UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB


[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

                  For the quarterly period ended March 31, 1998
                                                 --------------

                                       OR

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

For the transition period from                       to
                               ---------------------    ------------------

Commission file Number: 000-18464
                        ---------

                            EMCLAIRE FINANCIAL CORP.
        (Exact Name of small business issuer as specified in its charter)

PENNSYLVANIA                                             25-1606091
( State or other jurisdiction of                      (IRS Employer
 incorporation or organization)                       Identification Number)

612 Main Street
Emlenton, PA                                          16373-0046
(Address of principal executive offices)              (Zip Code)

Issuer's telephone number, including area code: (724) 867-2311

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

As of May 11, 1998,  there were  1,081,453  shares  outstanding  of the issuer's
common stock, par value $1.25 per share.



                                       1

<PAGE>
                            Emclaire Financial Corp.
                    INDEX TO QUARTERLY REPORT OF FORM 10-QSB
<TABLE>
<CAPTION>

Part I            Financial Information                                                                    Page
                                                                                                           ----
<S>             <C>                <C>                                                                 <C>
                  Item 1.           Consolidated Financial Statements (Unaudited)

                                    Consolidated Balance Sheet, March 31, 1998 and
                                    December 31, 1997                                                         3

                                    Consolidated Statement of Income
                                    Three months ended March 31, 1998 and 1997                                4

                                    Consolidated Statement of Comprehensive Income
                                    Three months ended March 31, 1998 and 1997                                5

                                    Consolidated Statement of Changes in
                                    Stockholders' Equity                                                      6

                                    Consolidated Statement of Cash Flows
                                    Three months ended March 31, 1998 and 1997                                7

                                    Notes to Consolidated Financial Statements                            8 - 9


                  Item 2.           Management's Discussion and Analysis of Financial
                                    Condition and Results of Operations                                 10 - 14


Part II           Other Information

                  Item 1.           Legal Proceedings                                                        15

                  Item 2.           Changes in Securities                                                    15

                  Item 3.           Defaults Upon Senior Securities                                          15

                  Item 4.           Submission of Matters to a Vote of Securities Holders                    15

                  Item 5.           Other Information                                                        15

                  Item 6.           Exhibits and Reports on Form 8-K                                         15

                  Signatures                                                                                 16

</TABLE>


<PAGE>
                            EMCLAIRE FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET
              (Unaudited - dollars in thousands, except share data)
<TABLE>
<CAPTION>
                                                                March 31, December 31,
                                                                   1998      1997
                                                                --------   --------
<S>                                                             <C>        <C>
ASSETS
     Cash and due from banks                                    $  4,110   $  4,975
     Federal funds sold                                            2,200          -
     Investment securities:
        Available for sale                                        30,946     31,977
        Held to maturity (estimated market value
            of $4,561 and $6,053)                                  4,557      6,057
     Loans                                                        89,222     86,144
     Less allowance for loan losses                                  888        874
                                                                --------   --------
        Net loans                                                 88,334     85,270
     Premises and equipment                                        2,930      2,619
     Accrued interest and other assets                             2,997      3,058
                                                                --------   --------

            TOTAL ASSETS                                        $136,074   $133,956
                                                                ========   ========
LIABILITIES
     Deposits
        Non-interest bearing demand                             $ 20,600   $ 19,765
        Interest bearing demand                                   16,865     17,276
        Savings                                                   16,779     16,261
        Money market                                              17,745     18,077
        Time                                                      47,683     46,276
                                                                --------   --------
            Total deposits                                       119,672    117,655
     Obligation under capital lease                                   52         63
     Borrowed Funds                                                2,000      2,200
     Accrued interest and other liabilities                          650        540
                                                                --------   --------
            TOTAL LIABILITIES                                    122,374    120,458
                                                                --------   --------

STOCKHOLDERS' EQUITY
     Preferred stock, par value $1.00, 3,000,000 shares
        authorized; none issued                                        -          -
                                                                --------   --------
     Common stock, par value $1.25 per share;
        12,000,000 shares authorized, 1,081,453 shares issued      1,352      1,352
     Additional paid in capital                                    4,432      4,432
     Retained earnings                                             7,701      7,492
     Net unrealized gain on securities                               215        222
                                                                --------   --------
            TOTAL STOCKHOLDERS' EQUITY                            13,700     13,498
                                                                --------   --------

            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $136,074   $133,956
                                                                ========   ========
</TABLE>


See accompanying notes to the consolidated financial statements.

