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 September 30, 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
(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 November 27, 1998, there were 1,395,852 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>
<S>     <C>                                                                               <C>
Part I   Financial Information                                                              Page
                                                                                            ----
         Item 1.           Consolidated Financial Statements (Unaudited)                     

                           Consolidated Balance Sheet, September 30, 1998 and
                           December 31, 1997                                                 3

                           Consolidated Statement of Income
                           Three months ended September 30, 1998 and 1997 and
                           Six months ended September 30, 1998 and 1997                      4

                           Consolidated Statement of Comprehensive Income
                           Three months ended September 30, 1998 and 1997 and
                           Six months ended September 30, 1998 and 1997                      5

                           Consolidated Statement of Changes in
                           Stockholders' Equity                                              6

                           Consolidated Statement of Cash Flows
                           Six months ended September 30, 1998 and 1997                      7

                           Notes to Consolidated Financial Statements                      8 - 10


         Item 2.           Management's Discussion and Analysis of Financial
                           Condition and Results of Operations                            11 - 18


Part II  Other Information

         Item 1.           Legal Proceedings                                                 19

         Item 2.           Changes in Securities                                             19

         Item 3.           Defaults Upon Senior Securities                                   19

         Item 4.           Submission of Matters to a Vote of Securities Holders             19

         Item 5.           Other Information                                                 19

         Item 6.           Exhibits and Reports on Form 8-K                                  19

         Signatures                                                                          20
</TABLE>

                                       2
<PAGE>


                            EMCLAIRE FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET
              (Unaudited - dollars in thousands, except share data)
<TABLE>
<CAPTION>
                                                                                       September 30,      December 31,
                                                                                           1998               1997
                                                                                      ----------------  ----------------
<S>  <C>                                                                                   <C>               <C>      
ASSETS
     Cash and due from banks                                                                 $  7,813          $   4,975
     Federal funds sold                                                                         3,500                  -
     Time deposits with other financial institutions                                              100                  -
     Investment securities:
         Available for sale                                                                    30,278             31,977
         Held to maturity (estimated market value
            of $3,486 and $6,053)                                                               3,428              6,057
     Loans                                                                                    132,091             86,144
     Less allowance for loan losses                                                             1,291                874
                                                                                      ---------------   ----------------
         Net loans                                                                            130,800             85,270
      Premises and equipment                                                                    3,680              2,619
      Accrued interest and other assets                                                         7,053              3,058
                                                                                      ---------------   ----------------
            TOTAL ASSETS                                                                     $186,652          $ 133,956
                                                                                      ===============   ================

LIABILITIES
     Deposits
         Non-interest bearing demand                                                         $ 22,925          $  19,765
         Interest bearing demand                                                               20,480             17,276
         Savings                                                                               22,128             16,261
         Money market                                                                          20,370             18,077
         Time                                                                                  76,437             46,276
                                                                                      ---------------   ----------------
            Total deposits                                                                    162,340            117,655
     Obligation under capital lease                                                                30                 63
     Borrowed funds                                                                             2,001              2,200
     Accrued interest and other liabilities                                                     1,183                540
                                                                                      ---------------   ----------------
            TOTAL LIABILITIES                                                                 165,554            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, 1,395,852 and 1,081,453 shares issued in 1998 and 1997                     1,745              1,352
     Additional paid in capital                                                                10,871              4,432
     Retained earnings                                                                          8,070              7,492
     Net unrealized gain on securities                                                            412                222
                                                                                      ---------------   ----------------
            TOTAL STOCKHOLDERS' EQUITY                                                         21,098             13,498
                                                                                      ---------------   ----------------

            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $186,652          $ 133,956
                                                                                      ===============   ================
</TABLE>



See accompanying notes to the consolidated financial statements.

                                        3



<PAGE>


                            EMCLAIRE FINANCIAL CORP.
                        CONSOLIDATED STATEMENT OF INCOME
            (Unaudited - dollars in thousands, except per share data)
<TABLE>
<CAPTION>
                                                     Three Months Ended September 30,     Nine Months Ended September 30,
                                                     --------------------------------     -------------------------------
                                                          1998              1997              1998               1997
                                                          ----              ----              ----               ----
<S>                                                  <C>               <C>               <C>                <C>          
INTEREST INCOME
Loans, including fees                                 $  2,291          $  1,836          $  6,189           $  5,081     
Interest bearing deposits in other banks                     -                 -                 1                  1     
Federal funds sold                                          51                33               116                 65
Investment securities:
         Taxable                                           488               538             1,485              1,743
         Exempt from federal income tax                     48                44               144                140
                                              -----------------  ----------------  ----------------   ----------------
            Total interest income                        2,878             2,451             7,935              7,030
                                              -----------------  ----------------  ----------------   ----------------

