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

                                   FORM 10-QSB

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

                      For Quarter Ended: September 30, 2003

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

         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 No.)


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


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


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



                      APPLICABLE ONLY TO CORPORATE ISSUERS

Number of shares of issuer's common stock outstanding as of October 31, 2003:

     Common Stock, $1.25 par value                        1,267,835
     -----------------------------                        ---------
                  (Class)                              (Outstanding)
     ------------------------------------

  Transitional Small Business Disclosure Format (Check one):    Yes   X   No
                                                             ----    ----

<PAGE>




                            EMCLAIRE FINANCIAL CORP.

                    INDEX TO QUARTERLY REPORT ON FORM 10-QSB



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

<TABLE>
<CAPTION>

Item 1.       Financial Statements (Unaudited)

              Consolidated Balance Sheets as of
<S>                     <C> <C>               <C> <C>                                                                  <C>
              September 30, 2003 and December 31, 2002..................................................................1

              Consolidated Income Statements for the three and nine
              months ended September 30, 2003 and 2002..................................................................2

              Consolidated Statements of Cash Flows for the nine
              months ended September 30, 2003 and 2002..................................................................3

              Consolidated Statement of Changes in Stockholders'
              Equity for the nine months ended September 30, 2003.......................................................4

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

Item 2.       Management's Discussion and Analysis
              of Financial Condition and Results of Operations..........................................................8

Item 3.       Controls and Procedures..................................................................................17


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

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

Item 2.       Changes in Securities....................................................................................18

Item 3.       Defaults Upon Senior Securities..........................................................................18

Item 4.       Submission of Matters to a Vote of Security Holders......................................................18

Item 5.       Other Information........................................................................................18

Item 6.       Exhibits and Reports on Form 8-K.........................................................................18

              Signatures...............................................................................................19

              Controls and Procedures Certifications...................................................................20

</TABLE>



<PAGE>
<TABLE>
<CAPTION>



                                                    PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
                                                Emclaire Financial Corp. and Subsidiary
                                                      Consolidated Balance Sheets
                                      As of September 30, 2003 (Unaudited) and December 31, 2002
                                           (Dollar amounts in thousands, except share data)





                                                                     September 30,     December 31,
                                                                         2003              2002
                                                                     --------------   ---------------

Assets
-------

<S>                                                                         <C>               <C>
Cash and due from banks                                                     $5,348            $5,495
Interest-earning deposits in banks                                           1,127             2,221
                                                                     --------------   ---------------
  Cash and cash equivalents                                                  6,475             7,716
Securities available for sale                                               54,069            48,719
Securities held to maturity; fair value of $18 and $29                          17                29
Loans receivable, net of allowance for loan losses of $1,705 and
 $1,587                                                                    182,720           169,557
Federal bank stocks, at cost                                                 1,942             1,298
Bank-owned life insurance                                                    4,218             4,054
Accrued interest receivable                                                  1,329             1,325
Premises and equipment                                                       4,791             3,678
Goodwill                                                                     1,422             1,422
Core deposit intangibles                                                        62               169
Prepaid expenses and other assets                                              891               610
                                                                     --------------   ---------------

       Total assets                                                       $257,936          $238,577
                                                                     ==============   ===============

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

Liabilities:
 Deposits:
  Noninterest bearing                                                      $37,849           $32,762
  Interest bearing                                                         178,044           171,663
                                                                     --------------   ---------------
       Total deposits                                                      215,893           204,425
 Borrowed funds                                                             17,930            10,000
 Accrued interest payable                                                      473               467
 Accrued expenses and other liabilities                                      1,190             1,005
                                                                     --------------   ---------------

   Total liabilities                                                       235,486           215,897
                                                                     --------------   ---------------

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 and 1,332,835 shares
   outstanding                                                               1,745             1,745
 Additional paid-in capital                                                 10,871            10,871
 Treasury stock, at cost; 128,017 and 63,017 shares                         (2,653)             (971)
 Retained earnings                                                          10,966             9,978
 Accumulated other comprehensive income                                      1,521             1,057
                                                                     --------------   ---------------

   Total stockholders' equity                                               22,450            22,680
                                                                     --------------   ---------------

       Total liabilities and stockholders' equity                         $257,936          $238,577
                                                                     ==============   ===============

</TABLE>


See accompanying notes to consolidated financial statements.


                                       1
<PAGE>

                     Emclaire Financial Corp. and Subsidiary
                         Consolidated Income Statements
                  For the three and nine months ended September
                      30, 2003 and 2002 (Unaudited)
                (Dollar amounts in thousands, except share data)

<TABLE>
<CAPTION>


                                                                              Three months ended     Nine months ended
                                                                                 September 30,         September 30,
                                                                             --------------------- ---------------------
                                                                              2003         2002       2003       2002
                                                                             ---------- ---------- ---------- ----------

Interest and dividend income:
<S>                                                                             <C>        <C>        <C>        <C>
 Loans receivable                                                               $2,965     $3,099     $8,919     $9,346
 Securities:
   Taxable                                                                         373        371      1,076      1,122
   Exempt from federal income tax                                                  181        146        560        424
 Federal bank stocks                                                                13         13         39         41
 Deposits with banks and federal funds sold                                          2         24         24         55
                                                                             ---------- ---------- ---------- ----------
  Total interest income                                                          3,534      3,653     10,618     10,988
                                                                             ---------- ---------- ---------- ----------

Interest expense:
 Deposits                                                                        1,073      1,243      3,286      3,704
 Borrowed funds                                                                    154         59        365        176
                                                                             ---------- ---------- ---------- ----------
  Total interest expense                                                         1,227      1,302      3,651      3,880
                                                                             ---------- ---------- ---------- ----------

Net interest income                                                              2,307      2,351      6,967      7,108
 Provision for loan losses                                                          75         90        225        291
                                                                             ---------- ---------- ---------- ----------

Net interest income after provision for loan losses                              2,232      2,261      6,742      6,817
                                                                             ---------- ---------- ---------- ----------

Noninterest income:
 Service fees                                                                      268        243        777        704
 Gain on sale of securities available for sale                                      60          -        115          -
 Gain on sale of loans held for sale                                                 5         39         23         39
 Earnings on bank-owned life insurance                                              58          -        175          -
 Other                                                                              76         75        228        252
                                                                             ---------- ---------- ---------- ----------
  Total noninterest income                                                         467        357      1,318        995
                                                                             ---------- ---------- ---------- ----------

Noninterest expense:
 Compensation and employee benefits                                              1,022        986      3,198      2,985
 Premises and equipment, net                                                       245        274        786        862
 Intangible amortization expense                                                    34         12        107        109
 Other                                                                             540        501      1,567      1,599
                                                                             ---------- ---------- ---------- ----------
  Total noninterest expense                                                      1,841      1,773      5,658      5,555
                                                                             ---------- ---------- ---------- ----------

Net income before provision for income taxes                                       858        845      2,402      2,257
 Provision for income taxes                                                        209        264        585        663
                                                                             ---------- ---------- ---------- ----------

Net income                                                                        $649       $581     $1,817     $1,594
                                                                             ========== ========== ========== ==========

  Net income per share                                                           $0.51      $0.44      $1.38      $1.20
  Dividends per share                                                            $0.21      $0.19      $0.63      $0.57

 Weighted average common shares outstanding                                  1,280,552  1,332,835  1,313,131  1,332,835

</TABLE>

See accompanying notes to consolidated financial statements.