<PAGE>
                            EMCLAIRE FINANCIAL CORP.
                        CONSOLIDATED STATEMENT OF INCOME
            (Unaudited - dollars in thousands, except per share data)


                                          Three Months Ended March 31,
                                               1998         1997
                                            ----------   ----------
INTEREST INCOME
     Loans, including fees                  $    1,926   $    1,546
     Federal funds sold                             12           18
     Investment securities:
        Taxable                                    513          620
        Exempt from federal income tax              52           50
                                            ----------   ----------
            Total interest income                2,503        2,234
                                            ----------   ----------

INTEREST EXPENSE
     Deposits                                      958          898
     Borrowed funds                                 29            3
     Lease obligation                                1            2
                                            ----------   ----------
            Total interest expense                 988          903
                                            ----------   ----------

NET INTEREST INCOME                              1,515        1,331

Provision for loan losses                           45           45
                                            ----------   ----------

NET INTEREST INCOME AFTER
     PROVISION FOR LOAN LOSSES                   1,470        1,286
                                            ----------   ----------

OTHER OPERATING INCOME
     Service fees on deposit accounts              122           84
     Other                                          37           23
                                            ----------   ----------
            Total other operating income           159          107
                                            ----------   ----------

OTHER OPERATING EXPENSE
     Salaries and employee benefits                584          556
     Occupancy, furniture and equipment            183          173
     Other                                         374          340
                                            ----------   ----------
            Total other operating expense        1,141        1,069
                                            ----------   ----------

Income before income taxes                         488          324
Income taxes                                       149           95
                                            ----------   ----------

NET INCOME                                  $      339   $      229
                                            ==========   ==========

EARNINGS PER SHARE                          $     0.31   $     0.21
DIVIDENDS PER SHARE                               0.12        0.105

AVERAGE SHARES OUTSTANDING                   1,081,453    1,081,453


See accompanying notes to the consolidated financial statements.
<PAGE>

                            EMCLAIRE FINANCIAL CORP.
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
            (Unaudited - dollars in thousands, except per share data)

                                           Three Months Ended March 31,
                                                   1998     1997
                                                  -----    -----

Net Income                                        $ 339    $ 229

Other Comprehensive income, net of tax:
     Unrealized loss on securities                   (7)    (289)
                                                  -----    -----

COMPREHENSIVE NET INCOME                            332      (60)
                                                  =====    =====





See accompanying notes to the consolidated financial statements.
<PAGE>

                            EMCLAIRE FINANCIAL CORP.
               CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
        EQUITY (Unaudited - dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                              Net
                                                  Additional               Unrealized
                                          Common    Paid in     Retained    Gain on
                                           Stock    Capital     Earnings   Securities    Total
                                       --------- -----------  ---------- --------------- ----------
<S>                                     <C>      <C>          <C>        <C>             <C>
Balance December 31, 1997                  1,352     4,432        7,492            222      13,498

Net income                                                          339                        339
Dividends declared
     ($.12 per share)                                              (130)                      (130)
Net unrealized loss on securities                                                   (7)         (7)
                                        -------- -----------  ---------- --------------- ----------

Balance March 31, 1998                  $  1,352 $    4,432   $   7,701  $         215   $  13,700
                                        ======== ==========   ========== =============== ==========

</TABLE>






See accompanying notes to the consolidated financial statements.

