================================================================================

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

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2008
                                                 --------------

                                       or

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


         For the transition period from _____________ to _____________


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


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


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


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


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


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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.       Yes |X| No |_|

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

     Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |_|
Smaller reporting company |X|

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

     The  number of shares  outstanding  of the  Registrant's  common  stock was
1,267,835 at May 14, 2008.

================================================================================
<PAGE>
<TABLE>
<CAPTION>
<S>                   <C> <C>               <C> <C>                                           <C>
                            EMCLAIRE FINANCIAL CORP.

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q


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

Item 1.         Interim Financial Statements (Unaudited)

                Consolidated Balance Sheets as of
                March 31, 2008 and December 31, 2007...........................................1

                Consolidated Statements of Income for the three
                months ended March 31, 2008 and 2007...........................................2

                Condensed Consolidated Statements of Cash Flows for the three
                months ended March 31, 2008 and 2007...........................................3

                Consolidated Statements of Changes in Stockholders'
                Equity for the three months ended March 31, 2008 and 2007......................4

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

Item 2.         Management's Discussion and Analysis
                of Financial Condition and Results of Operations..............................11

Item 3.         Quantitative and Qualitative Disclosures About Market Risk....................17

Item 4.         Controls and Procedures.......................................................18

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

Item 1.         Legal Proceedings.............................................................18

Item 1A.        Risk Factors..................................................................18

Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds...................19

Item 3.         Defaults Upon Senior Securities...............................................19

Item 4T.        Submission of Matters to a Vote of Security Holders...........................19

Item 5.         Other Information.............................................................19

Item 6.         Exhibits......................................................................19

Signatures      ..............................................................................20
</TABLE>

<PAGE>
                         PART I - FINANCIAL INFORMATION
                         ------------------------------

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

                     Emclaire Financial Corp. and Subsidiary
                           Consolidated Balance Sheets
             As of March 31, 2008 (Unaudited) and December 31, 2007
                (Dollar amounts in thousands, except share data)


                                                  March 31,       December 31,
                                                   2008               2007
                                             ---------------     ---------------

                   Assets
                   ------

Cash and due from banks                      $         8,079     $       10,288
Interest earning deposits with banks                   6,825                195
                                             ---------------     ---------------
  Cash and cash equivalents                           14,904             10,483
Securities available for sale, at fair value          55,078             51,919
Loans receivable, net of allowance for loan
 losses of $2,219 and $2,157                         232,863            229,819
Federal bank stocks, at cost                           2,697              2,662
Bank-owned life insurance                              5,036              4,987
Accrued interest receivable                            1,360              1,365
Premises and equipment, net                            8,091              7,904
Goodwill                                               1,422              1,422
Prepaid expenses and other assets                      1,071              1,159
                                             ---------------     ---------------

    Total Assets                             $       322,522     $      311,720
                                             ===============     ===============


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

Liabilities:
 Deposits:
  Non-interest bearing                       $        48,184     $       47,111
  Interest bearing                                   203,347            197,151
                                             ---------------     ---------------
    Total deposits                                   251,531            244,262
 Short-term borrowed funds                             8,757              5,400
 Long-term borrowed funds                             35,000             35,000
 Accrued interest payable                                780                771
 Accrued expenses and other liabilities                1,368              1,584
                                             ---------------     ---------------

  Total Liabilities                                  297,436            287,017
                                             ---------------     ---------------

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                           10,923             10,902
 Treasury stock, at cost; 128,017 shares              (2,653)            (2,653)
 Retained earnings                                    15,267             15,114
 Accumulated other comprehensive loss                   (196)              (405)
                                             ---------------     ---------------

   Total Stockholders' Equity                         25,086             24,703
                                             ---------------     ---------------

    Total Liabilities and Stockholders'
     Equity                                  $       322,522     $      311,720
                                             ===============     ===============

 Common shares outstanding                         1,267,835          1,267,835


See accompanying notes to consolidated financial statements.

                                       1
<PAGE>
                     Emclaire Financial Corp. and Subsidiary
                        Consolidated Statements of Income
         For the three months ended March 31, 2008 and 2007 (Unaudited)
              (Dollar amounts in thousands, except per share data)


                                                 For the three months ended
                                                          March 31,
                                             -----------------------------------
                                                   2008                2007
                                             ---------------     ---------------

Interest and dividend income:
  Loans receivable, including fees           $         3,928     $         3,604
  Securities:
    Taxable                                              378                 364
    Exempt from federal income tax                       161                 173
  Federal bank stocks                                     30                  50
  Deposits with banks                                     23                 121
                                             ---------------     ---------------
   Total interest and dividend income                  4,520               4,312
                                             ---------------     ---------------

Interest expense:
  Deposits                                             1,572               1,667
  Borrowed funds                                         405                 336
                                             ---------------     ---------------
   Total interest expense                              1,977               2,003
                                             ---------------     ---------------

Net interest income                                    2,543               2,309
  Provision for loan losses                               60                  45
                                             ---------------     ---------------

Net interest income after provision for loan
 losses                                                2,483               2,264
                                             ---------------     ---------------

Noninterest income:
  Fees and service charges                               358                 326
  Commissions on financial services                      118                 162
  Net gain on available for sale securities                -                  58
  Net gain on sales of loans                              14                   -
  Earnings on bank-owned life insurance
   (BOLI)                                                 56                  53
  Other                                                  114                 131
                                             ---------------     ---------------
   Total noninterest income                              660                 730
                                             ---------------     ---------------

Noninterest expense:
  Compensation and employee benefits                   1,417               1,306
  Premises and equipment                                 420                 400
  Other                                                  576                 604
                                             ---------------     ---------------
   Total noninterest expense                           2,413               2,310
                                             ---------------     ---------------

Income before provision for income taxes                 730                 684
  Provision for income taxes                             171                 133
                                             ---------------     ---------------

Net income                                   $           559     $           551
                                             ===============     ===============