                                       2
<PAGE>


                     Emclaire Financial Corp. and Subsidiary
                      Consolidated Statements of Cash Flows
                  For the nine months ended September 30, 2003
                                   (Unaudited)
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>



                                                                      For the Nine Months Ended
                                                                             September 30,
                                                                   --------------------------------
                                                                       2003              2002
                                                                   --------------   ---------------

Operating activities:
<S>                                                                       <C>               <C>
 Net income                                                               $1,817            $1,594
 Adjustments to reconcile net income to net cash provided
  by operating activities:
   Depreciation and amortization for premises and equipment                  293               355
   Provision for loan losses                                                 225               291
   Amortization of premiums and accretion of discounts, net                  190               173
   Gain on sale of securities available for sale                            (115)                -
   Earnings on bank-owned life insurance, net                               (164)                -
   Amortization of intangible assets                                         107               109
   Change in accrued interest receivable                                      (4)              (43)
   Change in prepaid expenses and other assets                              (281)              (89)
   Change in accrued interest payable                                          6               (20)
   Change in accrued expenses and other liabilities                          185               178
   Other                                                                      11              (417)
                                                                   --------------   ---------------
  Net cash from operating activities                                       2,270             2,131
                                                                   --------------   ---------------

Lending and Investing Activities:
 Loan originations, net of principal collections                         (13,445)           (7,367)
 Purchases of securities available for sale                              (37,062)          (28,960)
 Purchases of Federal bank stocks                                           (644)              (77)
 Purchase of Bank-owned life insurance                                         -            (4,000)
 Repayments, maturities and calls of securities available for
  sale                                                                    31,565            20,225
 Principal repayments of securities held to maturity                          12                30
 Proceeds from the sale of securities available for sale                     582                 -
 Purchases of premises and equipment                                      (1,406)             (443)
                                                                   --------------   ---------------
  Net cash from lending and investing activities                         (20,398)          (20,592)
                                                                   --------------   ---------------

Deposit and Financing Activities:
 Net increase in deposits                                                 11,468            14,241
 Increase in overnight borrowed funds                                      2,930             3,761
 Proceeds from long term advances                                          5,000                 -
 Dividends paid on common stock                                             (829)             (760)
 Payments to acquire treasury stock                                       (1,682)                -
                                                                   --------------   ---------------
  Net cash from deposit and  financing activities                         16,887            17,242
                                                                   --------------   ---------------

Net (decrease) increase in cash equivalents                               (1,241)           (1,219)
Cash equivalents at beginning of period                                    7,716             9,157
                                                                   --------------   ---------------
Cash equivalents at end of period                                         $6,475            $7,938
                                                                   ==============   ===============

Supplemental information:

 Interest paid                                                            $3,645            $3,900
 Income taxes paid                                                           708               545

</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                     Emclaire Financial Corp. and Subsidiary
                      Consolidated Statement of Changes in
                 Stockholders' Equity For the nine months ended
                         September 30, 2003 (Unaudited)
                          (Dollar amounts in thousands)


<TABLE>
<CAPTION>


                                                                                               Accumulated
                                                                 Additional                      Other         Total
                                                         Common   Paid-in   Treasury Retained ComprehensiveStockholders'
                                                          Stock   Capital    Stock   Earnings Income (Loss)   Equity
                                                         ------- ---------- -------- --------              -------------

<S>                 <C> <C>                              <C>       <C>        <C>     <C>          <C>          <C>
Balance at December 31, 2002                             $1,745    $10,871    $(971)  $9,978       $1,057       $22,680

Comprehensive income:
 Net income                                                   -          -        -    1,817            -         1,817
 Change in net unrealized gain on
  securities available for sale, net of
  taxes of $239 and reclassification
  adjustment for after tax gains of $75                       -          -        -        -          464           464
                                                                                                           -------------
Comprehensive income                                                                                              2,281
                                                                                                           -------------

Dividends paid                                                -          -        -     (829)           -          (829)

Purchase of treasury stock (65,000 shares)                    -          -   (1,682)       -            -        (1,682)
                                                         ------- ---------- -------- -------- ------------ -------------

Balance at September 30, 2003                            $1,745    $10,871  $(2,653) $10,966       $1,521       $22,450
                                                         ======= ========== ======== ======== ============ =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>


                     Emclaire Financial Corp. and Subsidiary
                   Notes to Consolidated Financial Statements

1.       Business and Basis of Presentation

         Emclaire Financial Corp. (the Corporation) is a Pennsylvania
         corporation and bank holding company that provides a full range of
         retail and commercial financial products and services to customers in
         western Pennsylvania through its wholly owned subsidiary bank, the
         Farmers National Bank of Emlenton (the Bank), a national banking
         association. The consolidated financial statements contained herein
         include the accounts of the Corporation and the Bank, which operate as
         one operating segment. All inter-company amounts have been eliminated.

         The accompanying unaudited consolidated financial statements for the
         interim periods include all adjustments, consisting of normal recurring
         accruals, which are necessary, in the opinion of management, to fairly
         reflect the Corporation's financial position and results of operations.
         Additionally, these consolidated financial statements for the interim
         periods have been prepared in accordance with instructions for the
         Securities and Exchange Commission's Form 10-QSB 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, 2002, as contained in the Corporation's 2002
         Annual Report to Stockholders.

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America requires
         management to make estimates and assumptions that affect the reported
         amounts in the consolidated financial statements and accompanying
         notes. Actual results could differ from those estimates. Material
         estimates that are particularly susceptible to significant change in
         the near term relate to the determination of the allowance for loan
         losses and deferred tax assets. 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.       Net Income Per Share

         The Corporation maintains a simple capital structure with no
         potentially dilutive instruments. Earnings per share computations are
         based on the weighted average number of common shares outstanding of
         1,280,552 and 1,332,835 shares for the three month periods ending
         September 30, 2003 and 2002, respectively, and 1,313,131 and 1,332,835
         shares for the nine month periods ending September 30, 2003 and 2002,
         respectively.