                                       6
<PAGE>

                            EMCLAIRE FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                       (Unaudited - dollars in thousands)
<TABLE>
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                                     1998       1997
                                                                                   -------    -------

<S>                                                                                <C>        <C>
OPERATING ACTIVITIES
     Net income                                                                    $   339    $   229
     Adjustments  to  reconcile  net income to net
        cash  provided  by  operating activities:
            Depreciation and amortization                                              153        149
            Net amortization of investment security
                discounts and premiums                                                  32         58
            Provision for loan losses                                                   45         45
            Increase in accrued interest receivable                                   (107)       (10)
            Increase (decrease) in accrued interest payable                             25       (320)
            Other, net                                                                 174        300
                                                                                   -------    -------
                Net cash provided by operating activities                              661        451
                                                                                   -------    -------

INVESTING ACTIVITIES
     Proceeds from maturities and repayments of
        investment securities:
            Available for sale                                                       1,000      1,000
            Held to maturity                                                         1,488      1,353
     Proceeds from sales of investment securities:
            Available for sale                                                           -      1,990
     Purchases of investment securities:
            Available for sale                                                           -     (1,051)
     Net loan originations                                                          (3,113)    (5,509)
     Purchases of premises and equipment                                              (377)       (20)
                                                                                   -------    -------
                Net cash used for investing activities                              (1,002)    (2,237)
                                                                                   -------    -------

FINANCING ACTIVITIES
     Net increase (decrease) in deposits                                             2,017     (1,266)
     Decrease in short-term borrowings                                                (200)         -
     Payments for obligation under capital lease                                       (11)       (10)
     Cash dividends paid                                                              (130)      (113)
                                                                                   -------    -------
                Net cash provided by (used for) financing activities                 1,676     (1,389)
                                                                                   -------    -------

                Increase (decrease) in cash and cash equivalents                     1,335     (3,175)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                       4,975      8,242
                                                                                   -------    -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $ 6,310    $ 5,067
                                                                                   =======    =======
</TABLE>

See accompanying notes to the consolidated financial statements.


                                       7
<PAGE>

                            EMCLAIRE FINANCIAL CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. GENERAL

The accounting and financial  reporting polices of Emclaire  Financial Corp. and
its  wholly-owned  subsidiary The Farmers  National Bank of Emlenton  ("Bank" or
"Farmers"),  conform to generally accepted accounting  principles and to general
practice  within  the  banking  industry.  In the  opinion  of  management,  the
accompanying  unaudited  consolidated financial statements of Emclaire Financial
Corp.  ("Company" or  "Emclaire")  contain all  adjustments,  consisting of only
normal and recurring  adjustments,  necessary for the fair  presentation  of the
Company's  financial  position,  results  of  operations  and cash flows for the
periods  presented.  The results of operations  for the interim  periods are not
necessarily indicative of the results to be expected for the full year.

2. SUBSEQUENT EVENT

On  April  7,  1998,  the  Company  entered  into an  Agreement  and Plan and of
Reorganization  with Peoples Savings Financial  Corporation  ("Peoples") and its
wholly-owned subsidiary Peoples Savings Bank ("Peoples Savings") to acquire 100%
of the  outstanding  common  shares of Peoples  for $26 per share,  payable in a
combination of cash and Emclaire  common stock, in a transaction to be accounted
for as a purchase.  Upon  completion  of the merger,  the  operations of Peoples
Savings will be consolidated  with and become part of Farmers.  The merger which
is subject to regulatory  approval and the approval of the  shareholders of both
the Company and Peoples is  expected  to be  completed  in the third  quarter of
1998. At December 31, 1997,  Peoples had total assets,  total deposits and total
capital of $44.5 million,  $35.1 million and $9.3 million,  respectively.  It is
expected this transaction will be completed prior to December 31, 1998.