  Basic and diluted earnings per share       $          0.44     $          0.43

  Average common shares outstanding                1,267,835           1,267,835


See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
                     Emclaire Financial Corp. and Subsidiary
                 Condensed Consolidated Statements of Cash Flows
         For the three months ended March 31, 2008 and 2007 (Unaudited)
                          (Dollar amounts in thousands)


                                                 For the three months ended
                                                          March 31,
                                             -----------------------------------
                                                  2008                2007
                                             ---------------     ---------------

Cash flows from operating activities
 Net income                                  $          559      $          551
 Adjustments to reconcile net income to
  net cash provided by operating
  activities:
    Depreciation and amortization of
     premises and equipment                             165                 170
    Provision for loan losses                            60                  45
    Amortization of premiums and
     accretion of discounts, net                        (35)                 (2)
    Amortization of mortgage servicing
     rights                                               5                   4
    Amortization of deferred loan costs                  70                  52
    Realized gains on sales of available
     for sale securities, net                             -                 (58)
    Net gains on sales of loans                         (14)                  -
    Originations of loans sold                         (355)               (312)
    Proceeds from the sale of loans                     357                 312
    Stock compensation expense                           20                   -
    Earnings on bank owned life
     insurance, net                                     (49)                (47)
    (Increase) decrease in accrued
     interest receivable                                  5                (102)
    Increase in prepaid expenses and
     other assets                                       (25)               (191)
    Increase (decrease) in accrued
     interest payable                                     9                 (71)
    Increase (decrease) in accrued
     expenses and other liabilities                    (216)                435
                                             ---------------     ---------------
  Net cash provided by operating
   activities                                           556                 786
                                             ---------------     ---------------

Cash flows from investing activities
 Loan originations and principal
  collections, net                                   (3,164)                312
 Available for sale securities:
       Sales                                              -                 265
       Maturities, repayments and calls              24,486                 126
       Purchases                                    (27,291)             (5,647)
 (Purchase) redemption of federal bank
  stocks                                                (35)                  8
 Purchases of premises and equipment                   (352)               (103)
                                             ---------------     ---------------
  Net cash used in investing activities              (6,356)             (5,039)
                                             ---------------     ---------------

Cash flows from financing activities
 Net increase (decrease) in deposits                  7,269              (1,021)
 Net increase in short-term borrowed
  funds                                               3,357                   -
 Dividends paid on common stock                        (405)               (368)
                                             ---------------     ---------------
  Net cash provided by (used in)
   financing activities                              10,221              (1,389)
                                             ---------------     ---------------

Net increase (decrease) in cash and cash
 equivalents                                          4,421              (5,642)
Cash and cash equivalents at beginning of
 period                                              10,483              16,717
                                             ---------------     ---------------
Cash and cash equivalents at end of
 period                                      $       14,904      $       11,075
                                             ===============     ===============

Supplemental information:
 Interest paid                               $        1,968      $        2,074


See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
                     Emclaire Financial Corp. and Subsidiary
           Consolidated Statements of Changes in Stockholders' Equity
         For the three months ended March 31, 2008 and 2007 (Unaudited)
              (Dollar amounts in thousands, except per share data)


                                                 For the three months ended
                                                          March 31,
                                             -----------------------------------
                                                  2008                2007
                                             ---------------     ---------------

Balance at beginning of period               $       24,703      $       23,917

Net income                                              559                 551

Other comprehensive income (loss):
  Change in net unrealized gains on available
  for sale securities, net of taxes                     209                   7
  Less reclassification adjustment for gains
   included
  in net income, net of taxes                             -                 (38)
                                             ---------------     ---------------
  Other comprehensive income (loss)                     209                 (31)
                                             ---------------     ---------------

Total comprehensive income                              768                 520

Stock compensation expense                               20                   -

Dividends declared                                     (405)               (368)
                                             ---------------     ---------------

Balance at end of period                     $       25,086      $       24,069
                                             ===============     ===============

Common cash dividend per share               $         0.32      $         0.29
                                             ===============     ===============


See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                     Emclaire Financial Corp. and Subsidiary
             Notes to Consolidated Financial Statements (Unaudited)

1.   Nature of Operations and Basis of Presentation.

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

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

     The  accompanying  unaudited  consolidated  financial  statements  for  the
     interim periods  include all  adjustments,  consisting of normal  recurring
     accruals,  which are  necessary,  in the opinion of  management,  to fairly
     reflect the Corporation's  consolidated  financial  position and results of
     operations.  Additionally,  these consolidated financial statements for the
     interim periods have been prepared in accordance with  instructions for the
     Securities and Exchange Commission's Form 10-Q and therefore do not include
     all  information  or footnotes  necessary  for a complete  presentation  of
     financial  condition,  results of  operations  and cash flows in conformity
     with  accounting  principles  generally  accepted  in the United  States of
     America.  For  further  information,  refer  to  the  audited  consolidated
     financial  statements and footnotes thereto for the year ended December 31,
     2007,  as contained in the  Corporation's  2007 Annual  Report of Form 10-K
     filed with the Securities and Exchange Commission.

     The balance  sheet at December  31, 2007 has been  derived from the audited
     financial  statements at that date but does not include all the information
     and footnotes  required by generally  accepted  accounting  principles  for
     complete financial statements.

     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.   Earnings per Common Share.

     Basic earnings per common share (EPS) excludes  dilution and is computed by
     dividing  net  income by the  weighted  average  number  of  common  shares
     outstanding during the period.  Diluted EPS reflects the potential dilution
     that could occur if  securities  or  contracts  to issue  common stock were
     exercised  or  converted  into common  stock or resulted in the issuance of
     common stock that then shared in the earnings of the  Corporation.  Options
     on 85,000  shares of common stock were not  included in  computing  diluted
     earnings per share because their effects were not dilutive.

                                       5
<PAGE>
3.   Securities.