INTEREST EXPENSE
     Deposits                                                                                          
                                                         1,143               920             3,075              2,708
     Borrowed funds                                         29                29                89                 39
     Lease obligation                                        -                 1                 2                  4
                                              -----------------  ----------------  ----------------   ----------------
            Total interest expense                       1,172               950             3,166              2,751
                                              -----------------  ----------------  ----------------   ----------------

NET INTEREST INCOME                                      1,706             1,501             4,769              4,279

Provision for loan losses                                   55                50               155                165
                                              -----------------  ----------------  ----------------   ----------------

NET INTEREST INCOME AFTER
     PROVISION FOR LOAN LOSSES                           1,651             1,451             4,614              4,114
                                              -----------------  ----------------  ----------------   ----------------

OTHER OPERATING INCOME
     Service fees on deposit accounts                      145               131               401                337
     Other                                                  56                32               139                 84
                                              -----------------  ----------------  ----------------   ----------------
            Total other operating income                   201               163               540                421
                                              -----------------  ----------------  ----------------   ----------------

OTHER OPERATING EXPENSE
     Salaries and employee benefits                        603               577             1,805              1,687
     Occupancy, furniture and equipment                    241               165               625                508
     Other                                                 475               361             1,267              1,072
                                              -----------------  ----------------  ----------------   ----------------
            Total other operating expense                1,319             1,103             3,697              3,267
                                              -----------------  ----------------  ----------------   ----------------

Income before income taxes                                 533               511             1,457              1,268
Income taxes                                               169               160               452                388
                                              -----------------  ----------------  ----------------   ----------------

NET INCOME                                            $    364          $    351          $  1,005           $    880
                                              =================  ================  ================   ================

EARNINGS PER SHARE                                    $   0.31          $   0.32          $   0.90           $   0.81
DIVIDENDS PER SHARE                                       0.12              0.11              0.36               0.32

</TABLE>

See accompanying notes to the consolidated financial statements.


                                       4

<PAGE>


                            EMCLAIRE FINANCIAL CORP.
                     CONSOLIDATED STATEMENT OF COMPREHENSIVE
                INCOME (Unaudited - dollars in thousands, except
                                 per share data)
<TABLE>
<CAPTION>
                                     Three Months Ended September 30,       Nine Months Ended September 30,
                                               1998        1997                     1998           1997
                                            -------    --------              -----------     ----------

<S>                                        <C>         <C>                     <C>             <C>    
Net Income                                  $   364     $   351                 $  1,005        $   880

Other comprehensive income, net of tax
     Unrealized gain on securities              188         155                      190             49
                                            --------   --------              -----------     ----------

COMPREHENSIVE NET INCOME                    $   552     $   506                 $  1,195        $   929
                                            ========   ========              ===========     ==========


</TABLE>

See accompanying notes to the consolidated financial statements.


                                       5
<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                                                                1,005                           1,005
Dividends declared
     ($.36 per share)                                                      (389)                           (389)
Issuance of 314,399 shares of
     common stock in merger
     transaction (Note 2)                    393           6,439                                          6,832
Net unrealized gain on securities                                                           190             190
                                     ------------ --------------- --------------  -------------- ---------------
Balance September 30, 1998              $  1,745        $ 10,871       $  8,108          $  412        $ 21,136
                                     ============ =============== ==============  ============== ===============


</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>
                                                                             Nine Months Ended September 30,
                                                                                 1998               1997
                                                                           -----------------  -----------------
<S> <C>                                                                          <C>                 <C>    
OPERATING ACTIVITIES
     Net income                                                                    $  1,005            $   880
     Adjustments to reconcile net income to net
         cash provided by operating activities:
            Depreciation and amortization                                               498                449
            Net amortization of investment security
                discounts and premiums                                                  109                158
            Provision for loan losses                                                   155                165
            (Increase) decrease in accrued interest receivable                         (126)                60
            Increase in accrued interest payable                                       (136)                (2)
            Other, net                                                                 (192)              (156)
                                                                           -----------------  -----------------
                Net cash provided by operating activities                             1,313              1,554
                                                                           -----------------  -----------------

INVESTING ACTIVITIES
     Proceeds from maturities and repayments of investment securities:
            Available for sale                                                        3,000              4,000
            Held to maturity                                                          2,596              3,707
     Proceeds from sales of investment securities:
            Available for sale                                                            -              1,990
     Purchases of investment securities:
            Available for sale                                                         (543)            (1,503)
     Net loan originations                                                          (10,187)           (14,774)
     Purchases of premises and equipment                                             (1,034)              (150)
     Proceeds from sales of premises and equipment                                        -                 10
     Net proceeds from merger acquisition (Note 2)                                    2,232                  -
                                                                           -----------------  -----------------
                Net cash used for investing activities                               (3,936)            (6,720)
                                                                           -----------------  -----------------

