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

                                    FORM 10-K
(Mark One):

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

                  For the fiscal year ended: December 31, 2005

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

           For the transition period from: ___________ to ___________

                        Commission File Number: 000-18464

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



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


                 612 Main Street, Emlenton, PA                  16373
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            (Address of principal executive office)          (Zip Code)

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

Securities registered
pursuant to Section 12(b) of the Act:      None.       OTC ELECTRONIC BULLETIN
                                                             BOARD (OTCBB)
                                                     --------------------------
                                                        Name of exchange on
                                                          which registered

Securities registered pursuant to
Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $1.25 PER SHARE
                                (Title of Class)

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. YES [_] NO [X].

     Indicate by  checkmark  if the  registrant  is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. YES [_] NO [X].

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

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

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

   Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [X]

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Act). YES [ ] NO [X].

     As of June 30, 2005, the aggregate value of the 1,267,835  shares of Common
Stock of the  Registrant  issued and  outstanding  on such date,  which excludes
130,582  shares held by the directors and officers of the Registrant as a group,
was approximately  $33,724 million. This figure is based on the last sales price
of $30.25 per share of the Registrant's Common Stock on June 30, 2005.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year ended
     December 31, 2005 (Parts I, II, and IV).

2.   Portions of the Proxy  Statement  for the May 17,  2006  Annual  Meeting of
     Stockholders (Part III).
<PAGE>


<TABLE>
<CAPTION>
                            EMCLAIRE FINANCIAL CORP.

                                TABLE OF CONTENTS


                                     PART I
<S>           <C>                                                                                                      <C>
Item 1.       Business..................................................................................................1

Item 1A.      Risk Factors.............................................................................................15

Item 1B.      Unresolved Staff Comments................................................................................16

Item 2.       Properties...............................................................................................17

Item 3.       Legal Proceedings........................................................................................17

Item 4.       Submission of Matters to a Vote of Security Holders......................................................17

                                     PART II

Item 5.       Market for Registrant's Common Equity, Related Stockholder Matters
                 and Issuer Purchases of Equity Securities............................................................ 18

Item 6.       Selected Financial Data..................................................................................18

Item 7.       Management's Discussion and Analysis of Financial Condition and Results of Operation.....................18

Item 7A.      Quantitative and Qualitative Disclosure about Market Risk................................................18

Item 8.       Financial Statements and Supplementary Data..............................................................19

Item 9.       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.....................19

Item 9A.      Controls and Procedures..................................................................................20

Item 9B.      Other Information........................................................................................20

                                    PART III

Item 10.      Directors and Executive Officers of the Registrant.......................................................20

Item 11.      Executive Compensation...................................................................................20

Item 12.      Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...........20

Item 13.      Certain Relationships and Related Transactions...........................................................21

Item 14.      Principal Accounting Fees and Services...................................................................21

Item 15.      Exhibits and Financial Statement Schedules...............................................................21

SIGNATURES    .........................................................................................................23
</TABLE>

<PAGE>

PART I

ITEM 1.  BUSINESS

FORWARD LOOKING STATEMENTS

Discussions  of  certain  matters in this Form 10-K and other  related  year end
documents  may  constitute  forward-looking  statements  within  the  meaning of
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 local economy,  the demand for the  Corporation's  products and
services,  accounting  principles  or  guidelines,  legislative  and  regulatory
changes, monetary and fiscal policies of the U.S. Government, U.S. 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. These factors and those discussed
under "Risk  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.

GENERAL

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).
The Bank  also  provides  investment  advisory  services  to our  customers  and
operates as Farmers Financial Services.

During 2004,  the Bank entered an agreement  with Blue Vase  Securities,  LLC to
provide  investment  advisory  services to our customers and operates as Farmers
Financial Services.  Blue Vase Securities,  LLC is a nation-wide,  full-service,
independent  broker/dealer  that offers  various  services such as  investments,
insurances, wealth management, advisory services, estate and retirement planning
and account consolidation.  This partnership has enabled the Bank to provide our
customers  with  financial  solutions  that extend  outside the Bank's  ordinary
deposit products and services.

The  Bank was  organized  in 1900 as a  national  banking  association  and is a
financial  intermediary whose principal business consists of attracting deposits
from the general public and investing such funds in real estate loans secured by
liens  on  residential  and  commercial  property,  consumer  loans,  commercial
business loans,  marketable securities and interest-earning  deposits.  The Bank
operates  through a network of ten retail  branch  offices in  Venango,  Butler,
Clarion, Clearfield, Elk and Jefferson counties,  Pennsylvania.  The Corporation
and the Bank are headquartered in Emlenton, Pennsylvania.

                                       1
<PAGE>

The  Corporation  and the Bank are  subject  to  examination  and  comprehensive
regulation by the Office of the Comptroller of the Currency (OCC),  which is the
Bank's  chartering  authority,  and the Federal  Deposit  Insurance  Corporation
(FDIC),  which  insures  customer  deposits  held by the Bank to the full extent
provided by law.  The Bank is a member of the Federal  Reserve Bank of Cleveland
(FRB) and the Federal Home Loan Bank of Pittsburgh  (FHLB). The Corporation is a
registered bank holding company pursuant to the Bank Holding Company Act of 1956
(BHCA), as amended.

During  January 2006,  the Bank  submitted an  application  to the OCC for a new
branch location in Cranberry, Pennsylvania. The Bank posted a legal notification
in a local newspaper and it provides 30 days for public comments.

At December 31, 2005, the Corporation had $275.6 million in total assets,  $23.6
million in stockholders'  equity,  $192.5 million in loans and $230.5 million in
deposits.

LENDING ACTIVITIES

GENERAL.  The principal  lending  activities of the Bank are the  origination of
residential  mortgage,  commercial  mortgage,  commercial  business and consumer
loans.  Significantly  all of the Bank's  loans are  secured by  property in the
Bank's primary market area.

ONE-TO-FOUR  FAMILY MORTGAGE LOANS. The Bank offers first mortgage loans secured
by one-to-four  family  residences  located in the Bank's primary  lending area.
Typically such residences are single-family owner occupied units. The Bank is an
approved,  qualified  lender  for the  Federal  Home Loan  Mortgage  Corporation
(FHLMC). As a result, the Bank may sell loans to and service loans for the FHLMC
in market  conditions and  circumstances  where this is advantageous in managing
interest rate risk.

HOME  EQUITY  LOANS.   The  Bank   originates   home  equity  loans  secured  by
single-family residences.  These loans may be either a single advance fixed-rate
loan with a term of up to 20 years, or a variable rate revolving line of credit.
These loans are made only on owner-occupied single-family residences.

COMMERCIAL AND COMMERCIAL REAL ESTATE LOANS.  Commercial  lending  constitutes a
significant  portion of the Bank's lending  activities.  Commercial business and
commercial  real estate loans  amounted to 41.5% of the total loan  portfolio at
December  31, 2005.  Commercial  real estate  loans  generally  consist of loans
granted for commercial  purposes  secured by commercial or other  nonresidential
real estate.  Commercial  loans consist of secured and unsecured  loans for such
items as capital assets, inventory, operations and other commercial purposes.

CONSUMER LOANS.  Consumer loans  generally  consist of fixed-rate term loans for
automobile purchases,  home improvements not secured by real estate, capital and
other personal  expenditures.  The Bank also offers unsecured revolving personal
lines of credit and overdraft protection.

LOANS TO ONE  BORROWER.  National  banks are  subject to limits on the amount of
credit that they can extend to one  borrower.  Under  current law,  loans to one
borrower are limited to an amount equal to 15% of unimpaired capital and surplus
on an unsecured  basis,  and an  additional  amount  equal to 10% of  unimpaired
capital and surplus if the loan is secured by readily marketable collateral.  At
December  31, 2005,  the Bank's  loans to one  borrower  limit based upon 15% of
unimpaired  capital was $3.3 million.  At December 31, 2005,  the Bank's largest
single lending  relationship had an outstanding  balance of $4.7 million,  which
consisted of a loan to a  municipality  and was not subject to the legal lending
limit.  The next  largest  borrower  had loans which  totaled  $3.2  million and
consisted of loans  secured by commercial  real estate and business  property in
the Bank's lending area. At December 31, 2005, all of such loans were performing
in accordance with their terms.


                                       2
<PAGE>



3


LOAN PORTFOLIO. The following table sets forth the composition and percentage of
the  Corporation's  loans receivable in dollar amounts and in percentages of the
portfolio as of December 31:

<TABLE>
<CAPTION>
                              -------------------  -----------------   -----------------   ------------------   ------------------
                                      2005                2004                2003               2002                  2001
                              -------------------  -----------------   -----------------   ------------------   ------------------
                               Dollar               Dollar              Dollar              Dollar               Dollar
(Dollar amounts in thousands)  Amount         %     Amount       %      Amount      %       Amount       %       Amount       %
----------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>    <C>         <C>     <C>         <C>     <C>          <C>     <C>          <C>
Mortgage loans on real estate:
      Residential
        first mortgages       $ 66,011      34.0%  $ 69,310    38.2%   $ 76,396    39.7%   $ 82,449     48.2%   $ 84,974     52.5%
      Home equity loans
        and lines
         of credit              39,933      20.5%    31,548    17.4%     30,316    15.8%     19,136     11.2%     15,446      9.5%
      Commercial                52,990      27.3%    48,539    26.8%     44,935    23.4%     34,986     20.4%     26,470     16.3%
                              --------    -------  --------   ------   --------   ------   --------    ------   --------    ------

          Total real
            estate loans       158,934      81.8%   149,397    82.4%    151,647    78.9%    136,571     79.8%    126,890     78.3%

Other loans:
      Commercial business       27,732      14.2%    23,898    13.2%     26,470    13.8%     21,913     12.8%     20,806     12.9%
      Consumer                   7,729       4.0%     8,090     4.4%     14,142     7.3%     12,660      7.4%     14,308      8.8%
                              --------    -------  --------   ------   --------   ------   --------    ------   --------    ------

          Total other loans     35,461      18.2%    31,988    17.6%     40,612    21.1%     34,573     20.2%     35,114     21.7%
                              --------    -------  --------   ------   --------   ------   --------    ------   --------    ------

Total loans receivable         194,395     100.0%   181,385   100.0%    192,259   100.0%    171,144    100.0%    162,004    100.0%
                                          =======             ======              ======               ======               ======
Less:
      Allowance
        for loan
          losses                 1,869                1,810               1,777               1,587               1,464
                              --------             --------            --------            --------             --------
Net loans receivable          $192,526             $179,575            $190,482            $169,557             $160,540
                              ========             ========            ========            ========             ========
</TABLE>
The following table sets forth the scheduled contractual principal repayments or
interest  repricing of loans in the  Corporation's  portfolio as of December 31,
2005. Demand loans having no stated schedule of repayment and no stated maturity
are reported as due within one year.