3.       Comprehensive Income

         Comprehensive income was comprised of the following for the periods
ended September 30:

<TABLE>
<CAPTION>

                                                       Three months ended       Nine months ended
                                                           September 30,         September 30,
                                                     ----------------------- -----------------------
In thousands                                               2003        2002        2003        2002
----------------------------------------------------------------------------------------------------

<S>                                                        <C>         <C>       <C>         <C>
Net income                                                 $649        $581      $1,817      $1,594
 Change in net unrealized gain on securities
  available
  for sale, net of taxes                                   (345)        355         539         799
 Less reclassification adjustment for gains included
  in net income, net of taxes                               (39)          -         (75)          -
                                                     ----------- ----------- ----------- -----------
Other comprehensive income                                 (384)        355         464         799
                                                     ----------- ----------- ----------- -----------

Comprehensive income                                       $265        $936      $2,281      $2,393
                                                     =========== =========== =========== ===========
</TABLE>


                                       5
<PAGE>



4.       Securities

         The following table summarizes the Corporation's securities as of the
respective dates:

<TABLE>
<CAPTION>

(In thousands)                              Amortized    Unrealized   Unrealized     Fair
                                              cost         gains        losses       value
--------------------------------------------------------------------------------------------

Available for sale:
----------------------------------------
   September 30, 2003
<S>                                          <C>              <C>         <C>       <C>
      U.S. Government agency securities      $24,862          $158        $(158)    $24,862
      Municipal securities                    15,134           738            -      15,872
      Corporate securities                    10,138           394            -      10,532
      Equity securities                        1,630         1,176           (3)      2,803
                                            ---------    ----------   ----------   ---------
                                             $51,764        $2,466        $(161)    $54,069
                                            =========    ==========   ==========   =========
   December 31, 2002:
      U.S. Government agency securities      $17,486          $350           $-     $17,836
      Municipal securities                    16,515           391          (99)     16,807
      Corporate securities                    12,146           421           (5)     12,562
      Equity securities                          971           543            -       1,514
                                            ---------    ----------   ----------   ---------
                                             $47,118        $1,705        $(104)    $48,719
                                            =========    ==========   ==========   =========
Held to maturity:
----------------------------------------
   September 30, 2003
      Mortgage-backed securities                 $17            $-           $-         $17
                                            ---------    ----------   ----------   ---------
                                                 $17            $-           $-         $17
                                            =========    ==========   ==========   =========
   December 31, 2002:
      Mortgage-backed securities                 $29            $-           $-         $29
                                            ---------    ----------   ----------   ---------
                                                 $29            $-           $-         $29
                                            =========    ==========   ==========   =========
</TABLE>

5.       Loans Receivable

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

<TABLE>
<CAPTION>

                                                 September 30,                    December 31,
(In thousands)                                      2003                           2002
----------------------------------------------------------------------------------------------

Mortgage loans:
<S>                                                    <C>                            <C>
   Residential first mortgage                          $75,265                        $82,449
   Home equity                                          30,691                         19,136
   Commercial real estate                               40,082                         34,986
                                                 --------------                 --------------
                                                       146,038                        136,571
Other loans:
   Consumer                                             14,679                         12,660
   Commercial business                                  23,708                         21,913
                                                 --------------                 --------------
                                                        38,387                         34,573
                                                 --------------                 --------------

Total gross loans                                      184,425                        171,144

Less allowance for loan losses                           1,705                          1,587
                                                 --------------                 --------------

                                                      $182,720                       $169,557
                                                 ==============                 ==============

</TABLE>



                                       6
<PAGE>


6.       Deposits

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


<TABLE>
<CAPTION>
Deposit summary:

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

(Dollar amounts in thousands)      September 30, 2003                December 31, 2002
                                 --------------------------------- ---------------------------------

                                  Weighted                         Weighted
                                  average                           average
Type of accounts                    rate      Amount             %   rate       Amount             %
----------------------------------------------------------------------------------------------------

<S>                                            <C>           <C>                 <C>           <C>
Noninterest-bearing deposits             -     $37,849       17.5%        -      $32,762       16.0%
Interest-bearing demand deposits      0.73%     79,185       36.7%     0.88%      72,637       35.5%
Time deposits                         3.76%     98,859       45.8%     3.97%      99,026       48.5%
                                            ----------- ----------           ------------ ----------

                                      1.99%   $215,893      100.0%     2.24%    $204,425      100.0%
                                            =========== ==========           ============ ==========
</TABLE>


                                       7
<PAGE>



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

This section discusses the consolidated financial condition and results of
operations of Emclaire Financial Corp. (the Corporation) and its wholly owned
subsidiary bank, the Farmers National Bank of Emlenton (the Bank), for the three
and nine month periods ended September 30, 2003 and should be read in
conjunction with the accompanying consolidated financial statements and notes
presented on pages 1 through 7.

Discussions of certain matters in this Report on Form 10-QSB may constitute
forward-looking statements within the meaning of the Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and as such, may involve risks and
uncertainties. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies, and expectations, are
generally identifiable by the use of words or phrases such as "believe", "plan",
"expect", "intend", "anticipate", "estimate", "project", "forecast", "may
increase", "may fluctuate", "may improve" and similar expressions of future or
conditional verbs such as "will", "should", "would", and "could". These
forward-looking statements relate to, among other things, expectations of the
business environment in which the Corporation operates, projections of future
performance, potential future credit experience, perceived opportunities in the
market, and statements regarding the Corporation's mission and vision. The
Corporation's actual results, performance, and achievements may differ
materially from the results, performance, and achievements expressed or implied
in such forward-looking statements due to a wide range of factors. These factors
include, but are not limited to, changes in interest rates, general economic
conditions, the demand for the Corporation's products and services, accounting
principles or guidelines, legislative and regulatory changes, monetary and
fiscal policies of the US Government, US Treasury, and Federal Reserve, real
estate markets, competition in the financial services industry, attracting and
retaining key personnel, performance of new employees, regulatory actions,
changes in and utilization of new technologies, and other risks detailed in the
Corporation's reports filed with the Securities and Exchange Commission (SEC)
from time to time, including the Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2002. These factors should be considered in evaluating
the forward-looking statements, and undue reliance should not be placed on such
statements. 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

General. The Corporation's total assets increased $19.4 million or 8.1% to
$257.9 million at September 30, 2003 from $238.6 million at December 31, 2002.
This net increase was comprised principally of increases in securities, loans,
and premises and equipment of $5.3 million, $13.2 million and $1.0 million,
respectively, partially offset by a decrease in cash and cash equivalents of
$1.2 million. The increase in total assets reflects a corresponding increase in
total liabilities of $19.6 million or 9.1%, partially offset by a decrease in
total stockholders' equity of $230,000 or 1.0%. The increase in total
liabilities was primarily the result of increases in deposits and borrowed funds
of $11.5 million and $7.9 million, respectively. This increase in deposits and
borrowed funds provided the resources for the Corporation's asset growth for the
period. The decrease in stockholders' equity was the result of an increase in
treasury stock of $1.7 million, offset by increases in retained earnings and
accumulated other comprehensive income of $988,000 and $464,000, respectively.