FINANCING ACTIVITIES
     Net increase in deposits                                                         9,620                798
     Decrease in short-term borrowings                                                 (200)                 -
     Proceeds from borrowed funds                                                         -              2,000
     Payments for obligation under capital lease                                        (32)               (30)
     Cash dividends paid                                                               (427)              (351)
                                                                           -----------------  -----------------
                Net cash provided by financing activities                             8,961              2,417
                                                                           -----------------  -----------------

                Increase in cash and cash equivalents                                 6,338             (2,749)

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

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $ 11,313           $  5,493
                                                                           =================  =================

</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. MERGER ACQUISITION

At the close of business August 31, 1998, the Company  completed the acquisition
of Peoples Savings Financial Corporation ("Peoples"), in a transaction accounted
for as a purchase.  This  transaction  was  consummated  through the issuance of
314,399 shares of Emclaire  common stock and a cash payment of  $5,684,000,  and
was valued at approximately $12.6 million.  Under the terms of the Agreement and
Plan and of Reorganization  dated April 7, 1998, and approved by shareholders of
both  companies on August 27, 1998,  Peoples'  wholly-owned  subsidiary  Peoples
Savings  Bank was  merged  into and  became  part of  Farmers.  The  results  of
operations  for the  three  branch  offices  acquired  in this  transaction  are
included in the accompanying  financial statements since the date of acquisition
As  a  result  of  this  transaction,   total   consolidated   assets  increased
approximately   $42.1  million,   including  net  fair  value  and  identifiable
intangible asset adjustments of $917,000, and goodwill of $2.6 million. The fair
value adjustments and identifiable  intangible assets are being amortized over 2
to 20 years. The resulting goodwill is being amortized over 25 years..

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. For the
three and nine month periods  ending  September  30, 1998 and 1997,  the average
number of shares outstanding totaled 1,183,974 and 1,081,453,  and 1,116,002 and
1,081,453,  respectively,  after giving effect to a five percent stock  dividend
issued in December 1997.

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


                                       8
<PAGE>

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 and nine months
ended September 30, 1998 and 1997 (in thousands):

<TABLE>
<CAPTION>

                                                                Three Months Ended September 30, 1998
                                                                -------------------------------------
                                                             Before             Tax              Net of
                                                           Tax Amount         Benefit          Tax Amount
                                                           ----------         -------          ----------
<S>                                                        <C>               <C>               <C>    
Unrealized gain on securities:
     Unrealized holding gain during the period              $   285           $    97           $   188
                                                            -------           --------          -------

         Other comprehensive income                         $   285           $    97           $   188
                                                            =======           =======           =======

                                                                Three Months Ended September 30, 1997
                                                                -------------------------------------
                                                             Before             Tax              Net of
                                                           Tax Amount         Benefit          Tax Amount
                                                           ----------         -------          ----------
Unrealized gain on securities:
     Unrealized holding loss during the period              $   235           $    80           $   155
                                                            -------           -------           -------

         Other comprehensive income                         $   235           $    80           $   155
                                                            =======           =======           =======

                                                                Nine Months Ended September 30, 1998
                                                                ------------------------------------
                                                             Before             Tax            Net of
                                                           Tax Amount         Benefit        Tax Amount
                                                           ----------         -------        ----------
Unrealized gain on securities:
     Unrealized holding gain during the period              $   288           $    98         $   190
                                                            --------         --------         -------

         Other comprehensive income                         $   288           $    98         $   190
                                                            =======          ========         =======

                                                                Nine Months Ended September 30, 1997
                                                                ------------------------------------
                                                             Before             Tax              Net of
                                                           Tax Amount         Benefit          Tax Amount
                                                           ----------         -------          ----------
Unrealized gain on securities:
     Unrealized holding gain during the period              $    74           $    25           $    49
                                                            --------          --------          -------

         Other comprehensive income                         $    74           $    25           $    49
                                                            =======           =======           =======

</TABLE>

                                       9

<PAGE>


The components of  accumulated  other  comprehensive  income for the nine months
ended  September 30, 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 nine months ended September 30, 1997,
the net  unrealized  gain on securities  had a beginning  balance of $124, a net
unrealized gain of $49, and an ending balance of $173.