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------
                                     Due in one       Due from one    Due from five  Due after
(Dollar amounts in thousands)        year or less     to five years   to ten years   ten years        Total
------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>            <C>            <C>
Residential mortgages                   $    847       $  4,108       $ 12,915       $ 48,141       $ 66,011
Home equity loans and lines of credit        148          7,334         13,047         19,404         39,933
Commercial mortgages                       1,466          2,850         15,869         32,805         52,990
Commercial business                        2,276          7,051          3,934         14,471         27,733
Consumer                                     443          6,023            848            415          7,729
                                        --------       --------       --------       --------       --------
                                        $  5,180       $ 27,366       $ 46,613       $115,236       $194,395
                                        ========       ========       ========       ========       ========
</TABLE>

The following table sets forth the dollar amount of the Corporation's fixed- and
adjustable-rate  loans with maturities  greater than one year as of December 31,
2005:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
                                                    Fixed    Adjustable
(Dollar amounts in thousands)                       rates      rates
-----------------------------------------------------------------------
<S>                                                <C>        <C>
Residential mortgage                               $ 58,463   $  6,701
Home equity loans and lines of credit                35,192      4,594
Commercial mortgage                                  18,831     32,693
Commercial business                                  20,154      5,303
Consumer                                              7,285       --
                                                   --------   --------
                                                   $139,925   $ 49,291
                                                   ========   ========
</TABLE>


Contractual  maturities  of  loans  do  not  reflect  the  actual  term  of  the
Corporation's   loan   portfolio.   The  average  life  of  mortgage   loans  is
substantially  less than their contractual terms because of loan prepayments and
enforcement  of due-on-sale  clauses,  which give the  Corporation  the right to
declare a loan immediately  payable in the event,  among other things,  that the
borrower sells the real property  subject to the mortgage.  Scheduled  principal
amortization  also reduces the average life of the loan  portfolio.  The average
life of mortgage  loans tends to increase  when current  market  mortgage  rates
substantially  exceed rates on existing mortgages and conversely,  decrease when
rates on existing mortgages substantially exceed current market interest rates.


                                       3
<PAGE>

DELINQUENCIES AND CLASSIFIED ASSETS

DELINQUENT LOANS AND REAL ESTATE ACQUIRED THROUGH FORECLOSURE (REO).  Typically,
a loan is  considered  past due and a late charge is assessed  when the borrower
has not made a payment  within  fifteen  days from the payment due date.  When a
borrower fails to make a required payment on a loan, the Corporation attempts to
cure the  deficiency by contacting  the borrower.  The initial  contact with the
borrower is made shortly  after the  seventeenth  day following the due date for
which a  payment  was not  received.  In most  cases,  delinquencies  are  cured
promptly.

If the delinquency  exceeds 60 days, the Corporation  works with the borrower to
set  up a  satisfactory  repayment  schedule.  Typically  loans  are  considered
non-accruing upon reaching 90 days delinquency,  although the Corporation may be
receiving  partial  payments of interest and partial  repayments of principal on
such loans. When a loan is placed in non-accrual status,  previously accrued but
unpaid interest is deducted from interest  income.  The  Corporation  institutes
foreclosure  action  on  secured  loans  only if all  other  remedies  have been
exhausted.  If an  action  to  foreclose  is  instituted  and  the  loan  is not
reinstated or paid in full, the property is sold at a judicial or trustee's sale
at which the Corporation may be the buyer.

Real estate properties  acquired through, or in lieu of, loan foreclosure are to
be sold and are  initially  recorded  at fair  value at the date of  foreclosure
establishing  a new  cost  basis.  After  foreclosure,  management  periodically
performs  valuations  and the real  estate is carried  at the lower of  carrying
amount or fair value less cost to sell. Revenue and expenses from operations and
changes in the  valuation  allowance  are  included in loss on  foreclosed  real
estate. The Corporation generally attempts to sell its REO properties as soon as
practical upon receipt of clear title.  The original  lender  typically  handles
disposition  of those REO  properties  resulting  from  loans  purchased  in the
secondary market.

As of December 31, 2005, the Corporation's  non-performing assets, which include
non-accrual   loans,   loans   delinquent   due  to  maturity,   troubled   debt
restructuring,  repossessions  and REO, amounted to $1.6 million or 0.58% of the
Corporation's total assets.

CLASSIFIED ASSETS.  Regulations  applicable to insured  institutions require the
classification  of  problem  assets  as  "substandard,"  "doubtful,"  or  "loss"
depending upon the existence of certain  characteristics  as discussed  below. A
category  designated  "special  mention"  must  also be  maintained  for  assets
currently not requiring the above  classifications but having potential weakness
or risk  characteristics  that  could  result  in future  problems.  An asset is
classified as substandard  if not adequately  protected by the current net worth
and paying  capacity  of the  obligor or of the  collateral  pledged,  if any. A
substandard  asset  is  characterized  by  the  distinct  possibility  that  the
Corporation will sustain some loss if the deficiencies are not corrected. Assets
classified as doubtful have all the weaknesses  inherent in those  classified as
substandard.  In addition,  these  weaknesses  make collection or liquidation in
full, on the basis of currently  existing facts,  conditions and values,  highly
questionable   and  improbable.   Assets   classified  as  loss  are  considered
uncollectible  and of such little value that their  continuance as assets is not
warranted.

The Corporation's  classification of assets policy requires the establishment of
valuation  allowances for loan losses in an amount deemed prudent by management.
Valuation  allowances  represent loss allowances  that have been  established to
recognize  the  inherent  risk  associated  with  lending  activities.  When the
Corporation  classifies  a problem  asset as a loss,  the  asset is  charged-off
immediately.

The  Corporation  regularly  reviews the problem  loans and other  assets in its
portfolio to determine whether any require classification in accordance with the
Corporation's  policy and applicable  regulations.  As of December 31, 2005, the
Corporation's  classified  and criticized  assets  amounted to $6.4 million with
$4.6 million  classified as substandard  and $1.8 million  identified as special
mention.


                                       4
<PAGE>



The  following  table  sets  forth   information   regarding  the  Corporation's
non-performing assets as of December 31:


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)                    2005            2004         2003             2002            2001
-----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>           <C>             <C>             <C>
Non-performing loans                          $   1,452       $     840     $   1,329       $   1,160       $   1,245
      Total as a percentage of gross loans         0.75%           0.46%         0.69%           0.69%           0.78%
                                              ---------       ---------     ---------       ---------       ---------
Repossessions                                        --               2            45              --              --
Real estate acquired through foreclosure            106              69            --               3              20
                                              ---------       ---------     ---------       ---------       ---------
      Total as a percentage of total assets        0.04%           0.03%         0.00%           0.00%           0.01%
                                              ---------       ---------     ---------       ---------       ---------
Total non-performing assets                   $   1,558       $     911     $   1,374       $   1,163       $   1,265
                                              =========       =========     =========       =========       =========
Total non-performing assets
      as a percentage of total assets              0.57%           0.33%         0.52%           0.49%           0.58%
                                              =========       =========     =========       =========       =========
Allowance for loan losses as a
      percentage of non-performing loans         128.72%         215.48%       133.71%         136.81%         117.59%
                                              =========       =========     =========       =========       =========
</TABLE>

ALLOWANCE  FOR LOAN LOSSES.  Management  establishes  allowances  for  estimated
losses on loans based upon its  evaluation of the pertinent  factors  underlying
the types and quality of loans;  historical loss experience  based on volume and
types of loans;  trend in portfolio volume and  composition;  level and trend on
non-performing  assets;  detailed  analysis of  individual  loans for which full
collectibility may not be assured; determination of the existence and realizable
value of the  collateral  and  guarantees  securing  such loans and the  current
economic conditions affecting the collectibility of loans in the portfolio.  The
Corporation analyzes its loan portfolio each month for valuation purposes and to
determine  the  adequacy of its  allowance  for  losses.  Based upon the factors
discussed above, management believes that the Corporation's allowance for losses
as of December  31, 2005 of $1.9  million is adequate to cover  probable  losses
inherent in the portfolio.