3. EARNINGS PER SHARE

In December 1997, the Company adopted the Financial  Accounting  Standards Board
Statement No. 128 "Earnings per Share". This statement requires the presentation
of basic an diluted  earnings per share.  Basic  earnings per share excludes the
dilutive  effects  of such  items as stock  options,  warrants  and  convertible
securities,  while diluted  earnings per share  reflects the dilutive  effect of
these  common  stock  equivalents.   The  Company  maintains  a  simple  capital
structure, thus resulting in no dilutive effects on earnings per share.

4. COMPREHENSIVE INCOME

Effective  January  1,  1998,  the  Company  adopted  the  Financial  Accounting
Standards  Board  Statement  No.  130  "Reporting  Comprehensive  Income".  This
statement  establishes  standards for reporting the components of  comprehensive
income by  requiring  all items that are to be  recognized  as under  accounting
standards  as  components  of  comprehensive  income  be  reported  a  financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  Comprehensive income includes net income, as well as, certain items
that are reported directly within separate  components of stockholders'  equity,
and thus bypass net income.  Financial statements for earlier periods,  provided
for comparative purposes, have been reclassified.

The company has opted to disclose  comprehensive  income in a separate financial
statement,  in which the components of comprehensive income are presented net of
applicable  income taxes. The following table sets forth the related tax effects
allocated  to each  element of  comprehensive  income for the three months ended
March 31, 1998 and 1997:

                                       8
<PAGE>
<TABLE>
<CAPTION>

                                                                         Three Months Ended March 31, 1998
                                                                  ------------------------------------------------
                                                                     Before             Tax             Net of
                                                                   Tax Amount         Benefit         Tax Amount
                                                                   ----------         -------         ----------
<S>                                                                <C>                <C>             <C>
Unrealized gain on securities:
     Unrealized holding loss during the period                     $     (10)         $    (3)        $       (7)
                                                                   ---------          -------         ----------

        Other comprehensive income                                 $     (10)         $    (3)        $       (7)
                                                                   =========          =======         ==========
</TABLE>

<TABLE>
<CAPTION>

                                                                         Three Months Ended March 31, 1997
                                                                  ----------------------------------------------
                                                                     Before             Tax             Net of
                                                                   Tax Amount         Benefit         Tax Amount
                                                                   ----------         -------         ----------
<S>                                                                <C>                <C>             <C>        

Unrealized gain (loss) on securities:
     Unrealized holding loss during the period                     $     (438)        $     (149)     $     (289)
                                                                   ----------         ----------      ----------

        Other comprehensive income                                 $     (438)        $     (149)     $     (289)
                                                                   ==========         ==========      ==========
</TABLE>


The components of accumulated  other  comprehensive  income for the three months
ended  March 31,  1998,  consist of the items  presented  under the  heading Net
Unrealized  Gain on  Securities  as presented in the  Consolidated  Statement of
Changes in Stockholders'  Equity. For the three months ended March 31, 1997, the
net unrealized gain or loss on securities had a beginning balance of $124, a net
unrealized loss of $289, and an ending balance of $(165).

5. LOANS

Major classifications of loans are summarized as follows:
<TABLE>
<CAPTION>

                                                                                     March 31,       December 31,
                                                                                        1998             1997
                                                                                  ----------------- ----------------

<S>                                                                                 <C>             <C>
Commercial and industrial                                                           $       11,744  $        11,147
Real estate mortgages
     Residential                                                                            47,017           45,709
     Commercial and other                                                                   16,397           15,188
Consumer                                                                                    14,064           14,100
                                                                                  ----------------- ----------------
                                                                                            89,222           86,144
Less allowance for loan losses                                                                 888              874
                                                                                  ----------------- ----------------

                                                                                    $       88,334  $        85,270
                                                                                  ================= ================
</TABLE>

The Bank's primary business  activity is with customers  located within Venango,
Clarion,   and  Butler  Counties.   Commercial,   residential,   personal,   and
agricultural  loans  are  granted.  Although  the  Bank has a  diversified  loan
portfolio  at March  31,  1997 and  December  31,  1996,  loans  outstanding  to
individuals  and businesses  are dependent  upon the local  economic  conditions
within the immediate trade area.

