EMLENTON — Emclaire Financial, the parent holding company of The Farmers National Bank of Emlenton, will reduce its quarterly cash dividends and its employee compensation costs.

This plan will be implemented in part to offset the increased costs of FDIC deposit insurance premiums, according to a bank news release. These costs have increased in the past two years and will go up more in 2009 because of the FDIC's special assessment on all banks.

This special assessment could cost the bank at least an additional $300,000 this year depending on the final legislation, the news release stated.

The corporation continues to have sound overall assets, but delinquencies and foreclosures are higher than before. However, they are below the level of national averages.

To offset these increase costs and considering the possibility of a prolonged recession, the corporation will preserve its capital by reducing the quarterly cash dividend from the current 32 cents per quarter to 14 cents per quarter effective for the second quarter this year, the release stated.

The reduced dividend will add more than $1 million in capital or 72 cents in additional value per common share. The value of per common share was $20.06 on Dec. 31.

The board also decided to discontinue all management and employee incentives and bonuses for 2009. This will save more than $400,000.

William C. Marsh, chairman of the board, president and chief executive officer, said in the release, "During this time of economic turmoil and additional regulation, we are taking proactive steps to protect capital and preserve shareholder value."

The bank has 12 offices in Venango, Butler, Clarion, Clearfield, Elk, Jefferson and Mercer counties.