5. LOANS

Major classifications of loans are summarized as follows (in thousands):

                                         September 30,      December 31,
                                              1998              1997
                                        ----------------- -----------------

Commercial and industrial                      $  13,408         $  11,147
Real estate mortgages
     Residential                                  85,889            45,709
     Commercial and other                         17,879            15,188
Consumer                                          14,915            14,100
                                        ----------------- -----------------
                                                 132,091            86,144
Less allowance for loan losses                     1,291               874
                                        ----------------- -----------------
                                               $ 130,800         $  85,270
                                        ================= =================

The Bank's primary business  activity is with customers  located within Venango,
Clarion,   Butler,   Elk,   Clearfield  and  Jefferson   Counties.   Commercial,
residential, personal, and agricultural loans are granted. Although the Bank has
a diversified  loan portfolio at September 30, 1998 and December 31, 1997, loans
outstanding to individuals  and businesses are dependent upon the local economic
conditions within the immediate trade area.

6. RECENT ACCOUNTING PRONOUNCEMENTS

In June  1998,  the  Financial  Accounting  Standards  Board  adopted  Financial
Accounting  Standards  Statement No. 133 "Accounting for Derivative  Instruments
and  Hedging  Activities".   This  statement   establishes  standards  requiring
companies to record  derivatives  on the balance sheet as assets or  liabilities
measured at fair value.  Gains or losses resulting from changes in the values of
derivatives would be accounted for based on whether the instrument qualifies for
hedge  accounting.  To  qualify  for hedge  accounting  treatment,  the  hedging
relationship  must be  highly  effective  in  achieving  the goal of  offsetting
changes in either fair value or cash flows.  This  statement  is  effective  for
fiscal years beginning  after June 15, 1999.  Management has not fully evaluated
the impact the adoption of Statement No. 133 may have on the financial condition
or the results of operations.  However,  it is not  anticipated  the adoption of
this statement will have a material impact.




                                       10
<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 September 30, 1998 and 1997
----------------------------------------------------------------

Net Income - Net income for the three  months ended  September  30, 1998 totaled
$364,000  or $.31 per  share,  approximating  the  $351,000  or $.32  per  share
recorded  during the same period in 1997,  adjusted for the five  percent  stock
dividend paid in December 1997. Net income showed only a modest  increase due to
increased  operating costs,  specifically,  those associated with acquisition of
Peoples Savings Financial  Corporation,  the completion of the data center,  the
upgrade of the main frame computer system, the transition to check imaging,  and
the  opening of the de novo  branch  office in the  Clarion  Mall.  These  costs
approximated  the  increases in net interest  income and other income which rose
$205,000 or 14% and $38,000 or 23%, respectively for the comparative three month
periods ended September 30, 1998 and 1997.

The reported net income  resulted in  annualized  returns on average  assets and
average  equity of .91% and 8.81% for the quarter  ended  September 30, 1998, as
compared to returns of 1.05% and 10.61% for the same period in 1997.  Net income
for the  third  quarter  of 1998 as  compared  to the  second  quarter  of 1998,
represents an increase of $62,000 or 21%. This increase is  attributable  to the
increase in net interest income,  resulting from the increased volume of earning
assets.

Interest  Income - Interest income for the three months ended September 30, 1998
increased approximately $427,000 or 17% from the same period in 1997, due to the
increase in the loan  portfolio.  The average  balance of the loan portfolio for
the quarter ended increased $24.9 million from the same period in 1997 to $106.7
million.  The acquisition of Peoples represented  approximately $11.7 million of
the total  average loan growth.  The  remainder of the increase is  attributable
largely to the increase in residential  mortgage loans. The tax equivalent yield
on the loan  portfolio  for the quarter  decreased 42 basis points to 8.55% from
the same  period  in 1997,  due to the  impact  of the  ongoing  refinancing  of
mortgage loans, particularly residential mortgages.

Average  investment  securities for the third quarter of 1998 were $34.5 million
resulting in a tax-equivalent yield of 6.45% for the quarter,  compared to $38.9
million and 6.18% during the same period in 1997. Due to continuing loan demand,
investment portfolio maturities generally are reinvested in the loan portfolio.

Despite the growth in the volume of average earning assets which increased $22.9
million for the third  quarter of 1998 as compared to 1997,  the tax  equivalent
yield on  earning  assets  fell to 7.91%  during the third  quarter of 1998,  as
compared to 8.01% during the same period in 1997, due to the general  decline in
interest  rates.  With the recent actions taken by the Federal  Reserve Board in
lowering the discount rate, it is  anticipated  the yield on earning assets will
continue to decline for the foreseeable future.

                                       11


<PAGE>


Interest expense - Interest expense  increased  $222,000 or 23% during the third
quarter of 1998, as compared to the same period in 1997.  The average  volume of
interest bearing  liabilities  during the quarter increased $18.4 million or 19%
during the comparative periods.  Approximately $11.6 million of this increase is
attributable to the acquisition of Peoples.  During the comparative quarters the
overall  rate paid on these  liabilities  rose from 3.83% to 3.98%.  This higher
cost of funds is due to a combination  of factors,  including the higher cost of
funds of the deposit liabilities assumed in the merger, due to the concentration
in higher yielding certificates of deposit, combined with the continuing efforts
to use retail deposits to fund loan growth.  The use of a Federal Home Loan Bank
advance as an alternative source of funds, has also contributed to the increased
cost of funds.