                                       9
<PAGE>

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

Certain  information  presented  in  this  discussion  and  analysis  and  other
statements   concerning  future   performance,   developments  or  events,   and
expectations  for growth and market  forecasts  are subject to a number of risks
and uncertainties,  including  interest rate  fluctuations,  changes in local or
national economic  conditions,  and government or regulatory actions which might
cause actual results to differ materially from stated expectations or estimates.

Comparison of the Three Months Ended March 31, 1998 and 1997
------------------------------------------------------------

Net  Income - Net income  for the three  months  ended  March 31,  1998  totaled
$339,000 or $.31 per share, a $110,000 or 48% increase from the $229,000 or $.21
per share recorded during the same period in 1997, adjusted for the five percent
stock  dividend paid in December  1997.  The increase in net income is primarily
attributed  to  increases  in net interest  income,  which rose  $184,000 or 14%
reflecting  the  increase  in interest  earnings  from the loan  portfolio.  The
increase in net interest income offset the rise in other operating expense which
increased  $72,000  or 7%  during  the  comparative  three  month  periods,  due
principally to normal periodic increases.

The improved net income  resulted in  annualized  returns on average  assets and
average  equity of 1.02% and 10.01% for the  quarter  ended March 31,  1998,  as
compared to returns of .73% and 7.31% for the same period in 1997.

Interest  Income - Interest  income for the three  months  ended  March 31, 1998
increased approximately $269,000 or 12% from the same period in 1997, due to the
increase  in the loan  portfolio.  The  average  balance  of the loan  portfolio
increased  $17.0  million  from the same  period in 1997 to $87.9  million,  due
largely to the increase in residential  mortgage loans. The tax equivalent yield
on the loan  portfolio  for the first three  months of 1998  increased  10 basis
points to 9.01%  from the same  period in 1997,  due to the effect of a 25 basis
point increase in the prime rate in March 1997.

Average  investment  securities for the first quarter of 1998 were $37.4 million
resulting in a tax-equivalent yield of 6.41% for the quarter,  compared to $45.8
million and 6.16%  during the same period in 1997.  Due to ongoing  loan demand,
investment portfolio maturities continue to be reinvested in the loan portfolio.

As a result of the growth in the volume of earning assets, combined with funding
loan growth with  securities  maturities,  the tax  equivalent  yield on earning
assets  rose to 8.21%  during the first  quarter of 1998,  as  compared to 7.80%
during the same period in 1997.

Interest  expense - Interest  expense  increased  $85,000 or 9% during the first
quarter of 1998, as compared to the same period in 1997.  The average  volume of
interest bearing liabilities increased $4.5 million or 5% during the comparative
periods,  while the overall  rate paid on these  liabilities  rose from 3.80% to
3.97%.  This  higher  cost of funds is related  to  continuing  competition  for
deposit  customers,  combined with the use of Federal Home Loan Bank advances as
an alternative source of funds.



                                       10
<PAGE>

Despite the generally low interest rate environment, the ongoing competition for
deposit  customers  by  traditional  and   non-traditional   financial  services
providers, can be expected to continue to affect the overall cost of funds.

Net  Interest  Income - As a result of the  increase  in the  volume of  earning
assets  which more than offset the  increase in interest  expense,  net interest
income rose $184,000 or 14% for the quarter ended March 31, 1998, as compared to
the same period in 1997.

Provision for Loan Losses - Based upon  management's  ongoing  assessment of the
quality of the loan portfolio, and considering the growth experienced during the
first three months of 1998,  the provision for loan losses for the first quarter
of 1998 totaled $45,000, equaling that provided during the same period in 1997.