The following  table sets forth an analysis of the allowance for losses on loans
receivable for the years ended December 31:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)                 2005            2004             2003              2002            2001
----------------------------------------------------------------------------------------------------------------------------

<S>                                         <C>              <C>              <C>              <C>              <C>
Balance at beginning of period              $ 1,810          $ 1,777          $ 1,587          $ 1,464          $ 1,460
      Provision for loan losses                 205              290              330              381              154

      Charge-offs:
           Mortgage loans                       (46)            (165)             (25)             (36)             (27)
           Commercial business loans            (60)             (36)             (26)            (186)             (62)
           Consumer loans                       (91)            (117)            (154)            (109)            (108)
                                            -------          -------          -------          -------          -------
                                               (197)            (318)            (205)            (331)            (197)
      Recoveries:
           Mortgage loans                      --                 17             --                 26             --
           Commercial business loans             18               19               22               20             --
           Consumer loans                        33               25               43               27               47
                                            -------          -------          -------          -------          -------
                                                 51               61               65               73               47
Balance at end of period                    $ 1,869          $ 1,810          $ 1,777          $ 1,587          $ 1,464
                                            =======          =======          =======          =======          =======
Ratio of net charge-offs to
   average loans outstanding                   0.08%            0.14%            0.08%            0.15%            0.10%
                                            =======          =======          =======          =======          =======
Ratio of allowance to
   total loans at end of period                0.96%            1.00%            0.92%            0.93%            0.90%
                                            =======          =======          =======          =======          =======
</TABLE>

                                       5
<PAGE>



The  following  table  provides a breakdown of the  allowance for loan losses by
major loan category for the years ended December 31:


<TABLE>
<CAPTION>
                                       2005              2004               2003               2002              2001
                                -----------------  -----------------  -----------------  ---------------- ------------------
     Loan Categories:           Amount        %    Amount       %     Amount       %     Amount       %    Amount       %
----------------------------------------------------------------------------------------------------------------------------
<S>                             <C>         <C>    <C>         <C>    <C>         <C>    <C>        <C>   <C>          <C>
Commercial, financial
   and agricultural             $  554      29.6%  $  503      27.8%  $  623      35.1%  $  479     30.2% $  649       44.3%
Commercial mortgages               841      45.0%   1,137      62.8%     798      44.9%     625     39.4%    515       35.2%
Residential mortgages              211      11.3%      10       0.6%      20       1.1%      21      1.3%     23        1.6%
Home equity loans                  150       8.0%      39       2.2%      68       3.8%      63      4.0%      7        0.5%
Consumer loans                     106       5.7%     121       6.7%     190      10.7%     119      7.5%    107        7.3%
Unallocated                          7       0.4%    --         0.0%      78       4.4%     280     17.6%    163       11.1%
                                ------    ------   ------    ------   ------    ------   ------  -----    ------    -----
                                $1,869       100%  $1,810       100%  $1,777       100%  $1,587    100%   $1,464      100%
                                ======             ======             ======             ======           ======
</TABLE>

INVESTMENT PORTFOLIO

GENERAL. The Corporation maintains an investment portfolio of securities such as
U.S.  government and agency  securities,  state and municipal debt  obligations,
corporate notes and bonds,  and to a lesser extent,  mortgage-backed  and equity
securities.   Management   generally  maintains  an  investment  portfolio  with
relatively short maturities to minimize overall interest rate risk.  However, at
December  31,  2005  approximately  $14.7  million was  invested in  longer-term
callable  municipal  securities,  as part of strategy to moderate federal income
taxes.  The Bank has no investment with any one issuer in an amount greater than
10% of stockholders' equity.

Investment decisions are made within policy guidelines  established by the Board
of  Directors.  This policy is aimed at  maintaining  a  diversified  investment
portfolio,   which  complements  the  overall   asset/liability   and  liquidity
objectives of the Bank,  while limiting the related credit risk to an acceptable
level.

The following table sets forth certain information regarding the amortized cost,
fair  value,   weighted  average  yields  and  contractual   maturities  of  the
Corporation's securities as of December 31, 2005:


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                Due in 1    Due from 1    Due from 3   Due from 5    Due after   No scheduled
(Dollar amounts in thousands) year or less  to 3 years    to 5 years   to 10 years   10 years    maturity          Total
---------------------------------------------------------------------------------------------------------------------------

<S>                             <C>          <C>           <C>           <C>          <C>           <C>          <C>
U.S. Government securities      $2,972       $14,682       $12,947       $2,934       $  --         $ --         $33,535
Mortgage-backed securities        --            --             839        2,083            15         --           2,937
Municipal securities              --            --            --           --          15,349         --          15,349
Corporate securities             2,249          --            --           --            --           --           2,249
Equity securities                 --            --            --           --            --          2,234         2,234
                                ------       -------       -------       ------       -------       ------       -------

Estimated Fair Value            $5,221       $14,682       $13,786       $5,017       $15,364       $2,234       $56,304
                                ======       =======       =======       ======       =======       ======       =======

Weighted average yield (1)        3.84%         3.14%         5.89%        4.31%         4.80%        2.50%         4.41%
                                ======       =======       =======       ======       =======       ======       =======
</TABLE>


(1) Weighted average yield is calculated based upon amortized cost.


For additional information regarding the Corporation's  investment portfolio see
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and  "Notes to  Consolidated  Financial  Statements"  in the Annual
Report incorporated herein by reference.


                                       6
<PAGE>

SOURCES OF FUNDS

GENERAL.  Deposits  are the primary  source of the Bank's  funds for lending and
investing  activities.   Secondary  sources  of  funds  are  derived  from  loan
repayments  and  investment  maturities.  Loan  repayments  can be  considered a
relatively stable funding source,  while deposit activity is greatly  influenced
by interest  rates and general  market  conditions.  The Bank also has access to
funds through credit facilities  available from the FHLB. In addition,  the Bank
can obtain  advances  from the FRB discount  window.  For a  description  of the
Bank's sources of funds, see "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" in the Annual Report incorporated herein by
reference.

DEPOSITS.  The Bank offers a wide variety of retail deposit account  products to
both  consumer  and  commercial  deposit  customers,  including  time  deposits,
non-interest  bearing and interest  bearing  demand  deposit  accounts,  savings
deposits and money market accounts.

Deposit  products are promoted in periodic  newspaper and radio  advertisements,
along with notices  provided in customer account  statements.  The Bank's market
strategy is based on its  reputation as a community  bank that provides  quality
products and personal customer service.

The Bank pays interest rates on its interest  bearing deposit  products that are
competitive  with rates offered by other  financial  institutions  in its market
area.  Management  reviews  interest  rates on deposits  weekly and  considers a
number of factors,  including (1) the Bank's  internal cost of funds;  (2) rates
offered  by  competing  financial   institutions;   (3)  investing  and  lending
opportunities; and (4) the Bank's liquidity position.

For additional information regarding the Corporation's deposit base and borrowed
funds,  see  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations" and "Notes to Consolidated  Financial  Statements" in the
Annual Report incorporated herein by reference.

SUBSIDIARY ACTIVITY

The  Corporation  has  one  wholly  owned  subsidiary,   the  Bank,  a  national
association. As of December 31, 2005, the Bank had no subsidiaries.

PERSONNEL

At December 31, 2005, the Bank had 111 full time equivalent employees.  There is
no collective  bargaining agreement between the Bank and its employees,  and the
Bank believes its relationship with its employees to be satisfactory.

COMPETITION

The Bank competes for loans, deposits and customers with other commercial banks,
savings and loan  associations,  securities  and brokerage  companies,  mortgage
companies,  insurance companies,  finance companies,  money market funds, credit
unions and other nonbank financial service providers.

SUPERVISION AND REGULATION

GENERAL.  Bank holding companies and banks are extensively  regulated under both
federal  and state  law.  Set forth  below is a summary  description  of certain
provisions of certain laws that relate to the regulation of the  Corporation and
the Bank.  The  description  does not purport to be complete and is qualified in
its entirety by reference to the applicable laws and regulations.


                                       7
<PAGE>



THE  CORPORATION.  The  Corporation is a registered  bank holding  company,  and
subject to regulation and  examination by the FRB under the Bank Holding Company
Act of 1956, as amended (the "BHCA").  The  Corporation is required to file with
the FRB periodic reports and such additional information as the FRB may require.
Recent  changes  to the Bank  Holding  Company  rating  system  emphasizes  risk
management and evaluation of the potential impact of non-depository  entities on
safety and soundness.

The FRB may require  the  Corporation  to  terminate  an  activity or  terminate
control  of  or  liquidate  or  divest  certain   subsidiaries,   affiliates  or
investments  when the FRB believes the activity or the control of the subsidiary
or affiliate  constitutes a significant risk to the financial safety,  soundness
or stability of any of its banking subsidiaries.  The FRB also has the authority
to regulate  provisions  of certain bank holding  company  debt,  including  the
authority to impose  interest  ceilings and reserve  requirements  on such debt.
Under certain circumstances, the Corporation must file written notice and obtain
FRB approval prior to purchasing or redeeming its equity securities.

Further,  the  Corporation is required by the FRB to maintain  certain levels of
capital. See "Capital Standards."

The  Corporation is required to obtain prior FRB approval for the acquisition of
more than 5% of the  outstanding  shares of any  class of voting  securities  or
substantially  all of the assets of any bank or bank holding company.  Prior FRB
approval is also required for the merger or consolidation of the Corporation and
another bank holding company.

The  Corporation  is  prohibited  by the  BHCA,  except in  certain  statutorily
prescribed instances,  from acquiring direct or indirect ownership or control of
more than 5% of the outstanding  voting shares of any company that is not a bank
or bank holding  company and from engaging  directly or indirectly in activities
other than those of  banking,  managing  or  controlling  banks,  or  furnishing
services to its subsidiaries.  However,  subject to the prior FRB approval,  The
Corporation  may  engage in any,  or acquire  shares of  companies  engaged  in,
activities that the FRB deems to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.

Under FRB  regulations,  the  Corporation  is  required  to serve as a source of
financial and managerial  strength to the Corporation's  subsidiary bank and may
not conduct  operations in an unsafe or unsound manner.  In addition,  it is the
FRB's policy that a bank  holding  company  should stand ready to use  available
resources  to provide  adequate  capital  funds to its  subsidiary  banks during
periods of financial  stress or  adversity  and should  maintain  the  financial
flexibility  and  capital-raising  capacity to obtain  additional  resources for
assisting its  subsidiary  banks. A bank holding  company's  failure to meet its
obligations  to serve as a source  of  strength  to its  subsidiary  banks  will
generally be considered by the FRB to be an unsafe and unsound banking  practice
or a violation of FRB regulations or both.