Cash and cash equivalents. Cash and cash equivalents decreased $1.2 million or
16.1% to $6.5 million at September 30, 2003 from $7.7 million at December 31,
2002. The net decrease between September 30, 2003 and December 31, 2002 was
primarily the result of investing deployable funds in loans, U.S. agency
securities and commercial paper and the acquisition of 65,000 shares of treasury
stock.

Securities. The Corporation's securities portfolio increased $5.3 million or
11.0% to $54.1 million at September 30, 2003 from $48.7 million at December 31,
2002. This net increase was primarily the result of security purchases of $37.0
million, partially offset by security maturities and calls of $31.6 million and
security sales of $468,000 during the nine months ended September 30, 2003.


                                       8
<PAGE>



Security purchases were comprised of U.S. government agency, corporate and
marketable equity securities of $28.3 million, $7.6 million, and $1.1 million,
respectively. Security maturities and calls were comprised of U.S. government
agency, tax-free municipal and corporate securities of $20.7 million, $1.4
million and $9.5 million, respectively. Corporate securities that were purchased
and that matured during the period included primarily short-term commercial
paper utilized to manage interest-earned on funds maintained for liquidity
purposes. At September 30, 2003, the Corporation's security portfolio did not
contain any short-term commercial paper.

Loans receivable. Net loans receivable increased $13.2 million or 7.8% to $182.7
million at September 30, 2003 from $169.6 million at December 31, 2002. This
increase was the result of increases in the Bank's mortgage, commercial business
and non-real estate consumer loan portfolios of $9.5 million, $1.8 million and
$2.0 million, respectively. The composition of the Corporation's mortgage loan
portfolio shifted from residential first mortgages to home equity loan products
and commercial mortgages. The Corporation has continued to experience
refinancing of mortgage loan products, particularly residential first mortgage
loans. For the most part, the Bank has been able to stem residential mortgages
exiting the institution, but during the nine months ended September 30, 2003,
amortization and refinancing activity outpaced new production in this portfolio.
This $7.2 million or 8.7% reduction in residential first mortgages has been more
than offset by commercial real estate and home equity loan growth. The
commercial real estate loan portfolio has grown $5.1 million or 14.6% during the
first nine months of 2003 due to the retention of several large commercial
customers as efforts continue to expand commercial lending activities in the
Bank's existing markets. The $11.6 million or 60.4% increase in home equity
loans outstanding is the direct result of specific home equity loan product
development and related marketing campaigns through the Bank's retail branch
network. This campaign has been directed at retaining consumer mortgage
investment in the Bank's market area. The Corporation's commercial business loan
portfolio grew $1.8 million or 8.2%, directly as the result of $3.0 million in
new funding on a tax-free loan with a municipality in the Bank's market area.
The Corporation's non-real estate consumer loan portfolio increased $2.0 million
or 16.0% as a direct result of marketing campaigns focusing on the retention of
consumer automobile loans in the Bank's market area.

Federal bank stocks. Federal bank stocks increased $644,000 or 49.6% to $1.9
million at September 30, 2003 from $1.3 million at December 31, 2002. This
increase is directly related to the $7.9 million increase in Federal Home Loan
Bank of Pittsburgh (FHLB) borrowed funds during the period - see comments below
under "Borrowed Funds".

Premises and equipment. Premises and equipment increased $1.0 million or 30.3%
to $4.8 million at September 30, 2003 from $3.7 million at December 31, 2002.
This increase can be attributed to capital investments made for the historical
remodeling of the Corporation's headquarters and the Bank's main office to date,
for the Bank's new branch office in Butler County, Pennsylvania and for various
data processing initiatives undertaken during 2003.

Non-performing assets. Non-performing assets include non-accrual loans and real
estate acquired through foreclosure. Non-performing assets amounted to $1.7
million or 0.65% and $1.2 million or 0.49% of total assets at September 30, 2003
and December 31, 2002, respectively. Non-accrual loans at September 30, 2003
consisted primarily of commercial mortgages and residential mortgages of $1.0
million and $371,000, respectively.

Deposits. Total deposits increased $11.5 million or 5.6% to $215.9 million at
September 30, 2003 from $204.4 million at December 31, 2002. This increase was
comprised of increases in noninterest bearing and interest bearing deposits of
$5.1 million and $6.4 million, respectively. The general increase in deposits
during the period can be attributed primarily to: (1) an overall movement of
funds in the marketplace by customers from mutual fund and stock investments
into FDIC insured bank deposits as a result of recent national economic
instability, and (2) the opening of a new branch banking office in Butler
County, Pennsylvania in late January 2003.

Borrowed funds. Borrowed funds increased $7.9 million or 79.3% to $17.9 million
at September 30, 2003 from $10.0 million at December 31, 2002. This increase was
the result of a new $5.0 million long-term borrowing from the FHLB utilized to
fund the aforementioned tax-free loan and $2.9 million of FHLB overnight
borrowings.


                                       9
<PAGE>



Stockholders' equity. Stockholders' equity decreased $230,000 or 1.0% to $22.5
million at September 30, 2003 from $22.7 million at December 31, 2002. This
decrease was the result of an increase in treasury stock of $1.7 million, offset
by increases in retained earnings of $988,000, comprised of net income of $1.8
million offset by dividends paid of $829,000, and in accumulated other
comprehensive income of $464,000.

During June and September of 2003, the Corporation received two separate
unsolicited offers from stockholders to buy back shares of the Corporation's
common stock held by these stockholders. These purchases totaled 65,000 shares
for an average price per share of $25.87 or a total purchase cost of $1.7
million. Cash on hand was utilized to facilitate these repurchases and take
advantage of this opportunity to manage the Corporation's capital levels.
Subsequent to this repurchase the Corporation and the Bank remain "well
capitalized" for regulatory purposes. These shares will be held in treasury
stock.

RESULTS OF OPERATIONS

Comparison of Results for the Three Month Periods Ended  September 30, 2003
and 2002

General. The Corporation reported net income of $649,000 and $581,000 for the
three months ended September 30, 2003 and 2002, respectively. The $68,000 or
11.7% increase in net income for the three months ended September 30, 2003, as
compared to the three months ended September 30, 2002, was attributable to an
increase in noninterest income of $110,000 and a decrease in the provision for
loan losses and the provision for income taxes of $15,000 and $55,000,
respectively. Partially offsetting these favorable variances was an increase in
noninterest expense of $68,000 and a decrease in net interest income of $44,000.