Other operating income - Other operating income increased $52,000 or 49% for the
first three months of 1998,  due  principally  to the impact from fees generated
from new or enhanced  products  and  services  introduced  during the second and
third  quarters  of 1997,  combined  with the  increase in the number of deposit
accounts During the second quarter of 1997, fees for transacting  wire transfers
and for processing returned checks were adjusted. In addition,  convenience fees
levied on  non-Farmers  customers who use an ATM  sponsored by Farmers  National
Bank were initiated  during the second  quarter of 1997.  While during the third
quarter of 1997,  the Bank  introduced  its  MasterMoney(TM)  debit card.  These
changes  resulted in new or additional  fee income  totaling  $50,000 during the
first quarter of 1998, as compared to the same period in 1997.

Other  Operating  Expense  - During  the  first  quarter  of 1998,  total  other
operating expenses increased $72,000 or 7% to $1.14 million from the same period
in  1997.  The rise in  other  operating  expenses  is due to a  combination  of
increases  in  recurring  expenses  for such  things as  salaries  and  employee
benefits,  equipment  service  contracts  and ATM network  fees,  combined  with
generally  non-recurring  costs related to a loss on a customer deposit account,
and legal costs for loan collections.

Salary and employee benefit costs increased $28,000 or 5%, due principally to an
accrual for a profit sharing payments totaling $30,000 recorded during the first
quarter  of 1998,  that was not  recorded  during  the same  period in 1997.  In
addition,   scheduled   employee  health   insurance   premiums  have  increased
approximately  14% for 1998. This increase  approximates  the savings  generated
from the Bank's  converting to the point of service  health care program  during
the second quarter of 1997.

Periodic costs associated with equipment service contracts  increased $12,000 or
27% during the first  quarter of 1998,  as  compared to the same period in 1997.
These costs relate principally to maintenance  agreements on the Bank's data and
document  processing  equipment.  Much  of this  equipment  is  scheduled  to be
upgraded or replaced,  which may help to control in the  short-term  the related
maintenance costs.

Other operating  expense  increased $34,000 or 10% during the first three months
of 1998, as compared to the same period in 1997,  due to increased ATM and debit
card  processing  fees which  increased  68% to $32,000 for the first quarter of
1998.   In  addition,   legal  fees  related  to  loan   collections   increased
approximately  $9,000.  Deposit account losses increased $12,000 to $15,000, due
to a single loss  incurred by a customer  cashing  stolen  checks.  Printing and
supplies increased 

                                       11
<PAGE>
$5,000 or 17% to $35,000 due to costs  associated with opening the eighth branch
office,  and costs  associated with a change in the area code for several office
locations.  Minor  cost  reductions  for such  things as  advertising,  postage,
insurance and other expenses helped to offset these increases.

While other operating  expenses  experienced only a marginal increase during the
first quarter of 1998, as compared to 1997,  several projects  undertaken by the
Company, intended to enhance the long-term growth of the Company, will result in
increased overhead expenses.

In March 1998,  the Bank opened its eighth office in the Clarion  Mall.  This de
novo branch  operation  is the Bank's  second  office in the Clarion area and is
located in an area which has experienced  recent commercial  growth. As with any
start-up operation,  this office can not be expected to produce a profit until a
deposit  base  sufficient  to support  the  operation  can be  generated.  It is
estimated this facility will generate a loss of  approximately  $200,000  during
the first full year of operation.

The data processing  center  construction  started in the third quarter of 1997,
will be completed in the second  quarter of 1998.  This  facility will allow for
the expansion of the bookkeeping and data  processing  operations,  by providing
sufficient  capacity to absorb future  growth.  With the planned  acquisition of
Peoples Savings Financial Corporation (See Note 2 of the accompanying  financial
statements)  three branch office  operations with  approximately  $35 million in
deposits  will  become  part of Farmers'  branch  network.  When the data center
becomes  operational,  overhead  costs  related to the building  and  furniture,
excluding upgrades to the Bank's data processing and check processing equipment,
are estimated to be approximately $75,000 the first full year of operation.