The  Corporation  is also a bank  holding  company  within  the  meaning  of the
Pennsylvania  Banking Code. As such, the  Corporation and its  subsidiaries  are
subject to  examination  by,  and may be  required  to file  reports  with,  the
Pennsylvania Department of Banking.

The Corporation's securities are registered with the SEC under the Exchange Act.
As such, the  Corporation  is subject to the  information,  proxy  solicitation,
insider trading,  corporate governance,  and other requirements and restrictions
of the Exchange Act. The public may obtain all forms and information  filed with
the SEC through their website http://www.sec.gov.



                                       8
<PAGE>


THE BANK.  As a  national  banking  association,  the Bank is subject to primary
supervision,  examination  and  regulation by the OCC. The  Corporation  is also
subject to regulations of the FDIC as  administrator  of the Bank Insurance Fund
("BIF")  and the FRB.  If, as a result of an  examination  of the Bank,  the OCC
should determine that the financial condition, capital resources, asset quality,
earnings prospects,  management, liquidity or other aspects of the Corporation's
operations are  unsatisfactory or that the Bank is violating or has violated any
law or  regulation,  various  remedies are  available to the OCC.  Such remedies
include  the  power  to  enjoin  "unsafe  or  unsound   practices,"  to  require
affirmative  action to correct any  conditions  resulting  from any violation or
practice,  to issue an administrative order that can be judicially enforced,  to
direct an increase in capital,  to restrict the Bank's  growth,  to assess civil
monetary penalties,  and to remove officers and directors.  The FDIC has similar
enforcement  authority,  in addition to its  authority to  terminate  the Bank's
deposit  insurance  in the absence of action by the OCC and upon a finding  that
the Bank is operating in an unsafe or unsound  condition,  is engaging in unsafe
or unsound  activities,  or that the  Corporation's  conduct poses a risk to the
deposit insurance fund or may prejudice the interest of its depositors.

A  national  bank  may  have a  financial  subsidiary  engaged  in any  activity
authorized  for  national  banks  directly  or certain  permissible  activities.
Generally,  a financial subsidiary is permitted to engage in activities that are
"financial  in  nature"  or  incidental  thereto,   even  though  they  are  not
permissible  for the national  bank itself.  The  definition  of  "financial  in
nature" includes, among other items, underwriting, dealing in or making a market
in securities,  including, for example, distributing shares of mutual funds. The
subsidiary  may not,  however,  engage as principal in  underwriting  insurance,
issue  annuities or engage in real estate  development or investment or merchant
banking.

THE  SARBANES-OXLEY  ACT OF  2002.  The  Sarbanes-Oxley  Act of  2002  addresses
accounting oversight and corporate governance matters, including:

          o    the prohibition of accounting firms from providing  various types
               of consulting services to public clients and requiring accounting
               firms to rotate  partners among public client  assignments  every
               five years;
          o    increased  penalties  for  financial  crimes  and  forfeiture  of
               executive bonuses in certain circumstances;
          o    required executive certification of financial presentations;
          o    increased  requirements  for  board  audit  committees  and their
               members;
          o    enhanced  disclosure  of controls  and  procedures  and  internal
               control over financial reporting;
          o    enhanced  controls on, and reporting of, insider  trading;  and o
               statutory separations between investment bankers and analysts.

The new legislation and its implementing  regulations have resulted in increased
costs of compliance, including certain outside professional costs. To date these
costs have not had a material impact on the Corporation's operations.

USA  PATRIOT  ACT OF 2001.  The USA  PATRIOT  Act of 2001  and its  implementing
regulations  significantly  expanded the  anti-money  laundering  and  financial
transparency laws. Under the USA PATRIOT Act, financial institutions are subject
to  prohibitions   regarding  specified   financial   transactions  and  account
relationships  as well as  enhanced  due  diligence  and  "know  your  customer"
standards in their  dealings  with foreign  financial  institutions  and foreign
customers.  For example,  the enhanced due diligence policies,  procedures,  and
controls generally require financial institutions to take reasonable steps:

          o    To conduct  enhanced  scrutiny of account  relationships to guard
               against money laundering and report any suspicious transaction,
          o    To ascertain  the identity of the nominal and  beneficial  owners
               of,  and the  source of funds  deposited  into,  each  account as
               needed  to  guard  against  money   laundering   and  report  any
               suspicious transactions,


                                       9
<PAGE>


          o    To ascertain  for any foreign  bank,  the shares of which are not
               publicly traded,  the identity of the owners of the foreign bank,
               and the nature and extent of the ownership  interest of each such
               owner, and
          o    To  ascertain  whether any foreign  bank  provides  correspondent
               accounts to other foreign banks and, if so, the identity of those
               foreign banks and related due diligence information.

Under the USA PATRIOT Act, financial  institutions are required to establish and
maintain anti-money laundering programs which included

          o    The establishment of a customer identification program,
          o    The development of internal policies, procedures, and controls,
          o    The designation of a compliance  officer,  o An ongoing  employee
               training program, and
          o    An independent audit function to test the programs.

The Bank has  implemented  comprehensive  policies and procedures to address the
requirements of the USA PATRIOT Act.

PRIVACY.  Federal  banking rules limit the ability of banks and other  financial
institutions to disclose non-public information about consumers to nonaffiliated
third parties. Pursuant to these rules, financial institutions must provide:

          o    initial  notices  to  customers  about  their  privacy  policies,
               describing the conditions under which they may disclose nonpublic
               personal   information   to   nonaffiliated   third  parties  and
               affiliates;
          o    annual  notices of their privacy  policies to current  customers;
               and
          o    a reasonable  method for customers to "opt out" of disclosures to
               nonaffiliated third parties.

These privacy provisions affect how consumer  information is transmitted through
diversified   financial   companies  and  conveyed  to  outside   vendors.   The
Corporation's privacy policies have been implemented in accordance with the law.

DIVIDENDS AND OTHER  TRANSFERS OF FUNDS.  Dividends from the Bank constitute the
principal source of income to the Corporation. The Corporation is a legal entity
separate and distinct  from the Bank.  The Bank is subject to various  statutory
and regulatory  restrictions on its ability to pay dividends to the Corporation.
In addition,  the Bank's regulators have the authority to prohibit the Bank from
paying dividends, depending upon the Bank's financial condition, if such payment
is deemed to constitute an unsafe or unsound practice.

TRANSACTIONS  WITH  AFFILIATES.  The Bank is  subject  to  certain  restrictions
imposed by federal  law on any  extensions  of credit to, or the  issuance  of a
guarantee or letter of credit on behalf of, any affiliates,  the purchase of, or
investments in, stock or other securities thereof, the taking of such securities
as  collateral  for loans,  and the purchase of assets of any  affiliates.  Such
restrictions  prevent any  affiliates  from  borrowing  from the Bank unless the
loans are secured by marketable obligations of designated amounts. Further, such
secured  loans and  investments  by the Bank to or in any affiliate are limited,
individually,  to 10.0% of the Bank's capital and surplus (as defined by federal
regulations),  and such  secured  loans  and  investments  are  limited,  in the
aggregate,  to 20.0% of the Bank's  capital and  surplus.  Some of the  entities
included in the definition of an affiliate are parent  companies,  sister banks,
sponsored and advised  companies,  investment  companies whereby the Bank or its
affiliate serves as investment advisor, and financial  subsidiaries of the bank.
Additional  restrictions on  transactions  with affiliates may be imposed on the
Bank under the prompt  corrective  action provisions of federal law. See "Prompt
Corrective Action and Other Enforcement Mechanisms."



                                       10
<PAGE>


LOANS-TO-ONE BORROWER LIMITATIONS.  With certain limited exceptions, the maximum
amount that a national bank may lend to any borrower  (including certain related
entities  of the  borrower)  at one time may not  exceed  15% of the  unimpaired
capital and surplus of the  institution,  plus an  additional  10% of unimpaired
capital and surplus for loans fully secured by readily marketable collateral. At
December 31, 2005, the Bank's loans-to-one-borrower limit was $3.3 million based
upon the 15% of  unimpaired  capital and surplus  measurement.  At December  31,
2005, the Bank's largest single lending  relationship had an outstanding balance
of $4.7 million, which consisted of a loan to a municipality and was not subject
to the legal lending  limit.  The next largest  borrower had loans which totaled
$3.2  million  and  consisted  of loans  secured by  commercial  real estate and
business  property in the Bank's lending area. At December 31, 2005, all of such
loans were performing in accordance with their terms.

CAPITAL STANDARDS.  The federal banking agencies have adopted risk-based minimum
capital  guidelines  intended to provide a measure of capital that  reflects the
degree of risk  associated  with a banking  organization's  operations  for both
transactions  reported on the balance sheet as assets and transactions which are
recorded as  off-balance  sheet items.  Under these  guidelines,  nominal dollar
amounts of assets and credit  equivalent  amounts of off-balance sheet items are
multiplied by one of several risk  adjustment  percentages,  which range from 0%
for assets with low credit risk, such as federal banking  agencies,  to 100% for
assets with relatively high credit risk.