     The  Corporation's  securities as of the respective dates are summarized as
     follows:
<TABLE>
<CAPTION>
<S>                                         <C>             <C>            <C>             <C>
-----------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)                Amortized      Unrealized     Unrealized         Fair
                                               cost           gains          losses          value
-----------------------------------------------------------------------------------------------------

Available for sale:
-------------------
  March 31, 2008:
    U.S. Government agencies and related
     entities                               $    16,496     $      145     $        -      $   16,642
    Mortgage-backed securities                   14,476             62             (6)         14,531
    Municipal securities                         13,686            669              -          14,354
    Corporate securities                          5,987              -             (1)          5,986
    Equity securities                             4,265              -           (701)          3,565
                                            -----------     ----------     -----------     ----------
                                            $    54,910     $      876     $     (707)     $   55,078
                                            ===========     ==========     ===========     ==========
  December 31, 2007:
    U.S. Government agencies and related
     entities                               $    29,356     $       37     $      (59)     $   29,334
    Mortgage-backed securities                    1,932              -            (48)          1,884
    Municipal securities                         13,685            566              -          14,251
    Corporate securities                          2,939              -              -           2,939
    Equity securities                             4,156              -           (645)          3,511
                                            -----------     ----------     -----------     ----------
                                            $    52,068     $      603     $     (752)     $   51,919
                                            ===========     ==========     ===========     ==========
-----------------------------------------------------------------------------------------------------
</TABLE>

     Management  evaluates  securities  for other than  temporary  impairment at
     least on a quarterly  basis,  and more frequently when economic,  market or
     other concerns warrant such  evaluation.  Consideration is given to (1) the
     length of time and the  extent  to which the fair  value has been less than
     cost, (2) the financial condition and near-term prospects of the issuer and
     (3) the intent and ability of the  Corporation  to retain its investment in
     the issuer  for a period of time  sufficient  to allow for any  anticipated
     recovery in fair value. Based on these considerations, the Corporation does
     not consider any investment to be other than temporarily  impaired at March
     31, 2008.

4.   Loans Receivable.

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

--------------------------------------------------------------------------------
(Dollar amounts in thousands)                   March 31,           December 31,
                                                   2008                2007
--------------------------------------------------------------------------------

Mortgage loans on real estate:
  Residential first mortgages                $        65,798     $        65,706
  Home equity loans and lines of credit               48,892              49,426
  Commercial real estate                              73,714              71,599
                                             ---------------     ---------------
                                                     188,404             186,731
Other loans:
  Commercial business                                 37,673              35,566
  Consumer                                             9,005               9,679
                                             ---------------     ---------------
                                                      46,678              45,245
                                             ---------------     ---------------

Total loans, gross                                   235,082             231,976

Less allowance for loan losses                         2,219               2,157
                                             ---------------     ---------------

Total loans, net                             $       232,863     $       229,819
                                             ===============     ===============
--------------------------------------------------------------------------------

                                       6
<PAGE>
5.   Deposits.

     The  Corporation's  deposits as of the  respective  dates are summarized as
     follows:
<TABLE>
<CAPTION>
<S>                                          <C>                 <C>      <C>                  <C>
----------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)                   March 31, 2008                December 31, 2007
----------------------------------------------------------------------------------------------------
              Type of accounts                 Amount           %           Amount            %
----------------------------------------------------------------------    --------------------------

Non-interest bearing deposits                $   48,184          19.2%    $    47,111          19.3%
Interest bearing demand deposits                 86,345          34.3%         77,614          31.8%
Time deposits                                   117,002          46.5%        119,537          48.9%
                                             ----------     ----------    -----------     ----------

                                             $  251,531         100.0%    $   244,262         100.0%
                                             ==========     ==========    ===========     ==========
----------------------------------------------------------------------------------------------------
</TABLE>

6.   Guarantees.

     The Corporation does not issue any guarantees that would require  liability
     recognition  or  disclosure,  other  than its  standby  letters  of credit.
     Standby  letters  of  credit  are  conditional  commitments  issued  by the
     Corporation to guarantee the performance of a customer to a third party. Of
     these  letters of credit at March 31, 2008,  $85,000 will expire within the
     next seventeen months,  $848,000 will  automatically  renew within the next
     twelve  months and $206,000  will  automatically  renew within  thirteen to
     twenty-five  months.  The Corporation,  generally,  holds collateral and/or
     personal guarantees supporting these commitments.  Management believes that
     the  proceeds   obtained  through  a  liquidation  of  collateral  and  the
     enforcement of guarantees would be sufficient to cover the potential amount
     of future payments required under the corresponding guarantees.  The credit
     risk involved in issuing letters of credit is essentially the same as those
     that are involved in extending  loan  facilities to customers.  The current
     amount of the liability as of March 31, 2008 for  guarantees  under standby
     letters of credit issued is not material.

7.   Employee Benefit Plans.

     The  Corporation  maintains a defined  contribution  401(k) Plan.  Eligible
     employees participate by providing tax-deferred  contributions up to 20% of
     qualified compensation. Employee contributions are vested at all times. The
     Corporation   provides  a  matching   contribution  of  up  to  4%  of  the
     participant's  salary.  Matching  contributions  for the three months ended
     March 31, 2008 and 2007 amounted to $37,000 and $33,000, respectively.

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

     The Corporation uses December 31 as the measurement date for its plans.

                                       7
<PAGE>
7.   Employee Benefit Plans (continued).

     The components of the periodic pension cost are as follows:


                                                      For the three months ended
(Dollar amounts in thousands)                                  March 31,
                                                      --------------------------
                                                          2008           2007
-----------------------------------------------------------------     ----------

Service cost                                           $      63      $      57
Interest cost                                                 71             65
Expected return on plan assets                               (79)           (77)
Transition asset                                               -             (2)
Prior service costs                                           (8)            (8)
Recognized net actuarial (gain) loss                           4              7
                                                       ----------     ----------

Net periodic pension cost                              $      51      $      42
                                                       ==========     ==========


     The expected  rate of return on plan assets was 8.50% for the periods ended
     March 31,  2008 and  2007.  The  Corporation  previously  disclosed  in its
     financial  statements for the year ended December 31, 2007 that it expected
     to  contribute  $335,000 to its pension plan in 2008. As of March 31, 2008,
     there have been no  contributions.  The Corporation  presently  anticipates
     contributing $335,000 to its pension plan in 2008.