Net interest income. Net interest income on a tax equivalent basis decreased
$9,000 to $2.4 million for the three months ended September 30, 2003. This net
decrease can be attributed to a decrease in interest income of $84,000, offset
by a decrease in interest expense of $75,000.

Interest income. Interest income on a tax equivalent basis decreased $84,000 or
2.3% to $3.6 million for the three months ended September 30, 2003, compared to
$3.7 million for the same period in the prior year. This decrease in interest
income can be attributed to a 77 basis point decline in the interest rate on
average interest-earning assets to 6.02% during the three months ended September
30, 2003, compared to 6.79% for the same period in the prior year. The yield on
average loans, securities and interest-earning deposits decreased to 6.57%,
4.48% and 1.91%, respectively, during the three months ended September 30, 2003,
compared to 7.34%, 5.26%, and 2.41%, respectively, for the same period in the
prior year. The decrease in interest income due to rate was offset by an
increase in the average balance of interest-earning assets, as average loans
receivable and securities increased to $181.2 million and $55.7 million,
respectively, during the three months ended September 30, 2003, compared to
$168.2 million and $43.6 million, respectively, during the same period in the
prior year. Offsetting the increase in average loans receivable and securities
was a decrease in the average balance of interest-earning cash and cash
equivalents to $3.1 million during the three months ended September 30, 2003,
compared to $6.1 million during the same period in the prior year. Increases in
average loans and securities between quarterly periods were funded by deposit
growth and, to a lesser extent, borrowed funds. See comments in the "Changes in
Financial Condition" section above for discussion of security, loan and deposit
growth factors.

Interest expense. Interest expense decreased $75,000 or 5.8% to $1.2 million for
the three months ended September 30, 2003, compared to $1.3 million for the same
period in the prior year. This decrease in interest expense can be attributed to
a 47 basis point decline in the interest rate on average interest-bearing
liabilities to 2.50% during the three months ended September 30, 2003, compared
to 2.97% for the same period in the prior year. The average cost of deposits
decreased to 2.40% during the three months ended September 30, 2003, compared to
2.93% for the same period in the prior year. The decrease in interest expense
due to rate was partially offset by an increase in the average balance of
interest-bearing liabilities, as average interest-bearing deposits and borrowed
funds increased to $177.1 million and $17.7 million, respectively, during the
three months ended September 30, 2003, compared to $168.4 million and $5.4
million, respectively, during the same period in the prior year.


                                       10
<PAGE>



Average Balance Sheet and Yield/Rate Analysis. The following table sets forth,
for periods indicated, information concerning the total dollar amounts of
interest income from interest-earning assets and the resulting average yields,
the total dollar amounts of interest expense on interest-bearing liabilities and
the resulting average costs, net interest income, interest rate spread and the
net interest margin earned on average interest-earning assets. For purposes of
this table, average loan balances include non-accrual loans and exclude the
allowance for loan losses, and interest income includes accretion of net
deferred loan costs. Interest and yields on tax-exempt loans and securities
(tax-exempt for federal income tax purposes) are shown on a fully tax equivalent
basis.

<TABLE>
<CAPTION>
(Dollar amounts in thousands)                        Three months ended September 30,

                                             2003                             2002
                                        ------------------------------   ------------------------------
                                         Average              Yield /     Average              Yield /
                                         Balance    Interest    Rate      Balance    Interest    Rate
-------------------------------------------------------------------------------------------------------

Interest-earning assets:
---------------------------------------
<S>                                      <C>          <C>        <C>      <C>          <C>        <C>
 Loans, taxable                          $174,040     $2,885     6.58%    $165,663     $3,069     7.35%
 Loans, tax exempt                          7,121        113     6.30%       2,500         43     6.85%
                                        ---------- ---------- --------   ---------- ---------- --------
                                          181,161      2,998     6.57%     168,163      3,112     7.34%
                                        ---------- ---------- --------   ---------- ---------- --------

 Securities, taxable                       40,206        373     3.68%      31,179        371     4.72%
 Securities, tax exempt                    15,504        256     6.56%      12,396        207     6.63%
                                        ---------- ---------- --------   ---------- ---------- --------
                                           55,710        629     4.48%      43,575        578     5.26%
                                        ---------- ---------- --------   ---------- ---------- --------

 Interest-earning cash equivalents          1,234          2     0.64%       4,765         24     2.00%
 Federal bank stocks                        1,886         13     2.73%       1,338         13     3.85%
                                        ---------- ---------- --------   ---------- ---------- --------
                                            3,120         15     1.91%       6,103         37     2.41%
                                        ---------- ---------- --------   ---------- ---------- --------

 Total interest-earning assets            239,991      3,642     6.02%     217,841      3,727     6.79%
   Cash and due from banks                  5,762                            6,660
   Other noninterest-earning assets        11,184                            6,076
                                        ---------- ---------- --------   ---------- ---------- --------

   Total assets                          $256,937     $3,642     5.62%    $230,577     $3,727     6.41%
                                        ========== ==========            ========== ==========

Interest-bearing liabilities:
---------------------------------------
 Interest-bearing demand deposits         $78,946       $144     0.72%     $72,545       $209     1.14%
 Time deposits                             98,119        929     3.76%      95,806      1,034     4.28%
                                        ---------- ---------- --------   ---------- ---------- --------
                                          177,065      1,073     2.40%     168,351      1,243     2.93%
                                        ---------- ---------- --------   ---------- ---------- --------

 Borrowed funds, term                      15,000        147     3.89%       5,000         57     4.52%
 Borrowed funds, overnight                  2,662          7     1.04%         427          2     1.86%
                                        ---------- ---------- --------   ---------- ---------- --------
                                           17,662        154     3.46%       5,427         59     4.31%
                                        ---------- ---------- --------   ---------- ---------- --------

 Total interest-bearing liabilities       194,727      1,227     2.50%     173,778      1,302     2.97%
   Noninterest-bearing demand deposits     38,084          -        -       32,884                   -
                                        ---------- ---------- --------   ---------- ---------- --------

  Funding and cost of funds               232,811      1,227     2.09%     206,662      1,302     2.50%
   Other noninterest-bearing
    liabilities                             2,023                            1,439
                                        ----------                       ----------

   Total liabilities                      234,834                          208,101
   Stockholders' equity                    22,103                           22,476
                                        ---------- ---------- --------   ---------- ---------- --------