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

Net Interest  Income - As a result of the increase in interest income due to the
increased  volume of earning  assets  which more than  offset  the  increase  in
interest expense, net interest income rose $205,000 or 14% for the quarter ended
September  30,  1998,  as  compared  to the same  period  in  1997.  The net tax
equivalent  yield on earning  assets for the quarter was 4.73%, a 22 basis point
decline from the 4.95% yield earned during 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
quarter,  the provision  for loan losses for the second  quarter of 1998 totaled
$55,000,  as compared  to $50,000  provided  during the same period in 1997.  In
addition,  the allowance for loan losses  increased  $349,000 as a result of the
acquisition of Peoples.

Other operating income - Other operating income increased $36,000 or 22% for the
third quarter of 1998, due  principally to the impact of 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  and third  quarters  of 1997,  convenience  fees  levied on
non-Farmers  customers  who use an ATM  sponsored by Farmers  National Bank were
initiated,  along with the introduction of the MasterMoney(TM) debit card. These
changes  resulted in new or additional  fee income  totaling  $15,000 during the
third  quarter of 1998,  as compared to the same period in 1997.  The  remaining
increase in fee income is  attributed  to the  increase in the number of deposit
accounts, principally overdraft charges.

Other  Operating  Expense  - During  the  third  quarter  of 1998,  total  other
operating  expenses  increased  $214,000  or 19% to $1.3  million  from the same
period in 1997. The rise in other operating  expenses is due to a combination of
recurring and non-recurring  expenditures.  Recurring  expenditures included the
costs of operating a de novo branch office facility opened in March 1998,  costs
associated  with  the  operation  of the data  center,  increases  in  recurring
expenses for such things as salaries and employee  benefits,  equipment  service
contracts and ATM network fees; and operating costs for the three branch offices
acquired in the  merger,  which  impacted  all  aspects of  operating  expenses.
Non-recurring costs were recorded related to the promotion and implementation of
the check imaging system, and for transition costs related to the merger.


                                       12

<PAGE>

The operation of the Clarion Mall office  resulted in  approximately  $68,000 of
additional  operating expenses during the third quarter of 1998. These costs are
considered  to be  recurring,  and can be  expected  to be subject  to  periodic
increases  for  such  items as  salary  and  benefit  adjustments,  office  rent
escalation  and  other  costs  normally   subject  to  inflationary  or  pricing
increases.  While the  results of  operations  for this  office are in line with
projections,  overall  deposit  and  loan  growth  to date  remain  short of the
projected results.

As a result of the expansion of the branch office  network,  salary and employee
benefit costs increased  $26,000 or 5% to $603,000 for the third quarter of 1998
as compared to $577,000  during the same period in 1997.  The de novo office and
former Peoples'  offices resulted in a net increase in employee related costs of
approximately $32,000. This more than offset the $30,000 reduction in the profit
sharing accrual during the comparative  quarters.  In addition,  periodic salary
adjustments and scheduled  employee health  insurance  premiums  account for the
balance of the increase.

Occupancy and equipment costs increased  $74,000 or 45% during the third quarter
of 1998, as compared to the same period in 1997. The  additional  branch offices
and data center accounted for $40,000 of the increase. Periodic costs associated
with equipment  service contracts  accounted for $15,000 of the increase.  These
costs  relate  principally  to  maintenance  agreements  on the Bank's  data and
document  processing  equipment.  During the third  quarter of 1998,  main frame
computer  equipment was upgraded,  and a check imaging program was  implemented.
Depreciation  expense related those aspects of these projects that are completed
and operational  amounted to  approximately  $9,000 for the quarter.  During the
third quarter,  a project to enhance the wide area network was  initiated.  This
will entail adding the three branches  acquired in the merger to the network and
expanding the processing capacity of the entire network.  The capital outlay for
this project is expected to approximate $100,000.