8.   Stock Compensation Plans.

     In May 2007,  the  Corporation  adopted the 2007 Stock  Incentive  Plan and
     Trust.  Under the Plan, the Corporation may grant options to its directors,
     officers and employees for up to 177,496 shares of common stock.  Incentive
     stock options, non-incentive or compensatory stock options and share awards
     may be granted under the Plan.  The exercise  price of each option shall at
     least  equal the  market  price of a share of  common  stock on the date of
     grant and have a  contractual  term of ten  years.  Options  shall vest and
     become  exercisable  at the  rate,  to  the  extent  and  subject  to  such
     limitations as may be specified by the Corporation. Effective May 2007, the
     Corporation adopted SFAS No. 123(R),  Share-Based  Payment,  which requires
     that  compensation  cost related to  share-based  payment  transactions  be
     recognized in the financial statements with measurement based upon the fair
     value of the equity or liability  instruments  issued.  For the three-month
     period ended March 31, 2008, the  Corporation  recognized  $20,000,  net of
     taxes, in compensation expense for stock options.

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted average
     assumptions:

                                For the three months ended
                                      March 31, 2008
------------------------------------------------------------

Dividend yield                            4.46%
Expected life                            10 years
Expected volatility                       14.09%
Risk-free interest rate                   5.10%
------------------------------------------------------------


     The expected  volatility is based on historical  stock price  fluctuations.
     The risk-free interest rates for periods within the contractual life of the
     awards are based on the U.S.  Treasury yield curve in effect at the time of
     the grant.  The expected  life is based on the maximum term of the options.
     The dividend  yield  assumption is based on the  Corporation's  history and
     expectation of dividend payouts.

                                        8
<PAGE>
8.   Stock Compensation Plans (continued).

     A summary  of option  activity  under  the Plan as of March 31,  2008,  and
     changes during the period then ended is presented below:
<TABLE>
<CAPTION>
<S>                          <C>                 <C>                                             <C>
----------------------------------------------------------------------------------------------------
                                           Weighted-                              Weighted-Average
                                            Average            Aggregate           Remaining Term
                          Options       Exercise Price      Intrinsic Value          (in years)
----------------------------------------------------------------------------------------------------

Outstanding at the
 beginning of the year       84,000              $26.00                                          9.2
Granted                       1,000               25.90                                          9.9
Exercised                         -                   -                                            -
Forfeited                         -                   -                                            -
                         ----------     ---------------     ---------------     --------------------
Outstanding as of March
 31, 2008                    85,000              $25.99                  $-                      9.2
                         ==========     ===============     ===============     ====================

Exercisable as of March
 31, 2008                         -                  $-                  $-                        -
                         ==========     ===============     ===============     ====================
</TABLE>


     A summary of the status of the  Corporation's  nonvested shares as of March
     31, 2008, and changes during the period then ended is presented below:


----------------------------------------------------------------------
                                                   Weighted-Average
                                  Options       Grant-date Fair Value
----------------------------------------------------------------------

Nonvested at the beginning of
 the year                              84,000   $                 3.39
Granted                                 1,000                     3.09
Vested                                      -                        -
Forfeited                                   -                        -
                              ---------------   ----------------------
Nonvested as of March 31, 2008         85,000   $                 3.39
                              ===============   ======================
----------------------------------------------------------------------


     As of March 31, 2008, there was $236,000 of total unrecognized compensation
     cost related to nonvested  share-based  compensation  arrangements  granted
     under the Plan.  That cost is  expected  to be  recognized  over an average
     period of 2.2 years.

9.   Fair Values of Financial Instruments.

     In September 2006, the Financial  Accounting  Standards Board (FASB) issued
     Statement  of Financial  Accounting  Standards  (SFAS) No. 157,  Fair Value
     Measurements (SFAS 157), which defines fair value,  establishes a framework
     for measuring fair value under  generally  accepted  accounting  principles
     (GAAP),  and expands  disclosures about fair value  measurements.  SFAS 157
     applies to other  accounting  pronouncements  that  require or permit  fair
     value measurements.  The new guidance is effective for financial statements
     issued for fiscal years  beginning after November 15, 2007, and for interim
     periods  within  those  fiscal  years.  The  Corporation  adopted  SFAS 157
     effective  January 1, 2008 for financial  assets and  liabilities  that are
     measured and reported at fair value.  There was no impact from the adoption
     of  SFAS  157  on  the  amounts  reported  in  the  consolidated  financial
     statements. The primary effect of SFAS 157 on the Corporation was to expand
     the required  disclosures  pertaining to the methods used to determine fair
     values.

     SFAS 157 establishes a fair value hierarchy that  prioritizes the inputs to
     valuation  methods  used to measure  fair value.  The  hierarchy  gives the
     highest  priority  to  unadjusted  quoted  prices  in  active  markets  for
     identical  assets or  liabilities  (Level 1  measurements)  and the  lowest
     priority to unobservable inputs (Level 3 measurements). The three levels of
     the fair value hierarchy under SFAS 157 are as follows:

          Level  1:  Unadjusted   quoted  prices  in  active  markets  that  are
          accessible at the measurement date for identical,  unrestricted assets
          or liabilities.

          Level 2: Quoted prices in markets that are not active,  or inputs that
          are observable  either directly or indirectly,  for  substantially the
          full term of the asset or liability.

                                       9
<PAGE>
9.   Fair Values of Financial Instruments (continued).

          Level 3: Prices or valuation  techniques  that require inputs that are
          both significant to the fair value measurement and unobservable  (i.e.
          supported with little or no market activity).

     An asset or liability's  level within the fair value  hierarchy is based on
     the  lowest  level  of  input  that  is   significant  to  the  fair  value
     measurement.