During 1997, management began to assess the current data processing operation in
order to plan for the future growth and operations of the Company.  Based on the
results of that  process,  the Company has entered  into an agreement to replace
its current main frame computer,  to upgrade its core operating  software and to
implement  a check  imaging  system for the  processing  and storage of customer
transactions.   The  capital  investment  required  for  these  improvements  is
estimated  to be  approximately  $500,000.  The  replacement  of the main  frame
computer became necessary as the growth experienced by the Company over the last
two years  absorbed the available  capacity of the system.  This  replacement is
approximately one year in advance of the scheduled  replacement of the computer.
The upgraded core  application  software offers program  enhancements,  improved
usability  by  being  converted  to  a  MS  windows  environment,  and  graphics
interfaces.  The planned check imaging  system should reduce the time devoted to
the processing and handling of transactions by the bookkeeping  department,  and
improve our ability to perform customer  research.  It is expected these systems
will be installed during the third quarter of 1998.

Income Taxes - The  provision  for income taxes of $149,000 for the three months
ended March 31,  1998,  represented  a 57%  increase  from the $95,000  recorded
during the same period of 1997.  This  increase  paralleled  the rise in pre-tax
income which increased $164,000 or 51% during the period.

                                       12

<PAGE>
Financial Condition
-------------------

At March 31, 1998,  the Company  reported  total  consolidated  assets of $136.0
million, an increase of $2.1 million or 2% from December 31, 1997. This increase
in total assets  resulted  from an increase in total  deposits  which rose 2% to
$119.7 million from $117.7 million at December 31, 1997.

The  increase in deposits  resulted  from the demand  deposit,  savings and time
deposit  segments of the portfolio which increased  $835,000,  $518,000 and $1.4
million  respectively.  These  increases  offset  declines  in the NOW and money
market account components of the portfolio. As previously discussed, competition
for deposit customers continues.  The Company continues to focus on its personal
customer  service,  while providing  deposit services at minimal or no fees, and
offering competitive interest rates to maintain its share of the deposit market.

Total loans increased $3.1 million or 4% to $89.2 million during the first three
months  of 1998.  This  increase  represents  a  decline  from the $5.5  million
increase  during the first three months of 1997.  The increase is  attributed to
continuing customer loan demand,  particularly  demand for residential  mortgage
loans, which increased $1.3 million from December 31, 1997. Commercial and other
real estate  loans  increased  $1.2 during the same  period.  The three  offices
opened or  acquired in 1996  continue  to account  for the  majority of the loan
growth providing $2.2 million or 71% of the growth  experienced during the first
quarter of 1998.

While loan growth continues to be strong,  the decline in the comparative  three
month periods indicates a moderate  lessening in loan demand.  Should this trend
continue,  it is likely that total interest income over the next three quarters,
in comparison to the same periods in 1997, would begin to level out.

Stockholders' equity of $13.7 million at March 31, 1998,  represented a $202,000
or 2% increase  from  December 31, 1997,  due  principally  from $209,000 of net
retained  income  for the  quarter.  At  March  31,  1998,  the  Bank had Tier 1
risk-based,  total  risk-based and leverage  capital ratios of 14.0%,  15.0% and
9.1%, respectively.  Each of these ratios exceeds the minimum ratios mandated by
law and banking regulations.

Liquidity
---------

Operating  activities,  particularly net income of $339,000 and depreciation and
amortization  of $153,000,  provided cash totaling  $661,000,  which was used to
fund investing and financing activities during the first three months of 1998.

As a result of the  increase  in loan  demand  previously  discussed,  financing
activities used  approximately $1.0 million in funds during the first quarter of
1998, as compared to $2.2 million used during the same period in 1997.  Net loan
originations used $3.1 million and was partially funded by investment maturities
which totaled approximately $2.5 million. By comparison,  during the first three
months of 1997, net loan originations totaled $5.5 million,  which was partially
funded by net investment maturities and sales totaling $3.3 million.