   Total liabilities and stockholders'
    equity                               $256,937     $1,227     2.09%    $230,577     $1,302     2.50%
                                        ========== ==========            ========== ==========

Net interest income                                   $2,415                           $2,425
                                                   ==========                       ==========

Interest rate spread (difference
 between                                                         3.52%                            3.82%
                                                              ========                         ========
 weighted average rate on interest-
  earning
 assets and interest-bearing
  liabilities)

Net interest margin (net interest                                3.99%                            4.42%
                                                              ========                         ========
 income as a percentage of average
 interest-earning assets)
</TABLE>


                                       11
<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>



-0-
*T
%%%%-DO-NOT-MODIFY-THIS-LINE-%%%%_Table_10_Start
 (In thousands)                                                 Three months ended September 30,
                                                                      2003 versus 2002
                                                                   Increase (decrease) due to
                                                             -------------------------------------
                                                              Volume         Rate          Total
--------------------------------------------------------------------------------------------------
 Interest income:
<S>                                                             <C>          <C>            <C>
    Loans                                                       $230         $(344)         $(114)
    Securities                                                   145          (285)           145
    Interest-earning cash equivalents                            (11)          (11)           (22)
    Federal bank stocks                                            4            (4)             -
                                                             --------      --------      ---------

    Total interest-earning assets                                368           (453)          (85)
                                                             --------      --------      ---------

 Interest expense:
    Deposits                                                      62          (232)          (170)
    Borrowed funds                                               109           (14)            95
                                                             --------      --------      ---------

    Total interest-bearing liabilities                           171          (246)           (75)
                                                             --------      --------      ---------

 Net interest income                                            $197         $(207)          $(10)
                                                             ========      ========      =========
</TABLE>


Provision for loan losses. The Corporation records provisions for loan losses to
bring the total allowance for loan losses to a level deemed adequate to cover
probable losses inherent in the loan portfolio. In determining the appropriate
level of allowance for loan losses, management considers historical loss
experience, the present and prospective financial condition of borrowers,
current and prospective economic 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. The $15,000 decrease in the
Corporation's provision for loans losses between the three-month periods ended
September 30, 2003 and 2002 can be attributed to management's assessment of the
overall adequacy of the Corporation's allowance for loan losses at September 30,
2003, as well as the lower volume of loan charge-offs during the third quarter
2003 versus the same quarter in 2002.

Noninterest income. Noninterest income increased $110,000 or 30.8% to $467,000
during the three months ended September 30, 2003, compared to $357,000 during
the same period in the prior year. This increase can be attributed to the
increase in customer service fees earned, gains on sales of marketable equity
securities, earnings on bank-owned life insurance and other noninterest income
of $25,000, $60,000, $58,000 and $1,000, respectively. Partially offsetting this
favorable variance was a decrease in the gains on loans held for sale of
$34,000.

Noninterest expense. Noninterest expense increased $68,000 or 3.8% to $1.841
million during the three months ended September 30, 2003, compared to $1.773
million during the same period in the prior year. This increase in noninterest
expense can be attributed to increases in compensation and employee benefits
expense, intangible amortization expense and other noninterest expense of
$36,000, $22,000 and $39,000, respectively. This unfavorable variance was offset
by a decrease in premises and equipment expense of $29,000. Increased
noninterest expenses as a result of opening the Bank's new branch office in
Butler, Pennsylvania in January 2003 were, for the most part, offset by cost
savings through the consolidation of two offices into one office in the Clarion,
Pennsylvania market in March 2003.


                                       12
<PAGE>


Compensation and employee benefits expense increased $36,000 or 3.7% to $1.0
million during the three months ended September 30, 2003, compared to $986,000
for the same period in the prior year. This increase can be attributed primarily
to normal and expected salary and benefit cost increases and increased
management and employee incentive costs between the two periods.

Premises and equipment expense decreased $29,000 or 10.6% to $245,000 during the
three months ended September 30, 2003, compared to $274,000 for the same period
in the prior year. This decrease can be primarily attributed to lower
depreciation expenses of $17,000, which was a result of the cessation of
depreciation on certain equipment at the end of 2002. During the month ended
September 30, 2003, construction on the main office was substantially complete.
The completion of this project will impact future noninterest expense with the
increase of depreciation, which will begin in the fourth quarter of 2003.

Intangible amortization expense increased $22,000 to $34,000 during the three
months ended September 30, 2003, compared to $12,000 for the same period in the
prior year. This variance was a result of the reversal of previously recognized
goodwill amortization expense of $33,000 in the third quarter of 2002 related to
adopting SFAS No. 147, "Acquisitions of Certain Financial Institutions."

Other noninterest expense increased $39,000 or 7.8% to $540,000 during the three
months ended September 30, 2003, compared to $501,000 for the same period in the
prior year. This increase can be attributed primarily to increases in travel and
entertainment expenses, printing and office supplies, loan expense and marketing
expenses associated with the promotion of the aforementioned home equity
products. Partially offsetting this unfavorable variance was decreases in
telephone cost expenses, software depreciation, and transfer agent fees between
the two periods.

Provision for income taxes. The provision for income taxes decreased $55,000 or
20.8% to $209,000 for the three months ended September 30, 2003, compared to
$264,000 for the same period in the prior year. This decrease is a direct result
of the decrease in the Corporation's effective tax rate resulting from the
investment in bank owned life insurance and increased investment in tax-free
municipal securities and loans, as well as historic tax credits attributable to
the remodeling of the Corporation's headquarters. Partially offsetting this
decrease was an increase in the Corporation's pre-tax earnings base between the
third quarter 2003 and 2002.



                                       13
<PAGE>



Comparison of Results for the Nine month  Periods Ended  September 30, 2003
and 2002

General. The Corporation reported net income of $1.8 million and $1.6 million
for the nine months ended September 30, 2003 and 2002, respectively. The
$223,000 or 14.0% increase in net income for the nine months ended September 30,
2003, as compared to the nine months ended September 30, 2002, was attributable
to an increase in noninterest income of $323,000 and decreases in the provision
for loan losses and income taxes of $66,000 and $78,000, respectively. Partially
offsetting this favorable variance was a decrease in net interest income of
$141,000 and an increase in noninterest expense of $103,000.

Average Balance Sheet and Yield/Rate Analysis.