     For assets  measured  at fair value on a  recurring  basis,  the fair value
     measurements  by level  within the fair value  hierarchy  used at March 31,
     2008 are as follows:
<TABLE>
<CAPTION>
<S>                          <C>            <C>                  <C>                              <C>
----------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
                                            (Level 1) Quoted       (Level 2)
                                               Prices in           Significant          (Level 3)
                                             Active Markets           Other            Significant
                                             for Identical         Observable         Unobservable
Description                 March 31, 2008       Assets               Inputs              Inputs
----------------------------------------------------------------------------------------------------

Securities available for
 sale                        $    55,078    $          3,565     $        51,513      $           -

                             -----------    ----------------     ---------------     ---------------
                             $    55,078    $          3,565     $        51,513      $           -
                             ===========    ================     ===============     ===============
----------------------------------------------------------------------------------------------------
</TABLE>


     The  Corporation's  adoption  of SFAS  157  applies  only to its  financial
     instruments  required to be reported at fair value.  The adoption  does not
     apply to non-financial  assets and non-financial  liabilities until January
     1, 2009 in accordance with FSP FAS 157-2. The following valuation technique
     was used to measure  fair value of assets in the table above on a recurring
     basis as of March 31, 2008:

     Available for sale securities - Fair value on available for sale securities
     were based upon a market  approach.  Prices for  securities  that are fixed
     income  instruments  that are not quoted on an exchange,  but are traded in
     active markets,  are obtained through third party data service providers or
     dealer  market   participants   which  the  Corporation  has   historically
     transacted both purchases and sales of investment  securities.  As of March
     31, 2008,  all fair values on available for sale  securities  were based on
     prices  obtained  from  these  sources  and  were  based on  actual  market
     quotations for each specific security.

10.  Adoption of New Accounting Standards.

     The  Corporation  adopted the Financial  Accounting  Standards Board (FASB)
     Statement  of Financial  Accounting  Standards  (SFAS) No. 157,  Fair Value
     Measurements  (SFAS 157) effective January 1, 2008 for financial assets and
     liabilities  that are  measured  and  reported at fair value.  There was no
     impact  from  the  adoption  of SFAS  157 on the  amounts  reported  in the
     consolidated  financial  statements.  The primary effect of SFAS 157 on the
     Corporation  was to expand required  disclosures  pertaining to the methods
     used to determine fair values. See note 9 for further detail.

11.  Effect of Recently Issued Accounting Standards.

     In February  2007,  the FASB issued SFAS No. 159, The Fair Value Option for
     Financial Assets and Financial Liabilities - Including an amendment of FASB
     Statement  No.  115 (SFAS  159).  SFAS 159  permits  entities  to choose to
     measure many financial  instruments  and certain other items at fair value.
     Unrealized  gains and losses on items for which the fair  value  option has
     been elected will be  recognized in earnings at each  subsequent  reporting
     date. SFAS 159 is effective for the  Corporation  January 1, 2008. This new
     accounting  pronouncement had no effect on the  Corporation's  consolidated
     financial statements as the Corporation elected not to adopt SFAS 159.

                                       10
<PAGE>
11.  Effect of Recently Issued Accounting Standards (continued).

     In December 2007, the FASB issued SFAS No.  141(R),  Business  Combinations
     (SFAS 141R). SFAS 141R establishes  principles and requirements for how the
     acquirer of a business recognizes and measures in its financial  statements
     the  identifiable  assets  acquired,   the  liabilities  assumed,  and  any
     noncontrolling  interest in the acquiree.  SFAS 141R also provides guidance
     for  recognizing  and  measuring  the  goodwill  acquired  in the  business
     combination and determines what  information to disclose to enable users of
     the financial  statements  to evaluate the nature and financial  effects of
     the business  combination.  The guidance  will become  effective for fiscal
     years beginning after December 15, 2008. This new pronouncement will impact
     the Corporation's  accounting for business combinations completed beginning
     January 1, 2009.

     In December 2007, the FASB issued SFAS No. 160,  Noncontrolling Interest in
     Consolidated  Financial Statements - An Amendment of ARB No. 51 (SFAS 160).
     SFAS  160   establishes   accounting   and  reporting   standards  for  the
     noncontrolling  interest in a subsidiary and for the  deconsolidation  of a
     subsidiary.  The guidance will become  effective for fiscal years beginning
     after December 15, 2008, which for the Corporation will be January 1, 2009.
     The  Corporation   believes  that  this  new  pronouncement  will  have  an
     immaterial impact on its consolidated financial statements.

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  months  ended  March 31, 2008  compared  to the same  periods in 2007 and
should be read in conjunction  with the  Corporation's  December 31, 2007 Annual
Report of Form 10-K filed with the Securities  and Exchange  Commission and with
the accompanying  consolidated financial statements and notes presented on pages
1 through 11 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.

CHANGES IN FINANCIAL CONDITION

Total assets  increased  $10.8 million to $322.5  million at March 31, 2008 from
$311.7 million at December 31, 2007. This 3.5% increase  resulted from increases
in cash and cash equivalents,  securities and loans receivable, net of allowance
for loan losses, of $4.4 million,  $3.2 million and $3.0 million,  respectively.
The increase in the  Corporation's  assets was primarily  funded by increases in
customer deposits and short-term borrowed funds.

Total  liabilities  increased  $10.4 million to $297.4 million at March 31, 2008
from $287.0  million at December  31,  2007,  while total  stockholders'  equity
increased  $383,000  to $25.1  million at March 31,  2008 from $24.7  million at
December 31, 2007.  The increase in total  liabilities  resulted  primarily from
increases in customer deposits of $7.3 million and short-term  borrowed funds of
$3.4 million.

                                       11
<PAGE>
RESULTS OF OPERATIONS

Comparison of Results for the Three Month Periods Ended March 31, 2008 and 2007

General.  Net income  increased  $8,000 or 1.4% to $559,000 for the three months
ended March 31, 2008 from  $551,000 for the same period in 2007.  This  increase
was the result of an  increase  in net  interest  income of  $234,000  partially
offset by a decrease  in  noninterest  income of $70,000  and  increases  in the
provision  for loan losses,  noninterest  expense and the  provision  for income
taxes of $15,000, $103,000 and $38,000, respectively.