Other operating  expense  increased  $114,000 or 32% during the third quarter of
1998, as compared to the same period in 1997 and totaled $475,000. Non recurring
costs  incurred  during  the  latest  quarter  included  $16,000  related to the
promotion  of the check  imaging  service,  and $10,000 in  transition  expenses
related to the merger,  and approximately  $6,000 in line charges related to the
wide area network project.  Additional  non-recurring  expenses related to these
projects are expected to be incurred during the fourth quarter, and are expected
to total approximately $18,000. Recurring costs increased during the comparative
quarter due to items such as: increased ATM and debit card processing fees which
increased $14,000 or 59% to $36,000;  printing and supplies increased $28,000 to
$61,000 due to costs  associated with opening the expanded  branch network,  and
the conversion to check imaging.  During the third quarter,  management  changed
long  distance  telephone  providers  to  reduce  the  cost of  telephone  voice
communications.  This change which became  effective  during the fourth  quarter
should   reduce  the  voice   communications   costs  at  existing   offices  by
approximately  20%. This savings should help to offset the costs associated with
the  branch  offices  added  as a  result  of the  merger.  As a  result  of the
acquisition of Peoples,  amortization  costs related to identifiable  intangible
assets and goodwill  increased  approximately  $15,000  during the quarter.  The
amortization  costs related to the acquisition of Peoples are expected to amount
to approximately $180,000 annually.

                                       13

<PAGE>

Income Taxes - The  provision  for income taxes of $169,000 for the three months
ended  September 30, 1998,  approximated  the $160,000  recorded during the same
period  of  1997.   Income  taxes  as  a  percentage  of  pre-tax  earnings  was
approximately 31% for the comparative three month periods.

Comparison of the Nine Months Ended September 30, 1998 and 1997
---------------------------------------------------------------

Net Income - Net income for the nine months  ended  September  30, 1998  totaled
$1.0  million or $.90 per share,  as  compared to $880,000 or $.81 per share for
the same period in 1997, an increase of $125,000 or 14%.

Net Interest Income - Net interest income  increased  $490,000 or 11% during the
first nine months of 1998,  as compared to the same period in 1997. As discussed
in the  "Comparison  of the Three  Months  Ended  September  30,  1998 and 1997"
section  of this  report,  the  increase  in loan  volume  has been  principally
responsible for the increase in net interest  income.  For the nine months ended
September  30, 1998 the net tax  equivalent  yield on earning  assets was 4.85%,
equaling the yield for the same period in 1997.

Provision  for Loan  Losses - The  provision  for loan  losses for the first six
months of 1998 totaled  $155,000,  as compared to $165,000  recorded  during the
same period in 1997.  As  discussed  in the quarter to quarter  comparison,  the
allowance for loan losses  increased an  additional  $349,000 as a result of the
acquisition of Peoples.

Other  Operating  Income - Other  operating  income of  $538,000  represents  an
increase  of  $117,000  or 28% for the  comparative  year-to-date  periods.  The
increase  is largely  attributed  to the impact of ATM  convenience  charges and
debit card fees,  combined with the increase in overdraft charges as a result of
the  increased  number  of  accounts,  as  discussed  in the  quarter-to-quarter
comparison.

Other  Operating  Expense - For the first nine  months of 1998  other  operating
expenses totaled $3.7 million as compared to $3.3 million for the same period in
1997, an increase of $428,000 or 13%. Total operating costs for the Clarion Mall
and merged offices accounted for  approximately  $230,000 of the total increase.
Non-recurring  charges  related to check imaging  promotion,  merger  transition
costs and computer network upgrades totaled $32,000. The remaining increase can
be attributed to increases in normal recurring costs such as, ATM and debit card
operating costs which increased  $35,000,  telephone,  and printing and supplies
which  increased  $6,000  and  $27,000  (net  of  costs  related  to the  branch
operations and non-recurring previously discussed).  Software amortization costs
increased   $11,000  due  to  the  computer  and  check  imaging   applications.
Correspondent  and  check  clearing  fees  increased  $11,000  due  largely  the
increased volume,  while losses on customer accounts increased $16,000, due to a
loss incurred in the in the first quarter of 1998.

Income Taxes - The  provision for income taxes for the first nine months of 1998
totaled  $452,000,  as compared to $338,000  during the same period in 1997. The
increase is  attributed to the increase in pre-tax  income.  For the nine months
ended September 30, 1998, income tax expense  represented 31% of pre-tax income,
as compared to 30% for the same period in 1997.


                                       14


<PAGE>

Financial Condition
-------------------

As  previously  discussed,  the Company  completed  the  acquisition  of Peoples
Savings Financial  Corporation as to the close of business August 31, 1998. As a
result of this transaction,  total consolidated  assets increased  approximately
$42.1  million,  including  net fair  value and  identifiable  intangible  asset
adjustments  of  $917,000;  and  goodwill  adjustments  of $2.6  million.  Total
liabilities and  shareholders'  equity increased $35.2 million and $6.9 million,
respectively.

At September 30, 1998, the Company reported total consolidated  assets of $186.7
million, an increase of $52.7 million or 39.3% from December 31, 1997. Excluding
the effects of acquisition,  Total assets increased $10.6 million, or 7.9 % from
operations. This increase in total assets since December 31, 1997, resulted from
an increase in total deposits which rose $9.7 million or 8.3%,  exclusive of the
impact of the merger. Considering the effects of the acquisition, total deposits
rose $44.7 million, or 38.0%.