<TABLE>
<CAPTION>

(Dollar amounts in thousands)                    Nine months ended September 30, 2003

                                             2003                             2002
                                        ------------------------------ --------------------------------
                                         Average              Yield /    Average               Yield /
                                         Balance    Interest    Rate     Balance     Interest    Rate
-------------------------------------------------------------------------------------------------------

Interest-earning assets:
---------------------------------------
<S>                                      <C>          <C>        <C>      <C>          <C>        <C>
 Loans, taxable                          $170,433     $8,732     6.85%    $163,913     $9,316     7.60%
 Loans, tax exempt                          5,659        264     6.24%       2,500         37     1.98%
                                        ---------- ---------- -------- ------------ ---------- --------
                                         $176,092     $8,996     6.83%    $166,413     $9,353     7.51%
                                        ---------- ---------- -------- ------------ ---------- --------

 Securities, taxable                       36,015      1,076     3.99%      29,160      1,122     5.14%
 Securities, tax exempt                    16,254        793     6.52%      11,789        602     6.83%
                                        ---------- ---------- -------- ------------ ---------- --------
                                           52,269      1,869     4.78%      40,949      1,724     5.63%
                                        ---------- ---------- -------- ------------ ---------- --------

 Interest-earning cash equivalents          2,414         24     1.33%       4,390         55     1.68%
 Federal bank stocks                        1,642         39     3.18%       1,308         41     4.19%
                                        ---------- ---------- -------- ------------ ---------- --------
                                            4,056         63     2.08%       5,698         96     2.25%
                                        ---------- ---------- -------- ------------ ---------- --------

 Total interest-earning assets            232,417     10,928     6.29%     213,060     11,173     7.01%
   Cash and due from banks                  6,021                            5,554
   Other noninterest-earning assets        10,449                            5,493
                                        ---------- ---------- -------- ------------ ---------- --------

   Total assets                          $248,887    $10,928     5.87%    $224,107    $11,173     6.67%
                                        ========== ==========          ============ ==========

Interest-bearing liabilities:
---------------------------------------
 Interest-bearing demand deposits         $76,477       $458     0.80%     $71,636       $613     1.14%
 Time deposits                             99,057      2,828     3.82%      92,628      3,091     4.46%
                                        ---------- ---------- -------- ------------ ---------- --------
                                          175,534      3,286     2.50%     164,264      3,704     3.01%
                                        ---------- ---------- -------- ------------ ---------- --------

 Borrowed funds, term                      12,000        356     3.97%       5,000        175     4.68%
 Borrowed funds, overnight                  1,108          9     1.09%         115          1     1.16%
                                        ---------- ---------- -------- ------------ ---------- --------
                                           13,108        365     3.72%       5,115        176     4.60%
                                        ---------- ---------- -------- ------------ ---------- --------

 Total interest-bearing liabilities       188,642      3,651     2.59%     169,379      3,880     3.06%
   Noninterest-bearing demand deposits     35,686          -        -       31,390                   -
                                        ---------- ---------- -------- ------------ ---------- --------

  Funding and cost of funds               224,328      3,651     2.18%     200,769      3,880     2.58%
   Other noninterest-bearing
    liabilities                             1,758                            1,442
                                        ----------                     ------------

   Total liabilities                      226,086                          202,211
   Stockholders' equity                    22,801                           21,896
                                        ---------- ---------- -------- ------------ ---------- --------

   Total liabilities and stockholders'
    equity                               $248,887     $3,651     2.18%    $224,107     $3,880     2.58%
                                        ========== ==========          ============ ==========

Net interest income                                   $7,277                           $7,293
                                                   ==========                       ==========

Interest rate spread (difference
 between                                                         3.70%                            3.95%
                                                              ========                         ========
 weighted average rate on interest-
  earning
 assets and interest-bearing
  liabilities)

Net interest margin (net interest                                4.19%                            4.58%
                                                              ========                         ========
 income as a percentage of average
 interest-earning assets)

</TABLE>



                                       14
<PAGE>


Analysis of Changes in Net Interest Income.

<TABLE>
<CAPTION>

 (In thousands)                                                 Nine months ended September 30,
                                                                       2003 versus 2002
                                                                   Increase (decrease) due to
                                                             -------------------------------------
                                                              Volume         Rate          Total
--------------------------------------------------------------------------------------------------
 Interest income:
<S>                                                             <C>          <C>            <C>
    Loans                                                       $525         $(882)         $(357)
    Securities                                                   430          (285)           145
    Interest-earning cash equivalents                            (21)          (10)           (31)
    Federal bank stocks                                            9           (11)            (2)
                                                             --------      --------      ---------

    Total interest-earning assets                                943        (1,188)          (245)
                                                             --------      --------      ---------

 Interest expense:
    Deposits                                                     242          (660)          (418)
    Borrowed funds                                               228           (39)           189
                                                             --------      --------      ---------

    Total interest-bearing liabilities                           470          (699)          (229)
                                                             --------      --------      ---------

 Net interest income                                            $473         $(489)          $(16)
                                                             ========      ========      =========
</TABLE>

Net interest income. Net interest income on a tax equivalent basis decreased
$16,000 to $7.3 million for the nine months ended September 30, 2003. This
decrease can be attributed to a decrease in interest income of $245,000
partially offset by a decrease in interest expense of $229,000.

Interest income. Interest income on a tax equivalent basis decreased $245,000 or
2.2% to $10.9 million for the nine months ended September 30, 2003, compared to
$11.2 million for the same period in the prior year. This net decrease in
interest income can be attributed to decreases in interest earned on loans and
interest-earning cash equivalents and federal bank stocks of $357,000 and
$33,000, respectively, partially offset by an increase in interest earned on
securities of $145,000.

Contributing to the decrease in interest income was a decrease in the yield on
interest-earning assets of 72 basis points to 6.29% for the nine months ended
September 30, 2003, compared to 7.01% for the same period in the prior year. The
yield on average loans, securities and interest-earning cash equivalents
decreased to 6.83%, 4.78%, and 2.08%, respectively, during the nine months ended
September 30, 2003, compared to 7.51%, 5.63%, and 2.25%, respectively, for the
same period in the prior year. Partially offsetting the decrease in the yield on
interest-earning assets was an increase in average interest-earning assets of
$19.4 million or 9.1% to $232.4 million for the nine months ended September 30,
2003, compared to $213.1 million for the same period in the prior year. The
increase in average interest-earning assets can be attributed to increases in
average loans receivable and securities of $9.7 million and $11.3 million,
respectively, offset by a decrease in interest-earning cash equivalents of $1.6
million. Average loans receivable increased to $176.1 million and average
securities increased to $52.3 million during the nine months ended September 30,
2003, compared to $166.4 million and $40.9 million, respectively, during the
same period in the prior year. See comments in the "Changes in Financial
Condition" section above for discussion of security, loan and deposit growth
factors.

Aside from changes in the volume and rates of interest-earning assets and
interest-bearing liabilities discussed herein, $93,000 of the decrease in net
interest income between the year to date periods can be attributed to the payoff
of a previously non-performing commercial real estate loan in March 2002 that
had been on non-accrual status. In connection with the loan payoff, the
Corporation received all principal and interest due under the contractual terms
of the loan agreement and therefore interest collected was appropriately
recorded as loan interest income during the quarter ended March 31, 2002.