Net interest  income.  Net interest  income on a tax equivalent  basis increased
$226,000 or 9.3% to $2.6  million for the three months ended March 31, 2008 from
$2.4 million for the same period in 2007. This net increase can be attributed to
an  increase in tax  equivalent  interest  income of $200,000  and a decrease in
interest expense of $26,000.

Interest income. Interest income on a tax equivalent basis increased $200,000 or
4.5% to $4.6 million for the three months ended March 31, 2008, compared to $4.4
million for the same period in the prior year.  This  increase can be attributed
to an increase  in interest  earned on loans of  $322,000,  partially  offset by
decreases in interest on securities and interest-earning deposits with banks and
dividends on federal bank stocks of $4,000, $98,000 and $20,000, respectively.

Tax equivalent interest earned on loans receivable increased $322,000 or 8.9% to
$4.0 million for the three months ended March 31, 2008, compared to $3.6 million
for the same period in 2007. This increase resulted primarily from average loans
increasing  $18.4 million or 8.6%,  accounting  for $312,000 in additional  loan
interest  income.  This  increase can be primarily  attributed  to growth in the
Corporation's commercial loan portfolios.

Tax equivalent  interest earned on securities  decreased  $4,000 to $611,000 for
the three months ended March 31, 2008,  compared to $615,000 for the same period
in 2007.  The  average  volume of  securities  decreased  $5.0  million or 9.5%,
accounting for a $61,000  decrease in interest  income.  Offsetting  this volume
decrease,  the yield on  securities  increased  43 basis points to 5.23% for the
three months ended March 31, 2008,  versus 4.80% for the same period in 2007, as
a result of certain lower yielding  securities  maturing.  This favorable  yield
variance contributed an additional $57,000 to interest income.

Interest earned on interest-earning  deposit accounts decreased $98,000 or 81.0%
to $23,000 for the three months ended March 31, 2008 from  $121,000 for the same
period in 2007.  The average  volume of these assets  decreased  $6.0 million or
64.1%,  primarily  as a result  of  funding  loans  and  purchasing  securities,
decreasing  interest  income by  $57,000.  Additionally,  the  average  yield on
interest-earning  deposit  accounts  decreased 248 basis points to 2.75% for the
three months ended March 31, 2008,  compared to 5.23% for the same period in the
prior year,  accounting for a $41,000 decrease in interest income.  The decrease
in the average yield reflects the recent decreases in short-term market interest
rates.  Dividends on federal bank stocks  decreased  $20,000 or 40.0% to $30,000
for the three month period ended March 31, 2008 from $50,000 for the same period
in 2007.  The  average  volume  of these  assets  increased  $309,000  or 14.0%,
accounting for a $6,000 increase in income. Offsetting this volume increase, the
yield on federal  bank stock  decreased  439 basis points to 4.79% for the three
months  ended March 31,  2008,  versus  9.18% for the same  period in 2007.  The
higher yield  experienced  during the first  quarter of 2007  resulted  from the
recognition  during the period of a fourth quarter 2006 special dividend on FHLB
capital stock.

Interest expense. Interest expense decreased $26,000 or 1.3% to $2.0 million for
the three  months  ended March 31,  2008,  and 2007.  This  decrease in interest
expense can be  attributed  to a decrease  in  interest  incurred on deposits of
$95,000, partially offset by an increase in borrowed funds of $69,000.

                                       12
<PAGE>
Interest expense incurred on deposits  decreased $95,000 or 5.7% to $1.6 million
for the three months ended March 31, 2008, compared to $1.7 million for the same
period in the prior year. The average volume of deposits  decreased $4.0 million
to $195.7 million for the three months ended March 31, 2008,  compared to $199.7
million  for the same  period in 2007  causing a $33,000  decrease  in  interest
expense.  Additionally, the cost of interest-bearing deposits decreased 16 basis
points to 3.23% for the three months ended March 31, 2008, compared to 3.39% for
the same period in 2007 causing a $62,000 decrease in interest expense.

Interest  expense  incurred  on  borrowed  funds  increased  $69,000 or 20.5% to
$405,000 for the three months ended March 31, 2008, compared to $336,000 for the
same  period in the  prior  year.  This  increase  in  interest  expense  can be
attributed  to the  increase  in the average  balance of borrowed  funds of $8.4
million or 27.8% to $38.4  million for the three  months  ended March 31,  2008,
compared to $30.0  million  for the same  period in the prior year  contributing
$89,000 in  additional  expense.  This  volume  increase  was the result of $5.0
million of FHLB long-term  borrowings  placed in the fourth quarter of 2007 used
primarily to fund loan growth and $8.7 million in short-term  borrowings  placed
in the  first  quarter  of  2008  used  to fund  security  purchases.  Partially
offsetting this volume  increase,  the cost of borrowed funds decreased 28 basis
points to 4.25% for the three months ended March 31, 2008, compared to 4.54% for
the same period in 2007 causing a $20,000 decrease in interest expense.

                                       13
<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 fees.  Interest and yields on tax-exempt  loans and securities  (tax-exempt
for federal income tax purposes) are shown on a fully tax equivalent  basis. The
information is based on average daily balances during the periods presented.
<TABLE>
<CAPTION>
<S>                                <C>               <C>         <C>                 <C>              <C>          <C>
------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)                                 Three months ended March 31,
                              ------------------------------------------------------------------------------------------
                                                2008                                             2007
                              ----------------------------------------          ----------------------------------------
                                  Average                    Yield/              Average                       Yield /
                                  Balance       Interest       Rate              Balance        Interest         Rate
------------------------------------------------------------------------------------------------------------------------

Interest-earning assets:
--------------------------
  Loans, taxable                $227,600         $3,860          6.82%            $208,776         $3,532          6.86%
  Loans, tax exempt                6,082             98          6.47%               6,495            104          6.49%
                              ----------     ----------                         ----------     ----------
    Total loans receivable       233,682          3,958          6.81%             215,271          3,636          6.85%
                              ----------     ----------                         ----------     ----------