The  risk-based  capital ratio is determined by  classifying  assets and certain
off-balance sheet financial  instruments into weighted  categories,  with higher
levels of capital being required for those categories  perceived as representing
greater  risk.  Under the capital  guidelines,  a banking  organization's  total
capital is divided into tiers.  "Tier I capital"  consists of (1) common equity,
(2) qualifying  noncumulative perpetual preferred stock, (3) a limited amount of
qualifying  cumulative  perpetual  preferred stock and (4) minority interests in
the equity  accounts of  consolidated  subsidiaries  (including  trust-preferred
securities),  less goodwill and certain other intangible  assets.  Not more than
25% of  qualifying  Tier I capital  may consist of  trust-preferred  securities.
"Tier II  capital"  consists  of hybrid  capital  instruments,  perpetual  debt,
mandatory  convertible debt securities,  a limited amount of subordinated  debt,
preferred stock that does not qualify as Tier I capital, a limited amount of the
allowance for loan and lease losses and a limited  amount of unrealized  holding
gains on equity securities.  "Tier III capital" consists of qualifying unsecured
subordinated  debt.  The sum of Tier II and Tier III  capital may not exceed the
amount of Tier I capital.

The  guidelines   require  a  minimum  ratio  of  qualifying  total  capital  to
risk-adjusted   assets  of  8%  and  a  minimum  ratio  of  Tier  1  capital  to
risk-adjusted  assets of 4%. In addition to the risk-based  guidelines,  federal
banking regulators require banking organizations to maintain a minimum amount of
Tier 1 capital to total assets, referred to as the leverage ratio. For a banking
organization  rated in the highest of the five  categories used by regulators to
rate  banking  organizations,  the minimum  leverage  ratio of Tier 1 capital to
total  assets  must be 3%.  In  addition  to these  uniform  risk-based  capital
guidelines  and leverage  ratios that apply across the industry,  the regulators
have the discretion to set individual minimum capital  requirements for specific
institutions at rates significantly above the minimum guidelines and ratios.

In addition, federal banking regulators may set capital requirements higher than
the minimums  described  above for financial  institutions  whose  circumstances
warrant it. For example,  a financial  institution  experiencing or anticipating
significant  growth may be expected to maintain capital positions  substantially
above the minimum supervisory levels without significant  reliance on intangible
assets.

PROMPT  CORRECTIVE  ACTION AND OTHER  ENFORCEMENT  MECHANISMS.  Federal  banking
agencies possess broad powers to take corrective and other supervisory action to
resolve  the  problems of insured  depository  institutions,  including  but not
limited to those  institutions  that fall below one or more  prescribed  minimum
capital ratios. Each federal banking agency has promulgated regulations defining
the following five categories in which an insured depository institution will be
placed, based on its capital ratios: well capitalized,  adequately  capitalized,
undercapitalized,     significantly     undercapitalized,     and     critically
undercapitalized.  At December 31, 2005,  the Bank exceeded the required  ratios
for classification as "well/adequately capitalized."



                                       11
<PAGE>


An  institution  that,  based upon its capital  levels,  is  classified  as well
capitalized,  adequately  capitalized,  or  undercapitalized  may be  treated as
though it were in the next lower  capital  category if the  appropriate  federal
banking agency,  after notice and  opportunity  for hearing,  determines that an
unsafe or unsound  condition  or an unsafe or  unsound  practice  warrants  such
treatment.  At each successive  lower capital  category,  an insured  depository
institution  is subject to more  restrictions.  The  federal  banking  agencies,
however,  may  not  treat  a  significantly   undercapitalized   institution  as
critically  undercapitalized  unless its capital  ratio  actually  warrants such
treatment.

In addition to measures  taken under the prompt  corrective  action  provisions,
commercial banking organizations may be subject to potential enforcement actions
by the federal  regulators for unsafe or unsound  practices in conducting  their
businesses or for  violations  of any law,  rule,  regulation,  or any condition
imposed  in  writing by the agency or any  written  agreement  with the  agency.
Finally,  pursuant  to an  interagency  agreement,  the  FDIC  can  examine  any
institution that has a substandard regulatory examination score or is considered
undercapitalized - without the express  permission of the institution's  primary
regulator.

SAFETY AND  SOUNDNESS  STANDARDS.  The federal  banking  agencies  have  adopted
guidelines  designed to assist the federal  banking  agencies in identifying and
addressing  potential  safety and  soundness  concerns  before  capital  becomes
impaired. The guidelines set forth operational and managerial standards relating
to: (i) internal controls,  information systems and internal audit systems, (ii)
loan documentation,  (iii) credit underwriting, (iv) asset growth, (v) earnings,
and (vi)  compensation,  fees and  benefits.  In addition,  the federal  banking
agencies have also adopted safety and soundness guidelines with respect to asset
quality and earnings  standards.  These  guidelines  provide six  standards  for
establishing  and  maintaining a system to identify  problem  assets and prevent
those assets from  deteriorating.  Under these standards,  an insured depository
institution  should:  (i) conduct  periodic  asset  quality  reviews to identify
problem  assets,  (ii)  estimate  the  inherent  losses in  problem  assets  and
establish reserves that are sufficient to absorb estimated losses, (iii) compare
problem  asset totals to capital,  (iv) take  appropriate  corrective  action to
resolve  problem  assets,  (v) consider the size and potential risks of material
asset  concentrations,  and (vi) provide  periodic  asset  quality  reports with
adequate  information  for  management  and the board of directors to assess the
level of asset risk.  These  guidelines  also set forth standards for evaluating
and  monitoring  earnings and for ensuring that earnings are  sufficient for the
maintenance of adequate capital and reserves.

PREMIUMS  FOR DEPOSIT  INSURANCE.  Through the BIF,  the FDIC insures the Bank's
customer deposits up to prescribed limits for each depositor. The amount of FDIC
assessments paid by each BIF member institution is based on its relative risk of
default  as  measured  by   regulatory   capital   ratios  and  other   factors.
Specifically,  the assessment rate is based on the institution's  capitalization
risk category and supervisory subgroup category. An institution's capitalization
risk category is based on the FDIC's determination of whether the institution is
well capitalized, adequately capitalized or less than adequately capitalized. An
institution's supervisory subgroup category is based on the FDIC's assessment of
the  financial  condition  of the  institution  and the  probability  that  FDIC
intervention or other corrective action will be required.

FDIC-insured  depository  institutions  pay an assessment rate equal to the rate
assessed on deposits insured by the Savings Association Insurance Fund ("SAIF").

The assessment rate currently  ranges from zero to 27 cents per $100 of domestic
deposits.  The FDIC may increase or decrease the  assessment  rate schedule on a
semi-annual  basis.  Due to  continued  growth in deposits  and some recent bank
failures,  the BIF is nearing its minimum ratio of 1.25% of insured  deposits as
mandated by law. If the ratio drops below  1.25%,  it is likely the FDIC will be
required to assess  premiums on all banks.  Any increase in  assessments  or the
assessment  rate  could  have a  material  adverse  effect on the  Corporation's
earnings,  depending  on the amount of the  increase.  Furthermore,  the FDIC is
authorized to raise insurance premiums under certain circumstances.




                                       12
<PAGE>
The FDIC is authorized to terminate a depository institution's deposit insurance
upon a finding by the FDIC that the institution's  financial condition is unsafe
or unsound or that the institution has engaged in unsafe or unsound practices or
has violated any  applicable  rule,  regulation,  order or condition  enacted or
imposed by the  institution's  regulatory  agency.  The  termination  of deposit
insurance for the Bank could have a material adverse effect on the Corporation's
earnings,  depending  on the  collective  size  of the  particular  institutions
involved.

All  FDIC-insured  depository  institutions  must pay an  annual  assessment  to
provide  funds for the  payment of  interest  on bonds  issued by the  Financing
Corporation,  a federal corporation chartered under the authority of the Federal
Housing  Finance  Board.  The bonds,  commonly  referred to as FICO bonds,  were
issued to capitalize  the Federal  Savings and Loan Insurance  Corporation.  The
FICO assessment rates for fourth quarter of fiscal 2005 were 1.46 cents for each
$100 of assessable  deposits.  The FICO  assessments  are adjusted  quarterly to
reflect changes in the assessment bases of the FDIC's insurance funds and do not
vary  depending  on a depository  institution's  capitalization  or  supervisory
evaluations.

DEPOSIT INSURANCE  REFORM.  On February 8, 2006,  President Bush signed into law
legislation that merges the BIF and the SAIF, eliminates any disparities in bank
and thrift risk-based premium assessments,  reduces the administrative burden of
maintaining  and  operating  two  separate  funds and  establishes  certain  new
insurance coverage limits and a mechanism for possible periodic  increases.  The
legislation  also gives the FDIC  greater  discretion  to identify  the relative
risks all institutions  present to the deposit insurance fund and set risk-based
premiums.

Major  provisions  in the  legislation  include:  maintaining  basic deposit and
municipal account  insurance  coverage at $100,000 but providing for a new basic
insurance coverage for retirement  accounts of $250,000.  Insurance coverage for
basic deposit and  retirement  accounts  could be increased for inflation  every
five years in $10,000 increments  beginning in 2011; providing the FDIC with the
ability to set the  designated  reserve  ratio  within a range of  between  1.15
percent and 1.50  percent,  rather than  maintaining  1.25  percent at all times
regardless of prevailing  economic  conditions;  providing a one-time assessment
credit of $4.7  billion  to banks  and  savings  associations  in  existence  on
December  31, 1996.  The  institutions  qualifying  for the credit may use it to
offset  future  premiums  with  certain  limitations;  requiring  the payment of
dividends  of 100% of the amount that the  insurance  fund  exceeds  1.5% of the
estimated  insured  deposits  and the  payment  of 50% of the  amount  that  the
insurance  fund  exceeds  1.35% of the  estimated  insured  deposits.  (when the
reserve is greater than 1.35% but no more than 1.5%); the merger of the SAIF and
BIF must  occur  no later  than  July 1,  2006.  Other  provisions  will  become
effective  within 90 days of the publication  date of the final FDIC regulations
implementing the legislation.

