repricing within one-year totaled $82.6 million, providing an excess
of interest-bearing  liabilities over interest-earning assets of $4.5 million or
a negative 1.7% of total assets.  At September 30, 2005,  the  percentage of the
Corporation's  assets to liabilities  maturing or repricing  within one year was
94.6%.

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, 2004.

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 Principal  Financial and  Accounting  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).

As of the quarter  ended  September  30, 2005,  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 Principal  Financial and Accounting  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 Principal
Financial and Accounting  Officer  concluded that the  Corporation's  disclosure
controls and procedures were effective.


                                       19

<PAGE>


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 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 Principal Financial and Accounting
             Officer
Exhibit 32.1 CEO Certification Pursuant to 18 U.S.C. Section 1350
Exhibit 32.2 PFO Certification Pursuant to 18 U.S.C. Section 1350


                                       20

<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 14, 2005         By:      /s/ David L. Cox
                                 -----------------------------------------------
                                 David L. Cox
                                 Chairman of the Board,
                                 President and Chief Executive Officer

Date:  November 14, 2005         By:      /s/ Shelly L. Rhoades
                                 -----------------------------------------------
                                 Treasurer
                                 (Principal Financial and Accounting Officer)


                                       21