  Securities, taxable             32,664            378          4.65%              36,758            364          4.02%
  Securities, tax exempt          14,361            233          6.53%              15,224            251          6.68%
                              ----------     ----------                         ----------     ----------
    Total securities              47,025            611          5.23%              51,982            615          4.80%
                              ----------     ----------                         ----------     ----------

  Interest-earning deposits
   with banks                      3,362             23          2.75%               9,375            121          5.23%
  Federal bank stocks              2,518             30          4.79%               2,209             50          9.18%
                              ----------     ----------                         ----------     ----------
    Total interest-earning
     cash equivalents              5,880             53          3.63%              11,584            171          5.99%
                              ----------     ----------                         ----------     ----------

  Total interest-earning
   assets                        286,587          4,622          6.49%             278,837          4,422          6.43%
    Cash and due from banks        5,224                                             6,163
    Other noninterest-earning
     assets                       14,614                                            14,535
                              ----------                                        ----------

    Total Assets                $306,425                                          $299,535
                              ==========                                        ==========

Interest-bearing
 liabilities:
--------------------------
  Interest-bearing demand
   deposits                      $78,962            282          1.44%             $72,176            233          1.31%
  Time deposits                  116,734          1,290          4.44%             127,533          1,434          4.56%
                              ----------     ----------                         ----------     ----------
    Total interest-bearing
     deposits                    195,696          1,572          3.23%             199,709          1,667          3.39%
                              ----------     ----------                         ----------     ----------

  Borrowed funds, short-
   term                            3,351              4          0.48%                   -              -          0.00%
  Borrowed funds, long-
   term                           35,000            401          4.61%              30,000            336          4.54%
                              ----------     ----------                         ----------     ----------
    Total borrowed funds          38,351            405          4.25%              30,000            336          4.54%
                              ----------     ----------                         ----------     ----------

  Total interest-bearing
   liabilities                   234,047          1,977          3.40%             229,709          2,003          3.54%
                              ----------     ----------                         ----------     ----------

    Noninterest-bearing demand
     deposits                     45,163              -              -              43,368              -              -
                              ----------     ----------                         ----------     ----------

    Funding and cost of funds    279,210          1,977          2.85%             273,077          2,003          2.97%

    Other noninterest-bearing
     liabilities                   2,388                                             2,572
                              ----------                                        ----------

    Total Liabilities            281,598                                           275,649
    Stockholders' Equity          24,827                                            23,886
                              ----------                                        ----------

    Total Liabilities and
     Stockholders' Equity       $306,425                                          $299,535
                              ==========     ----------                         ==========     ----------

Net interest income                              $2,645                                            $2,419
                                             ==========                                        ==========

Interest rate spread (difference between                         3.09%                                             2.89%
  weighted average rate on interest-earning
  assets and interest-bearing liabilities)

Net interest margin (net interest                                3.69%                                             3.52%
  income as a percentage of average
  interest-earning assets)

</TABLE>

                                       14
<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>
<S>                                                         <C>            <C>           <C>
----------------------------------------------------------------------------------------------------
 (Dollar amounts in thousands)                                    Three months ended March 31,
                                                                        2008 versus 2007
                                                                   Increase (Decrease) due to
                                                            ----------------------------------------
                                                              Volume          Rate          Total
----------------------------------------------------------------------------------------------------
 Interest income:
    Loans                                                   $     312      $      10     $      322
    Securities                                                    (61)            57             (4)
    Interest-earning deposits with banks                          (57)           (41)           (98)
    Federal bank stocks                                             6            (26)           (20)
                                                            ----------     ----------    -----------

    Total interest-earning assets                                 200              -            200
                                                            ----------     ----------    -----------

 Interest expense:
    Deposits                                                      (33)           (62)           (95)
    Borrowed funds                                                 89            (20)            69
                                                            ----------     ----------    -----------

    Total interest-bearing liabilities                             56            (82)           (26)
                                                            ----------     ----------    -----------

 Net interest income                                        $     144      $      82     $      226
                                                            ==========     ==========    ===========
----------------------------------------------------------------------------------------------------
</TABLE>


Provision for loan losses. The Corporation records provisions for loan losses to
maintain a level of total allowance for loan losses that management believes, to
the best of its  knowledge,  covers all known and inherent  losses that are both
probable and reasonably  estimable at each reporting date.  Management considers
historical loss experience,  the present and prospective  financial condition of
borrowers,  current conditions (particularly as they relate to markets where the
Corporation   originates  loans),  the  status  of  non-performing  assets,  the
estimated  underlying  value of the collateral and other factors  related to the
collectibility of the loan portfolio.

Information  pertaining  to the  allowance  for loan  losses and  non-performing
assets for the quarters ended March 31, 2008 and 2007 is as follows:


--------------------------------------------------------------------------------
(Dollar amounts in thousands)                    For the three months ended
                                                          March 31,
                                             -----------------------------------
                                                  2008                2007
--------------------------------------------------------------------------------
Balance at the beginning of the period       $        2,157      $        2,035
Provision for loan losses                                60                  45
Charge-offs                                              (9)                (15)
Recoveries                                               11                  13
                                             ---------------     ---------------
Balance at the end of the period             $        2,219      $        2,078
                                             ===============     ===============

Non-performing loans                         $          855      $        1,980
Non-performing assets                                   979               1,980
Non-performing loans to total loans                    0.36%               0.92%
Non-performing assets to total assets                  0.30%               0.66%
Allowance for loan losses to total loans               0.94%               0.97%
Allowance for loan losses to non-performing
 loans                                               259.53%             104.95%
--------------------------------------------------------------------------------


                                       15
<PAGE>

The  provision  for loan  losses  increased  $15,000 or 33.3% to $60,000 for the
three month  period ended March 31, 2008 from $45,000 for the same period in the
prior  year.  Management's  evaluation  of the  loan  portfolio,  including  the
changing  composition  of the portfolio as well as economic  trends,  regulatory
considerations  and other factors  contributed to the  recognition of $60,000 in
the provision for loan losses during the three months ended March 31, 2008.