Total loans, excluding those acquired in the merger,  increased $10.7 million or
12.5%.  At September 30, 1998 the loan  portfolio  totaled  $132.1  million,  an
increase of $45.9  million,  or 53.3% during the first nine months of 1998.  The
increase in the loan  portfolio  from  operations  represents  a decline of $4.0
million from the $14.7  million  increase  during the first nine 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 $4.4 million or 72% of the
growth experienced during the first half of 1998.

During the third quarter of 1998,  management commenced a project to improve the
Bank's data  processing  capabilities  by upgrading the main frame  computer and
core application software. In addition to upgrading the computer system, a check
imaging  system  was also  implemented.  The  combined  capital  outlay  for the
computer  upgrade and check  imaging  system is expected to total  approximately
$525,000.  This  project is  expected  to be fully  completed  during the fourth
quarter of 1998.  In  addition to the  computer  system  upgrade,  approximately
$105,000  has been  earmarked  for  changes to the wide area  computer  network,
including  the addition of the merger  offices to the  network.  This project is
also expected to be completed by year end.

Stockholders' equity of $21.1 million at September 30, 1998,  represented a $7.6
million or 56.3% increase from December 31, 1997, due principally  from the $6.8
million  resulting  from the issuance of 314,399  common  shares to complete the
merger.  At  September  30,  1998,  the  Company  had Tier 1  risk-based,  total
risk-based and leverage capital ratios of 15.3%,  16.5% and 7.4%,  respectively.
Each of these  ratios  exceeds  the minimum  ratios  mandated by law and banking
regulations.

Liquidity
---------

Operating  activities,  particularly net income of $1,005,000,  depreciation and
amortization  of  $498,000,  and the  provision  for loan  losses  of  $155,000,
provided cash totaling $1.3 million which was used to fund investing  activities
during the first nine months of 1998.


                                       15

<PAGE>

As a result  of the  continuing  loan  demand  previously  discussed,  financing
activities used approximately $3.9 million in funds during the nine months ended
September  30, 1998,  as compared to $6.7 million used during the same period in
1997. Net loan originations, exclusive of the loans obtained in the merger, used
$10.2  million  and was  partially  funded by net  investment  maturities  which
totaled approximately $5.1 million. By comparison,  during the first nine months
of 1997, net loan originations totaled $14.8 million, which was partially funded
by net  investment  maturities  and sales  totaling $8.2  million.  In addition,
approximately  $1 million  was used during the first nine months of 1998 for the
purchase  premises and equipment.  These funds were used principally  toward the
construction and furnishing of the data center facility,  and the acquisition of
computer  and check  imaging  equipment.  The  acquisition  of  Peoples  Savings
Financial  Corporation  resulted in a net source of cash as the cash received in
the  merger,   principally   interest  bearing  deposits  with  other  financial
institutions exceeded the cash portion of the merger consideration.

Financing  activities  through the nine months ended September 30, 1998 provided
approximately  $8.9 million,  due principally to the net increase in deposits of
$9.6 million, exclusive of the deposit liabilities assumed in the acquisition of
Peoples.   During  the  same  period  of  1997,  financing  activities  provided
approximately  $2.4 million of funds due to an increase in borrowed  funds of $2
million and a $798,000 net increase 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 a correspondent  bank. At September
30, 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 September 30, 1998,  non-performing  loans,  including  those past due ninety
days or more, and loans on nonaccrual status totaled  approximately  $1,145,000.
Non-performing  loans  totaling  $441,000  were acquired in the  acquisition  of
Peoples, of which $291,000 are nonaccrual.  These loans are generally secured by
residential  real  estate  and  collection  is  actively  being  pursued.  As of
September 30, 1998,  Management does not believe any of these loans presents any
significant risk of loss.

Of  the  non-performing  loans,  $531,000  are  considered  to be  impaired  for
financial  reporting  purposes.  These impaired loans consist of four commercial
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,  $40,000 of the allowance for loan losses at
September 30, 1998, has been allocated for these loans. During the third quarter
of 1998, the borrower  provided a $6,000  payment which was applied  against the
principal balance.  Management believes the Company is adequately secured by the
underlying collateral.


                                       16


<PAGE>


Other real estate  owned  consists of four  parcels of  residential  real estate
acquired in the merger.  Since  September  30,  1998,  one parcel has been sold,
while two  others  are  under  agreements  to sell.  If these  transactions  are
completed,  it is expected no loss will  result  from the  disposition  of these
properties.