INTERSTATE  BANKING AND  BRANCHING.  Banks have the ability,  subject to certain
State restrictions,  to acquire, by acquisition or merger,  branches outside its
home state.  The  establishment  of new interstate  branches is also possible in
those states with laws that expressly permit it. Interstate branches are subject
to  certain  laws of the  states  in which  they are  located.  Competition  may
increase further as banks branch across state lines and enter new markets.

CONSUMER  PROTECTION  LAWS AND  REGULATIONS.  The bank  regulatory  agencies are
focusing greater attention on compliance with consumer protection laws and their
implementing  regulations.  Examination and enforcement have become more intense
in nature,  and  insured  institutions  have been  advised to monitor  carefully
compliance with such laws and  regulations.  The bank is subject to many federal
consumer protection statutes and regulations, some of which are discussed below.

The  Community  Reinvestment  Act,  or CRA, is  intended  to  encourage  insured
depository  institutions,  while operating safely and soundly,  to help meet the
credit  needs of their  communities.  The CRA  specifically  directs the federal
regulatory agencies, in examining insured depository  institutions,  to assess a
bank's  record  of  helping  meet  the  credit  needs of its  entire  community,
including low- and moderate-income neighborhoods, consistent with safe and sound
banking  practices.  The CRA further  requires  the agencies to take a financial
institution's  record of meeting its  community  credit  needs into account when
evaluating applications for, among other things,  domestic branches,  mergers or
acquisitions, or holding company formations. The agencies use the CRA assessment
factors in order to provide a rating to the financial  institution.  The ratings
range from a high of "outstanding" to a low of "substantial  noncompliance."  In
its last  examination  for CRA  compliance,  as of March 22, 1999,  the Bank was
rated "satisfactory."

On February 22, 2005, the federal banking agencies re-proposed amendments to the
CRA regulations that would:

          o    increase the definition of "small  institution" from total assets
               of $250  million to $1  billion,  without  regard to any  holding
               company; and
          o    take into  account  abusive  lending  practices  by a bank or its
               affiliates in determining a bank's CRA rating.

There can be no assurances such proposal will be adopted or, if adopted, in what
form.

The Fair  Credit  Reporting  Act,  as  amended by the Fair and  Accurate  Credit
Transactions  Act,  or FACT,  requires  financial  firms to help deter  identity
theft,  including  developing  appropriate  fraud  response  programs,  and give
consumers more control of their credit data. It also  reauthorizes a federal ban
on state laws that  interfere  with  corporate  credit  granting  and  marketing
practices.  In connection with FACT, financial  institution  regulatory agencies
proposed rules that would prohibit an institution from using certain information
about a consumer it received  from an  affiliate to make a  solicitation  to the
consumer, unless the consumer has been notified and given a chance to opt out of
such solicitations.  A consumer's election to opt out would be applicable for at
least five years.
                                       13
<PAGE>

The Check  Clearing  for the 21st Century  Act, or Check 21,  facilitates  check
truncation  and  electronic  check  exchange  by  authorizing  a new  negotiable
instrument  called a  "substitute  check,"  which is the legal  equivalent of an
original check.  Check 21, effective October 28, 2004, does not require banks to
create  substitute  checks or accept  checks  electronically;  however,  it does
require  banks to accept a legally  equivalent  substitute  check in place of an
original.

The Equal Credit Opportunity Act, or ECOA, generally prohibits discrimination in
any credit transaction,  whether for consumer or business purposes, on the basis
of race, color,  religion,  national origin, sex, marital status, age (except in
limited  circumstances),  receipt of income from public assistance programs,  or
good faith exercise of any rights under the Consumer Credit Protection Act.

The Truth in Lending  Act, or TILA,  is designed to ensure that credit terms are
disclosed in a meaningful  way so that  consumers may compare  credit terms more
readily and  knowledgeably.  As a result of the TILA, all creditors must use the
same credit  terminology  to express  rates and  payments,  including the annual
percentage rate, the finance charge, the amount financed,  the total of payments
and the payment schedule, among other things.

The Fair Housing Act, or FH Act,  regulates many practices,  including making it
unlawful  for  any  lender  to  discriminate  in  its  housing-related   lending
activities against any person because of race, color, religion, national origin,
sex,  handicap or familial status. A number of lending practices have been found
by the courts to be, or may be considered,  illegal under the FH Act,  including
some that are not specifically mentioned in the FH Act itself.

The Home  Mortgage  Disclosure  Act, or HMDA,  grew out of public  concern  over
credit shortages in certain urban  neighborhoods and provides public information
that will help show  whether  financial  institutions  are  serving  the housing
credit needs of the neighborhoods and communities in which they are located. The
HMDA also  includes a "fair  lending"  aspect that requires the  collection  and
disclosure  of data about  applicant  and borrower  characteristics  as a way of
identifying   possible    discriminatory    lending   patterns   and   enforcing
anti-discrimination statutes.

The term  "predatory  lending,"  much like the terms "safety and  soundness" and
"unfair and deceptive practices," is far-reaching and covers a potentially broad
range  of  behavior.  As  such,  it does  not  lend  itself  to a  concise  or a
comprehensive definition. But typically predatory lending involves at least one,
and perhaps all three, of the following elements:

          o    making  unaffordable  loans  based on the assets of the  borrower
               rather  than on the  borrower's  ability  to repay an  obligation
               ("asset-based lending")

          o    inducing a borrower to  refinance a loan  repeatedly  in order to
               charge  high  points  and fees each  time the loan is  refinanced
               ("loan flipping")

          o    engaging in fraud or  deception to conceal the true nature of the
               loan obligation from an unsuspecting or unsophisticated borrower.

FRB regulations  aimed at curbing such lending  significantly  widen the pool of
high-cost home-secured loans covered by the Home Ownership and Equity Protection
Act of 1994,  a  federal  law  that  requires  extra  disclosures  and  consumer
protections to borrowers.  Lenders that violate the rules face  cancellation  of
loans and penalties equal to the finance charges paid.

Effective  April 8,  2005,  OCC  guidelines  require  national  banks  and their
operating   subsidiaries  to  comply  with  certain  standards  when  making  or
purchasing  loans to avoid  predatory or abusive  residential  mortgage  lending
practices.  Failure to comply with the guidelines  could be deemed an unsafe and
unsound or unfair or  deceptive  practice,  subjecting  the bank to  supervisory
enforcement actions.


                                       14
<PAGE>

Finally, the Real Estate Settlement  Procedures Act, or RESPA,  requires lenders
to provide  borrowers  with  disclosures  regarding  the nature and cost of real
estate  settlements.  Also, RESPA prohibits certain abusive  practices,  such as
kickbacks,  and places  limitations on the amount of escrow accounts.  Penalties
under the above laws may include fines,  reimbursements and other penalties. Due
to heightened  regulatory  concern  related to compliance with the CRA, TILA, FH
Act, ECOA, HMDA and RESPA generally,  the Bank may incur  additional  compliance
costs or be required to expend  additional  funds for  investments  in its local
community.

FEDERAL  HOME LOAN BANK  SYSTEM.  The Bank is a member of the Federal  Home Loan
Bank of  Pittsburgh.  Among  other  benefits,  each FHLB  serves as a reserve or
central bank for its members within its assigned  region.  Each FHLB is financed
primarily from the sale of  consolidated  obligations  of the FHLB system.  Each
FHLB makes  available  loans or advances to its members in  compliance  with the
policies and procedures  established by the Board of Directors of the individual
FHLB. As an FHLB member, the Bank is required to own a certain amount of capital
stock in the FHLB.  At December 31, 2005,  the Bank was in  compliance  with the
stock requirements.

FEDERAL RESERVE SYSTEM. The FRB requires all depository institutions to maintain
non-interest  bearing  reserves at specified  levels  against their  transaction
accounts  (primarily  checking,  NOW,  and  Super  NOW  checking  accounts)  and
non-personal  time  deposits.  At December 31, 2005,  the Bank was in compliance
with these requirements.

ITEM 1A.  RISK FACTORS

The  following  discusses  certain  factors  that may affect  the  Corporation's
financial  condition  and  results of  operations  and should be  considered  in
analyzing whether to make or continue an investment in our common stock.

ABILITY OF THE  CORPORATION  TO EXECUTE ITS  BUSINESS  STRATEGY.  The  financial
performance and  profitability of the Corporation will depend, in large part, on
its ability to favorably execute its business  strategy.  This execution entails
risks in, among other areas,  technology  implementation,  market  segmentation,
brand  identification,  banking  operations,  and  capital  and  human  resource
investments. Accordingly, there can be no assurance that the Corporation will be
successful in its business strategy.

ECONOMIC CONDITIONS AND GEOGRAPHIC  CONCENTRATION.  The Corporation's operations
are located in western Pennsylvania and are concentrated in Venango, Clarion and
Butler  Counties,   Pennsylvania.   Although   management  has  diversified  the
Corporation's  loan portfolio into other  Pennsylvania  counties,  and to a very
limited extent into other states, the vast majority of the Corporation's credits
remain  concentrated  in  the  three  primary  counties.  As a  result  of  this
geographic concentration, the Corporation's results depend largely upon economic
and real estate market  conditions in these areas.  Deterioration in economic or
real estate market  conditions in the  Corporation's  primary market areas could
have a  material  adverse  impact  on the  quality  of  the  Corporation's  loan
portfolio, the demand for its products and services, and its financial condition
and results of operations.

INTEREST RATES. By nature,  all financial  institutions are impacted by changing
interest rates, due to the impact of such upon:

          o    the demand for new loans
          o    prepayment speeds experienced on various asset classes,
               particularly residential mortgage loans
          o    credit profiles of existing borrowers
          o    rates received on loans and securities
          o    rates paid on deposits and borrowings.

As presented  previously,  the  Corporation is  financially  exposed to parallel
shifts in general market interest rates,  changes in the relative pricing of the
term structure of general market  interest  rates,  and relative credit spreads.
Therefore,  significant  fluctuations  in interest  rates may present an adverse
effect upon the Corporation's financial condition and results of operations.