Noninterest  income.  Noninterest  income decreased  $70,000 or 9.6% to $660,000
during the three months ended March 31,  2008,  compared to $730,000  during the
same period in the prior year.  This  decrease can be attributed to decreases in
commissions  earned  on  financial  services,  gains  on  securities  and  other
noninterest  income of $44,000,  $58,000 and  $17,000,  respectively.  Partially
offsetting  this  decrease  in  noninterest  income were  increases  in fees and
service  charges,  gains on the sale of loans and  earnings on  bank-owned  life
insurance of $32,000, $14,000, and $3,000, respectively.

Noninterest  expense.  Noninterest  expense  increased  $103,000 to $2.4 million
during the three months ended March 31,  2008,  compared to $2.3 million  during
the same period in the prior year.  This increase in noninterest  expense can be
attributed to increases in compensation  and employee  benefits and premises and
equipment of $111,000 and $20,000, respectively,  partially offset by a decrease
in other noninterest expenses of $28,000.

Compensation and employee  benefits  increased  $111,000 or 8.5% to $1.4 million
for the three months ended March 31, 2008, compared to $1.3 million for the same
period the prior year.  This  increase  can be  attributed  primarily  to normal
salary and wage increases and the addition of staff at a new branch location.

Premises  and  equipment  increased  $20,000 or 5.0% to  $420,000  for the three
months  ended March 31,  2008,  compared to $400,000  for the same period in the
prior year. This increase can be attributed  primarily to costs  associated with
an additional branch office which was opened in April 2008.

Other noninterest expense decreased $28,000 or 4.6% to $576,000 during the three
months  ended March 31,  2008,  compared to $604,000  for the same period in the
prior  year.  This  decrease  can  be  attributed  primarily  to a  decrease  in
professional fees relating to Sarbanes-Oxley Section 404 compliance.

Provision for income taxes. The provision for income taxes increased  $38,000 or
28.6% to  $171,000  for the three  months  ended  March 31,  2008,  compared  to
$133,000  for the same period in the prior year.  This was due to an increase in
pre-tax earnings of $46,000 or 6.7% to $730,000 for the three months ended March
31,  2008,  compared  to  $684,000  for the same period in the prior year and an
increase in the effective tax rate to 23.4% for the three months ended March 31,
2008,  compared to 19.4% for the same period in 2007. The difference between the
statutory  rate  of 34%  and  the  Corporation's  effective  tax  rate is due to
tax-exempt income earned on certain tax-free loans and 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 three
months ended March 31, 2008, the Corporation used its sources of funds primarily
to  fund  loan  originations  and  security  purchases.  As of  such  date,  the
Corporation had outstanding loan  commitments,  including  undisbursed loans and
amounts  available  under credit  lines,  totaling  $28.8  million,  and standby
letters of credit totaling $1.1 million.

                                       16
<PAGE>

At March 31,  2008,  time  deposits  amounted to $117.0  million or 46.5% of the
Corporation's total consolidated deposits, including approximately $47.1 million
of which are  scheduled  to  mature  within  the next  year.  Management  of the
Corporation  believes  that  it  has  adequate  resources  to  fund  all  of its
commitments,  that all of its commitments  will be funded as required by related
maturity  dates and  that,  based  upon  past  experience  and  current  pricing
policies,  it can  adjust  the rates of time  deposits  to retain a  substantial
portion of maturing liabilities.

Aside from  liquidity  available  from  customer  deposits or through  sales and
maturities of securities,  the Corporation has alternative sources of funds such
as a term  borrowing  capacity  from the FHLB and, to a limited and rare extent,
the sale of loans. At March 31, 2008, the Corporation's  borrowing capacity with
the FHLB, net of funds borrowed, was $119.4 million.

Management  is  not  aware  of  any   conditions,   including   any   regulatory
recommendations  or requirements,  which would adversely impact its liquidity or
its ability to meet funding needs in the ordinary course of business.

CRITICAL ACCOUNTING POLICIES

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

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

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 interest-bearing  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.

                                       17
<PAGE>

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 March 31,
2008, the Corporation's interest-earning assets maturing or repricing within one
year totaled $97.4 million while the Corporation's  interest-bearing liabilities
maturing or repricing within one-year totaled $94.5 million, providing an excess
of interest-earning assets over interest-bearing  liabilities of $2.9 million or
1.0% of total assets.  At March 31, 2008,  the  percentage of the  Corporation's
assets to liabilities maturing or repricing within one year was 103.0%.

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, 2007.

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

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

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

As of March 31,  2008,  the  Corporation  carried out an  evaluation,  under the
supervision  and  with  the  participation  of  the  Corporation's   management,
including the Corporation's Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Corporation's disclosure
controls  and  procedures.  Based  on the  foregoing,  the  Corporation's  Chief
Executive  Officer and Chief Financial  Officer concluded that the Corporation's
disclosure   controls  and  procedures  were  effective.   There  have  been  no
significant  changes in the Corporation's  internal controls or in other factors
that could significantly affect the internal controls subsequent to the date the
Corporation completed its evaluation.


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

Item 1.  Legal Proceedings
--------------------------

The  Corporation  is  involved in various  legal  proceedings  occurring  in the
ordinary course of business. It is the opinion of management, after consultation
with  legal  counsel,   that  these  matters  will  not  materially  effect  the
Corporation's consolidated financial position or results of operations.

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

There have been no material changes in the Corporation's risk factors from those
previously disclosed in the 2007 Form 10-K.

                                       18
<PAGE>

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

None.

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

None.

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

None.

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

(a)     Not applicable.

(b)     Not applicable.

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

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

                                       19
<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: May 14, 2008                     By: /s/ David L. Cox
                                           ------------------------------------
                                           David L. Cox
                                           Chairman of the Board,
                                           President and Chief Executive Officer

Date: May 14, 2008                     By: /s/ William C. Marsh
                                           ------------------------------------
                                           William C. Marsh
                                           Chief Financial Officer and Treasurer




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