The following  table presents the components of  non-performing  loans and other
non-performing assets as the five most recent quarters ended:
<TABLE>
<CAPTION>
                                                                 1998                                 1997
                                              ------------------------------------------  -----------------------------
                                               September 30,   June 30,     March 31,     December 31,   September 30,
                                               -------------   --------     ---------     ------------   -------------
<S>                                              <C>           <C>          <C>          <C>          <C>    
Non-performing loans
    Loans past due 90 days or more                 $   204       $   55        $  132       $  171       $  134 
    Nonaccrual loans                                   941          667           828          820          856
                                                      ----         ----          ----         ----         ----
      Total non-performing loans                     1,145          722           960          991          990
Other non-performing assets
Repossessed assets                                       -            -             -            -            -
Real estate acquired through
    foreclosure                                        337            -             -            -            -
                                                      ----         ----          ----         ----         ----
      Total other non-performing assets                337            -             -            -            -
                                                      ----         ----          ----         ----         ----
        Total non-performing assets                $ 1,482       $  722        $  960       $  991       $  990
                                                   =======       ======        ======       ======       ======

Non-performing loans as a percentage
    of total loans                                     .87%         .78%         1.08%        1.15%        1.19%
Non-performing assets to assets                        .79          .52           .71          .74          .75

</TABLE>
                               
Year 2000
---------

The following discussion of the implications of the Year 2000 ("Y2K") compliance
issue for the Company  contains  numerous  forward-looking  statements  based on
inherently uncertain information.  The cost of the project and the date on which
the  Company  plans to  complete  various  aspects of the  project  are based on
management's   best  estimates,   which  were  derived  utilizing  a  number  of
assumptions of future events  including the continued  availability  of internal
and external resources, third party modifications and other factors.

Management  continues to work toward  attaining  Year 2000  ("Y2K")  compliance.
Prior to entering  into  agreements  to purchase the computer and check  imaging
equipment  discussed  previously,  vendors  provided  representations  that  the
equipment  and  software  were Y2K  compliant.  In addition,  management  tested
computer hardware for compliance prior to it being installed.

In addition to the ongoing  assessment  and testing of  equipment,  software and
vendors  discussed  in the 1997 Annual  Report,  the Company has  implemented  a
program to assess the Y2K risk that might be presented by significant commercial
customers.  Self-assessment  questionnaires  were  provided  to these  customers
during  the  second  quarter.  A review  and  assessment  of the  responses  was
completed during the third quarter. This process will be applied to new

                                       17

<PAGE>


commercial customers, and will be periodically updated for existing customers as
the century date change approaches.

During the third  quarter,  the Company  began  drafting its Y2K test program to
allow for the documented testing of its mission critical software  applications.
This program will be coordinated  with the existing  contingency  plan outlining
actions to be  considered  at various  points in time for  critical  operational
functions which fail to achieve Y2K compliance by specific dates. It is expected
that  testing  of  the  mission  critical  applications  will  be  substantially
completed by January 31, 1998.

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.

Management  believes that  substantially all date reliant equipment and software
will be tested and,  if needed,  upgraded  or  replaced  by March 31,  1999.  In
addition,  assessments of significant  vendors,  service providers and customers
have 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.

It is not  believed  the efforts  made by the Company to achieve Y2K  compliance
will have a material impact on the financial condition,  liquidity or results of
operations of the Company.  The expected outlay of funds directly related to the
Y2K project is not  expected to exceed  $50,000,  over the life of the  project.
While the outlay of funds is not  considered  to be material,  the employee time
devoted to the project has been and will continue to be significant.




                                       18
<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

         A special meeting of stockholders was held August 27, 1998, to consider
and vote on the proposal to approve the  Agreement  and Plan of  Reorganization,
dated  April 7, 1998 by and between  Emclaire  Financial  Corp.  and The Farmers
National Bank of Emlenton, and Peoples Savings Financial Corporation and Peoples
Savings Bank. Of the 1,081,453  shares  eligible to vote,  898,798 or 83.1% were
voted in person or by proxy.  Of the total  shares  voted,  898,451 were cast in
favor of the proposal, no shares were cast against the proposal,  and 347 shares
abstained.

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 September 1, 1998, the Company filed Form 8-K disclosing it
                  had completed the acquisition of all of the outstanding  stock
                  of Peoples Savings Financial  Corporation,  under the terms of
                  the Agreement and Plan of Reorganization dated April 7, 1998.



                                       19

<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: November 30, 1998                  By: /s/ David L. Cox
      -----------------                      -----------------------------------
                                             David L. Cox
                                             President and CEO


Date: November 30, 1998                  By: /s/ John J. Boczar
      -----------------                      -----------------------------------
                                             John J. Boczar, CPA
                                             Treasurer



                                       20