                                       15
<PAGE>

GOVERNMENT  REGULATION AND MONETARY POLICY.  The financial  services industry is
subject to extensive federal and state  supervision and regulation.  Significant
new laws,  changes in existing  laws, or repeals of present laws could cause the
Corporation's financial results to materially differ from past results. Further,
federal monetary policy, particularly as implemented through the Federal Reserve
System,  significantly  affects  credit  conditions for the  Corporation,  and a
material  change in these  conditions  could  present an  adverse  impact on the
Corporation's financial condition and results of operations.

COMPETITION.  The financial services business in the Corporation's  market areas
is highly  competitive,  and is becoming more so due to  technological  advances
(particularly  Internet  based  financial  services  delivery),  changes  in the
regulatory  environment,  and the enormous consolidation that has occurred among
financial  services  providers.  Many of the Corporation's  competitors are much
larger  in  terms of total  assets  and  market  capitalization,  enjoy  greater
liquidity  in their  equity  securities,  have  greater  access to  capital  and
funding, and offer a broader array of financial products and services.  In light
of this environment, there can be no assurance that the Corporation will be able
to compete effectively.  The results of the Corporation may materially differ in
future periods depending upon the nature or level of competition.

CREDIT QUALITY.  A significant  source of risk arises from the possibility  that
losses will be sustained because borrowers,  guarantors, and related parties may
fail to perform in accordance with the terms of their loans. The Corporation has
adopted  underwriting  and credit  monitoring  procedures  and credit  policies,
including the  establishment  and review of the allowance for loan losses,  that
management  believes  are  appropriate  to control  this risk by  assessing  the
likelihood of non-performance,  tracking loan performance,  and diversifying the
credit  portfolio.  Such  policies  and  procedures  may not,  however,  prevent
unexpected losses that could have a material adverse effect on the Corporation's
financial condition or results of operations. Unexpected losses may arise from a
wide  variety of  specific  or  systemic  factors,  many of which are beyond the
Corporation's ability to predict, influence, or control.

THERE ARE INCREASED RISKS INVOLVED WITH  COMMERCIAL  REAL ESTATE,  CONSTRUCTION,
COMMERCIAL BUSINESS AND CONSUMER LENDING ACTIVITIES.

         Our lending  activities  include loans  secured by existing  commercial
real estate. Commercial real estate lending generally is considered to involve a
higher degree of risk than single-family residential lending due to a variety of
factors,  including  generally  larger  loan  balances  and  the  dependency  on
successful  operation of the project for repayment.  Our lending activities also
include commercial  business loans to small to medium business,  which generally
are secured by various  equipment,  machinery and other corporate assets,  and a
wide variety of consumer loans, including home equity and second mortgage loans,
automobile loans and unsecured  loans.  Although  commercial  business loans and
consumer  loans  generally  have shorter  terms and higher  interest  rates than
mortgage loans,  they generally involve more risk than mortgage loans because of
the nature of, or in certain cases the absence of, the collateral  which secures
such loans.

OUR  ALLOWANCE  FOR LOAN LOSSES ON LOANS MAY NOT BE  ADEQUATE TO COVER  PROBABLE
LOSSES.

         We have  established  an allowance  for loan losses which we believe is
adequate  to offset  probable  losses  on our  existing  loans.  There can be no
assurance  that any future  declines in real estate market  conditions,  general
economic  conditions  or changes in  regulatory  policies will not require us to
increase our allowance for loan losses, which could adversely affect our results
of operations.

OTHER RISKS. From time to time, the Corporation details other risks with respect
to its business and financial results in its filings with the SEC.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not applicable.



                                       16
<PAGE>
ITEM 2.  PROPERTIES

The Corporation  owns no real property but utilizes the main office of the Bank.
The  Corporation's  and the Bank's  executive  offices  are  located at 612 Main
Street,  Emlenton,  Pennsylvania.  The Corporation pays no rent or other form of
consideration  for the use of this  facility.  The  following  table  sets forth
information with respect to the Bank's offices at December 31, 2005:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
 (Dollar amounts in thousands)                                            Owned     Lease        Net Book       Deposits
                                                                            or    Expiration     Value or          at
Location                                                        County    Leased   Date (1)      Annual Rent  12/31/2005
-------------------------------------------------------------------------------------------------------------------------
Corporate and Bank Main Offices:
--------------------------------
<S>                                                           <C>         <C>        <C>         <C>           <C>
        Headquarters and Main Office                           Venango     Owned      --           $1,793       $ 45,895
        612 Main Street, Emlenton, Pennsylvania 16373

        Data Center                                            Venango     Owned      --              984             --
        708 Main Street, Emlenton, Pennsylvania 16373

Bank Branch Offices
-------------------
        Bon Aire Office                                         Butler    Leased   May 2011            36         35,479
        1101 North Main Street, Butler, Pennsylvania 16003

        Brookville Office                                     Jefferson    Owned      --              211         21,419
        263 Main Street, Brookville, Pennsylvania 15825

        Clarion Office                                         Clarion     Owned      --              330         35,260
        Sixth & Wood Street, Clarion, Pennsylvania 16214

        DuBois Office                                         Clearfield  Leased  June 2010            20         13,678
        861 Beaver Drive, Dubois, Pennsylvania 15801

        East Brady Office                                      Clarion     Owned      --               53         18,555
        323 Kelly's Way, East Brady, Pennsylvania 16028

        Eau Claire Office                                       Butler     Owned      --              161         14,280
        207 Washington Street, Eau Claire, Pennsylvania 16030

        Knox Office                                            Clarion    Leased  December 2011        27         27,109
        Route 338 South, Knox, Pennsylvania 16232

        Meridian Office                                         Butler    Leased  December 2012        26          8,494
        101 Meridian Road, Butler, Pennsylvania 16003

        Ridgway Office                                           Elk       Owned      --              166         10,334
        173 Main Street, Ridgway, Pennsylvania 15853
                                                                                                              -----------
                                                                                                                $230,503
                                                                                                              ===========
</TABLE>


ITEM  3.  LEGAL PROCEEDINGS

Neither  the  Bank  nor  the  Corporation  is  involved  in any  material  legal
proceedings.  The Bank, from time to time, is party to litigation that arises in
the  ordinary  course  of  business,  such as claims to  enforce  liens,  claims
involving the  origination  and servicing of loans,  and other issues related to
the business of the Bank. In the opinion of  management,  the  resolution of any
such issues would not have a material adverse impact on the financial  position,
results of operation, or liquidity of the Bank or the Corporation.

ITEM  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were  submitted to  stockholders  for a vote during the quarter ended
December 31, 2005.

                                       17
<PAGE>




18

PART II

ITEM  5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
          MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.

(a)  The  information  is contained  under the section  captioned  "Common Stock
     Information" in the  Corporation's  Annual Report for the fiscal year ended
     December 31, 2005, and is incorporated herein by reference. For information
     with  respect  to  equity  compensation  plans,  see  "Item  12 -  Security
     Ownership  of  Certain   Beneficial   Owners  and  Management  and  Related
     Stockholder Matters." There were no sales of the Corporation's unregistered
     securities during the period covered by this report.

(b)  Not applicable.

(c)  Issuer Purchases of Equity  Securities.  The Corporation did not repurchase
     any of its equity securities in the year ended December 31, 2005.

ITEM 6:  SELECTED FINANCIAL DATA

The  required  information  is  contained  in the  section  captioned  "Selected
Consolidated  Financial  Data" in the  Corporation's  Annual Report for the year
ended December 31, 2005 and incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

The required  information  is contained in the section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Corporation's  Annual  Report  for the  year  ended  December  31,  2005  and is
incorporated herein by reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk for the  Corporation is comprised  primarily from interest rate risk
exposure and liquidity risk. Since virtually all of the interest-earning  assets
and paying liabilities are at the Bank,  virtually all of the interest rate risk
and liquidity  risk lies at the Bank level.  The Bank is not subject to currency
exchange  risk or  commodity  price  risk,  and has no  trading  portfolio,  and
therefore,  is not subject to any trading risk.  In addition,  the Bank does not
participate  in  hedging  transactions  such as  interest  rate  swaps and caps.
Changes in interest rates will impact both income and expense  recorded and also
the market value of long-term  interest-earning  assets.  Interest rate risk and
liquidity risk management is performed at the Bank level.  Although the Bank has
a diversified  loan portfolio,  loans  outstanding to individuals and businesses
depend upon the local economic conditions in the immediate trade area.

One of the primary  functions of the  Corporation's  asset/liability  management
committee  is to  monitor  the level to which the  balance  sheet is  subject to
interest rate risk. The goal of the  asset/liability  committee is to manage the
relationship  between interest rate sensitive  assets and  liabilities,  thereby
minimizing  the  fluctuations  in  the  net  interest  margin,   which  achieves
consistent  growth of net interest  income during  periods of changing  interest
rates.


                                       18
<PAGE>



Interest  rate  sensitivity  is the result of  differences  in the  amounts  and
repricing  dates  of  the  bank's  rate  sensitive  assets  and  rate  sensitive
liabilities.  These  differences,  or interest rate repricing "gap",  provide an
indication of the extent that the  Corporation's net interest income is affected
by future  changes in interest  rates.  A gap is  considered  positive  when the
amount  of  interest-rate  sensitive  assets  exceeds  the  amount  of  interest
rate-sensitive  liabilities  and is  considered  negative  when  the  amount  of
interest   rate-sensitive   liabilities   exceeds   the   amount   of   interest
rate-sensitive  assets.  Generally,  during a period of rising interest rates, a
negative gap would  adversely  affect net  interest  income while a positive gap
would result in an increase in net interest income. Conversely,  during a period
of falling  interest  rates,  a negative  gap would result in an increase in net
interest income and a positive gap would adversely  affect net interest  income.
The closer to zero that gap is maintained,  generally,  the lesser the impact of
market interest rate changes on net interest income.