                                       15
<PAGE>



Interest expense. Interest expense decreased $229,000 or 5.9% to $3.7 million
for the nine months ended September 30, 2003, compared to $3.9 million for the
same period in the prior year. This decrease in interest expense can be
attributed to a 47 basis point decline in the interest rate on average
interest-bearing liabilities to 2.59% during the nine months ended September 30,
2003, compared to 3.06% for the same period in the prior year. The average cost
of deposits and borrowed funds decreased to 2.50% and 3.72%, respectively,
during the nine months ended September 30, 2003, compared to 3.01% and 4.60%,
respectively, for the same period in the prior year. The decrease in interest
expense due to rate was partially offset by an increase in the average balance
of interest-bearing liabilities as average interest-bearing deposits and
borrowed funds increased to $175.5 million and $13.1 million, respectively,
during the nine months ended September 30, 2003, compared to $164.3 million and
$5.1 million, respectively, during the same period in the prior year.

Provision for loan losses. The $66,000 or 22.7% decrease in the Corporation's
provision for loans losses between the nine month periods ended September 30,
2003 and 2002 was primarily the result of management's assessment of the overall
adequacy of the Corporation's allowance for loan losses at September 30, 2003,
as well as the lower volume of loan charge-offs during the nine month period
ending September 30, 2003 versus the same period in the prior year.

Noninterest income. Noninterest income increased $323,000 or 32.5% to $1.3
million for the nine months ended September 30, 2003 compared to $995,000 for
the same period in the prior year. This increase can principally be attributed
to the increase in service fees, gains on sales of marketable equity securities
and earnings on bank-owned life insurance of $73,000, $115,000 and $175,000,
respectively. Offsetting this increase in noninterest income are decreases in
gains on sales of loans held for sale and other noninterest income of $16,000
and $24,000, respectively.

Noninterest expense. Noninterest expense increased $103,000 or 1.9% to $5.7
million during the nine months ended September 30, 2003 compared to $5.6 million
for the same period in the prior year. This increase in noninterest expense can
be attributed to an increase in compensation and employee benefits expense of
$213,000, offset by decreases in premises and equipment expense, intangible
amortization expense and other expenses of $76,000, $2,000 and $32,000,
respectively. Increased noninterest expenses as a result of opening the Bank's
new branch office in Butler, PA in January 2003 were, for the most part, offset
by cost savings through the consolidation of two offices into one office in the
Clarion, Pennsylvania market in March 2003.

Compensation and employee benefits expense increased $213,000 or 7.1% to $3.2
million during the nine months ended September 30, 2003, compared to $3.0
million for the same period in the prior year. This increase can be attributed
primarily to normal and expected salary and benefit cost increases and increased
management and employee incentive costs between the two periods.

Premises and equipment expense decreased $76,000 or 8.8% to $786,000 during the
nine months ended September 30, 2003, compared to $862,000 for the same period
in the prior year. This decrease can be primarily attributed to lower
depreciation expenses of $62,000, which was principally a result of the
cessation of depreciation on certain equipment at the end of 2002. During the
nine months ended September 30, 2003, construction on the main office was
substantially complete. The completion of this project will impact future
noninterest expense with the increase of depreciation, which will begin in the
fourth quarter of 2003.

Other noninterest expense decreased $32,000 or 2.0% to $1.567 million during the
nine months ended September 30, 2003, compared to $1.599 million for the same
period in the prior year. This decrease can primarily be attributed to decreased
telephone cost expenses, software depreciation, and travel and entertainment
expenses between the two periods. Partially offsetting this favorable variance
was an increase in printing and office supplies, postage, and marketing expenses
associated with the introduction of the Bank's internet banking product and the
promotion of home equity products.



                                       16
<PAGE>



Provision for income taxes. The provision for income taxes decreased $78,000 or
11.8% to $585,000 for the nine months ended September 30, 2003, compared to
$663,000 for the same period in the prior year. This decrease is a direct result
of the decrease in the Corporation's effective tax rate as a result of increased
investments in tax-free instruments and tax credits - see also comments in
quarterly analysis section.


                                       17
<PAGE>


LIQUIDITY

The Corporation's primary sources of funds generally have been deposits obtained
through the offices of the Bank, borrowings from the FHLB, and amortization and
prepayments of outstanding loans and maturing securities. During the nine months
ended September 30, 2003, the Corporation used its sources of funds primarily to
fund loan commitments and, to a lesser extent, purchase securities. As of such
date, the Corporation had outstanding loan commitments, including undisbursed
loans and amounts available under credit lines, totaling $14.5 million, and
standby letters of credit totaling $566,000.

At September 30, 2003, time deposits amounted to $98.9 million or 45.8% of the
Corporation's total consolidated deposits, including approximately $25.8
million, which were 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 line of credit and term borrowing capacity from the FHLB and, to a limited
and rare extent, the sale of loans. At September 30, 2003, the Corporation's
borrowing capacity with the FHLB, net of funds borrowed, was $106.3 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.

Item 3.  Controls and Procedures

(a)   The Corporation maintains disclosure controls and procedures that are
      designed to ensure that information required to be disclosed in the
      Corporation's Exchange Act reports is recorded, processed, summarized and
      reported within the time periods specified in the SEC's rules and forms,
      and that such information is accumulated and communicated to the
      Corporation's management, including its Chief Executive Officer and
      Principal Financial and Accounting Officer, as appropriate, to allow
      timely decisions regarding required disclosure based closely on the
      definition of "disclosure controls and procedures" in Rule 13a-14(c).

      As of the quarter ended September 30, 3003, 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 the Corporation's Principal Financial and Accounting Officer,
      of the effectiveness of the design and operation of the Corporation's
      disclosure controls and procedures. Based on the foregoing, the
      Corporation's Chief Executive Officer and Principal Financial and
      Accounting Officer concluded that the Corporation's disclosure controls
      and procedures were effective.

(b)   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



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<PAGE>



PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

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

Item 2.  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)      Exhibits

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

(b)      Reports on Form 8-K

         The Corporation filed a Form 8-K dated July 17, 2003 to announce second
quarter 2003 earnings.


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<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.



Date:  November 14, 2003       By:   /s/ David L. Cox
                                     -------------------------------------------
                                     David L. Cox
                                     Chairman of the Board,
                                     President and Chief Executive Officer

Date:  November 14, 2003       By:   /s/ Shelly L. Rhoades
                                     ------------------------------------------
                                     Assistant Controller
                                    (Principal Financial and Accounting Officer)



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