In addition to the funds used for  investing  activities,  financing  activities
during the first three months of 1998 provided  approximately $1.7 million,  due
principally  to the net  increase in 


                                       13
<PAGE>
deposits of $2.0 million.  During the same period of 1997,  financing activities
used  approximately  $1.4  million of funds due to a $1.3  million  decrease  in
deposits.

Aside from  liquidity  available  from  customer  deposits or through  sales and
maturities of the investment  portfolio,  the Company has alternative sources of
funds such as lines of credit available with  correspondent  banks. At March 31,
1998, two short-term  credit  facilities were available through the Federal Home
Loan Bank,  including a revolving line of credit of approximately  $4.6 million,
and a second revolving facility with a maximum borrowing of $10 million.

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

Risk Elements
-------------

At March 31, 1998, non-performing loans, including those past due ninety days or
more, and loans on nonaccrual status totaled  approximately  $991,000.  Of these
non-performing  loans,  $685,000 are  considered  to be impaired  for  financial
reporting  purposes.  These  impaired  loans  consist  of  four  commercial  and
commercial real estate loans to a single borrower,  secured by real estate.  The
borrower continues to operate under Chapter 11 bankruptcy protection. As part of
management's ongoing assessment of the loan portfolio,  $70,000 of the allowance
for loan losses at March 31, 1998, has been allocated for these loans.  In April
1998, the borrower  completed the sale of a parcel of real estate  securing this
account.  As a result of the sale, the Company received  approximately  $148,000
which was applied against the principal balance. Management believes the Company
is adequately secured by the underlying collateral.

Year 2000
---------

As  discussed  in the 1997  Annual  Report,  the Company  formed a committee  in
September  1997,  to implement an action plan  designed to ensure the  Company's
computer systems,  software  applications and other date reliant equipment would
function properly after December 31, 1999.

For items or vendors that are not  compliant  and have not achieved  significant
progress  toward  compliance  by October 1, 1998,  the  Company  will  implement
contingency  plans to either  replace the  product or vendor,  or  implement  an
alternative procedure to mitigate the affected area.

All software  programs used by the Company are purchased  directly from vendors,
and are not modified internally by the Company. This eliminates the need for the
direct  hiring of  programmers  to  rewrite  or modify  computer  software.  The
computer  hardware  and  software  upgrades   previously   discussed  have  been
represented as being  compliant by the vendors.  They will be subject to testing
by the Company prior to being implemented.

Management  believes that  substantially all date reliant equipment and software
will be tested and, if needed,  upgraded or replaced by December  31,  1998.  In
addition,  assessments of significant  vendors,  service providers and customers
will also be  completed.  Despite the best efforts of management to address this
issue,  the vast  number of  external  entities  that have  direct and  indirect
business  relationships with the Company,  such as customers,  vendors,  payment
system providers and other financial institutions, makes it impossible to assure
that a failure to achieve  compliance by one or more of these entities would not
have a material adverse impact on the operations of the Company.

                                       14
<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

         (None)

Item 2. Changes in Securities

         (None)

Item 3. Defaults Upon Senior Securities

         (None)

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

         (None)

Item 5. Other Information

         (None)

Item 6. Exhibits and Reports on Form 8-K

         (a) Exhibit 27 - Financial  Data Schedule (in  electronic  filing only)
         (b) Reports on Form 8-K
                  On March 23, 1998,  the Company  filed Form 8-K  disclosing it
                  had  entered  into a letter of intent  to  acquire  all of the
                  outstanding stock of Peoples Savings Financial Corporation.



                                       15

<PAGE>




                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

Emclaire Financial Corp.
        (Registrant)


Date: May 14, 1998                                By: /s/ David L. Cox
     -------------                                    ----------------
                                                        David L. Cox
                                                        President and CEO


Date: May 14, 1998                                By: /s/ John J. Boczar
     -------------                                    ------------------
                                                        John J. Boczar, CPA
                                                        Treasurer


                                       16