Based on certain  assumptions by a federal regulatory  agency,  which management
believes most accurately  represents the sensitivity of the Corporation's assets
and   liabilities   to  interest  rate  changes,   at  December  31,  2005,  the
Corporation's  interest-earning  assets  maturing or  repricing  within one year
totaled  $67.2  million  while the  Corporation's  interest-bearing  liabilities
maturing or repricing within one-year totaled $83.1 million, providing an excess
of interest-bearing liabilities over interest-earning assets of $15.9 million or
a negative  15.5% of total assets.  At December 31, 2005,  the percentage of the
Corporation's  assets to liabilities  maturing or repricing  within one year was
80.9%.

For  more  information,  see  "Market  Risk  Management"  in  Exhibit  13 to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2005.

ITEM  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  Corporation's   consolidated   financial  statements  required  herein  are
contained in the  Corporation's  Annual  Report for the year ended  December 31,
2005 and are incorporated herein by reference.

ITEM  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

On  January  19,  2005,  the  Corporation's  Board of  Directors  dismissed  its
independent  auditors,  Crowe  Chizek  and  Company  LLC  (Crowe  Chizek)  to be
effective  upon  filing  of the 2004  Form  10-K.  Crowe  Chizek  completed  its
engagement  as  independent  auditor  for the  Corporation's  fiscal  year ended
December  31, 2004 upon the filing of the  Corporation's  Form 10-K for the year
ended December 31, 2004. Crowe Chizek's report on the Corporation's consolidated
financial  statements  during the fiscal years ended  December 31, 2004 and 2003
contained no adverse  opinion or a disclaimer of opinion,  and was not qualified
or  modified  as to  uncertainty,  audit  scope or  accounting  principles.  The
decision  to  change  accountants  was  approved  by  the  Corporation's   Audit
Committee.  During the two fiscal years ended December 31, 2004 and 2003 and the
subsequent  interim  period  to the  date  of  their  dismissal,  there  were no
disagreements  between  the  Corporation  and  Crowe  Chizek on any  matters  of
accounting principles or practices,  financial statement disclosure, or auditing
scope or principles, which disagreement(s),  if not resolved to the satisfaction
of Crowe Chizek,  would have caused it to make a reference to the subject matter
of the  disagreement(s) in connection with its reports.  None of the "REPORTABLE
EVENTS"  described in Item  304(a)(1)(v) of Regulation S-K occurred with respect
to the Corporation  within the two fiscal years ended December 31, 2004 and 2003
and the subsequent interim period to the date of their dismissal.

Effective  January 19, 2005,  the  Corporation  engaged BEARD MILLER COMPANY LLP
(Beard Miller) as its  independent  auditors for the fiscal year ending December
31, 2005.  During the two fiscal years ended  December 31, 2004 and 2003 and the
subsequent  interim period to the date of their engagement,  the Corporation did
not consult  Beard  Miller  regarding  any of the matters or events set forth in
Item 304(a)(2)(i) and (ii) of Regulation S-K.



                                       19
<PAGE>

ITEM 9A.  CONTROLS AND PROCEDURES.

The Corporation  maintains  disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Corporation's reports
in compliance  with the Exchange Act, 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) promulgated under the Exchange Act. As of December
31, 2005, the Corporation  carried out an evaluation,  under the supervision and
with  the   participation  of  the  Corporation's   Management,   including  the
Corporation's Chief Executive Officer and 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.

During the fourth quarter of fiscal year 2005, there were no significant changes
in the  Corporation's  internal  control  over  financial  reporting or in other
factors that could significantly  affect the internal controls subsequent to the
date of the evaluation referenced above.

ITEM 9B.  OTHER INFORMATION.

None.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information  contained under the sections  captioned  "Principal  Beneficial
Owners of the  Corporation's  Common  Stock" and  "Information  as to  Nominees,
Directors  and  Executive   Officers"  is   incorporated  by  reference  to  the
Corporation's definitive proxy statement for the Corporation's Annual Meeting of
Stockholders  to be held on May 17,  2006 (the  Proxy  Statement)  which will be
filed no later than 120 days following the Corporation's fiscal year end.

The  Corporation  maintains a Code of Personal and  Business  Conduct and Ethics
(the "Code") that applies to all employees,  including the CEO and the principal
financial and accounting  officer.  A copy of the Code has previously been filed
with the SEC and is posted on our  website at  www.farmersnb.com.  Any waiver of
the Code with  respect to the CEO and the  principal  financial  and  accounting
officer will be publicly disclosed in accordance with applicable regulations.

ITEM 11.  EXECUTIVE COMPENSATION

The  information  contained  under  the  section  captioned  "Information  as to
Nominees,   Directors  and  Executive   Officers"  in  the  Proxy  Statement  is
incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information  required by this item is  incorporated  herein by  reference to the
section  captioned  "Principal  Beneficial  Owners of the  Corporation's  Common
Stock" in the Proxy Statement.


                                       20
<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference to the
section captioned "Information as to Nominees, Directors and Executive Officers"
in the Proxy Statement.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated herein by reference to the
section captioned  "Ratification of Independent Public Accountants" in the Proxy
Statement.

PART IV

ITEM 15.  EXHIBITS AND FINANCIAL SCHEDULES

(a)  (1)-(2) Financial Statements and Schedules:

               (i) Financial  statements and schedules included in Exhibit 13 to
          this Form 10-K are filed as part of this report.

               (ii) All other financial  statement schedules are omitted because
          the required information is not applicable, or because the information
          required is  included in the  consolidated  financial  statements  and
          notes thereto.

    (3) Management Contracts or Compensatory Plans:

               (i)  Exhibits  10.1-10.3  listed  below  in  (b)  below  identify
          management contracts or compensatory plans or arrangements required to
          be filed as exhibits to this report,  and such listing is incorporated
          herein by reference.

(b)  Exhibits are either attached as part of this Report or incorporated  herein
     by reference.

3.1  Articles of Incorporation of Emclaire Financial Corp. (1)

3.2  Bylaws of Emclaire Financial Corp. (1)

4    Specimen Stock Certificate of Emclaire Financial Corp. (2)

10.1 Form of Change in Control  Agreement  between  Registrant and two executive
     officers. (3)

10.2 Form of Group Term  Carve-Out  Plan  between the Farmers  National  Bank of
     Emlenton and 20 Officers and Employees. (5)

10.3 Form of  Supplemental  Executive  Retirement  Plan  Agreement  between  the
     Farmers National Bank of Emlenton and Six Officers. (5)

11   Statement  regarding  computation  of earnings per share (see Note 1 of the
     Notes to Consolidated Financial Statements in the Annual Report).

13   Annual Report to Stockholders for the fiscal year ended December 31, 2005.

14   Code of Personal and Business Conduct and Ethics. (6)



                                       21
<PAGE>

16   Letter regarding change in certifying accountant

20   Emclaire Financial Corp. Dividend Reinvestment and Stock Purchase Plan.(4)

21   Subsidiaries  of the Registrant  (see  information  contained  herein under
     "Item 1. Description of Business - Subsidiary Activity").

31.1 CEO 302 Certification.

31.2 Principal Financial and Accounting Officer 302 Certification.

32.1 Chief Executive Officer 906 Certification.

32.2 Principal Financial and Accounting Officer 906 Certification.

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

(1)  Incorporated  by reference to the  Registrant's  Registration  Statement on
     Form SB-2, as amended,  (File No. 333-11773)  declared effective by the SEC
     on October 25, 1996.
(2)  Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the year ended December 31, 1997.
(3)  Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the year ended December 31, 1996.
(4)  Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the year ended December 31, 2001.
(5)  Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the year ended December 31, 2002.
(6)  Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the year ended December 31, 2004.


                                       22
<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.

Dated:  March 27, 2006      By: /S/ DAVID L. COX
                               ------------------------------------------------
                               David L. Cox
                               President, Chief Executive Officer, and Director
                               (Duly Authorized Representative)

Pursuant to the requirement of the Securities  Exchange Act of 1934, this Report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S>                                                           <C>
By:   /S/ DAVID L. COX                                       By:/S/ SHELLY L. RHOADES
      -----------------------------------------------           --------------------------------------------
      David L. Cox                                              Shelly L. Rhoades
      President, Chief Executive Officer, and Director          Treasurer
      (Principal Executive Officer)                             (Principal Financial and Accounting Officer)

Date: March 27, 2006                                          Date:March 27, 2006

By:   /S/ RONALD L. ASHBAUGH                                 By:/S/ BRIAN C. MCCARRIER
      -----------------------------------------------           --------------------------------------------
      Ronald L. Ashbaugh                                        Brian C. McCarrier
      Director                                                  Director

Date: March 27, 2006                                          Date:March 27, 2006


By:   /S/ JAMES M. CROOKS                                    By:/S/ GEORGE W. FREEMAN
      -----------------------------------------------           --------------------------------------------
      James M. Crooks                                           George W. Freeman
      Director                                                  Director

Date: March 27, 2006                                          Date:March 27, 2006


By:   /S/ MARK A. FREEMER                                    By:/S/ ROBERT L. HUNTER
      -----------------------------------------------           --------------------------------------------
      Mark A. Freemer                                           Robert L. Hunter
      Director                                                  Director

Date: March 27, 2006                                          Date:March 27, 2006


By:   /S/ J. MICHAEL KING                                    By:/S/ JOHN B. MASON
      -----------------------------------------------           --------------------------------------------
      J. Michael King                                           John B. Mason
      Director                                                  Director

Date: March 27, 2006                                          Date:March 27, 2006
</TABLE>

                                       23