STATE FINANCIAL SERVICES CORP - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10 - Q

(X)	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2005
	or
( )	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 000-18166

STATE FINANCIAL SERVICES CORPORATION

(Exact name of registrant as specified in its charter)

WISCONSIN

(State or other jurisdiction of

incorporation or organization)

39-1489983

(I.R.S. Employer identification No.)

815 NORTH WATER STREET, MILWAUKEE, WISCONSIN 53202-3526

(Address and Zip Code of principal executive offices)

(414) 223-8400

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act).

Yes [X] No [ ]

As of May 10, 2005, there were 6,945,472 shares of Registrant's $0.10 Par Value Common Stock outstanding.

	FORM 10-Q
	STATE FINANCIAL SERVICES CORPORATION
	INDEX
	PART I - FINANCIAL INFORMATION
		Page No.
Item 1.	Financial Statements. (Unaudited)
	Consolidated Statements of Financial Condition as of March 31, 2005 (unaudited) and December 31, 2004 (audited)	3
	Consolidated Statements of Income for the Three Months ended March 31, 2005 and March 31, 2004	4
	Consolidated Statements of Cash Flows for the Three Months ended March 31, 2005 and March 31, 2004	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	15
Item 4.	Controls and Procedures.	16
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	17
Item 3.	Default Upon Senior Securities.	17
Item 4.	Submission of Matters to a Vote of Security Holders.	17
Item 5.	Other Information.	17
Item 6.	Exhibits.	17
Signatures		18
Exhibit Index		19

Part I. Financial Information

Item 1. Financial Statements.

State Financial Services Corporation And Subsidiaries

Consolidated Statements of Financial Condition

	March 31, 2005 (unaudited)			December 31, 2004 (audited)
Assets
Cash and due from banks	$	38,208,078		$	34,864,395
Interest-bearing bank balances		4,318,078			5,170,383
Federal funds sold		3,266,013			14,968,937
Cash and cash equivalents		45,792,169			55,003,715
Investment securities:
Available-for-sale (at fair value)		363,091,235			387,077,866
Held-to-maturity (fair value of $279,075-2005 and $279,511-2004)		274,915			274,947
Loans and leases (net of allowance for loan and lease losses of $13,293,916-2005 and $12,347,154-2004)		983,592,923			922,668,520
Loans held for sale		3,508,915			3,129,775
Premises and equipment		32,975,236			32,941,598
Accrued interest receivable		5,755,389			5,690,553
Goodwill		36,815,156			35,354,252
Core deposit intangible		4,513,744			4,642,708
Bank owned life insurance		22,152,386			21,920,248
Other assets		8,332,086			7,178,719
Total Assets	$	1,506,804,154		$	1,475,882,901

Liabilities and Shareholders’ Equity
Deposits		1,086,960,675			1,083,866,755
Securities sold under agreement to repurchase		140,363,795			143,723,944
Federal Home Loan Bank advances		67,300,000			67,300,000
Note payable		41,590,000			15,790,000
Subordinated debt		14,000,000			14,000,000
Junior subordinated debentures owed to unconsolidated subsidiary trust		30,000,000			30,000,000
Accrued expenses and other liabilities		8,086,171			4,137,478
Accrued interest payable		2,872,557			2,182,398
Total Liabilities		1,391,173,198			1,361,000,575
Minority interest in consolidated subsidiary		577,737			-

Shareholders’ Equity:
Preferred stock, $1 par value; authorized-100,000 shares; issued and outstanding-none		-			-
Common stock, $.10 par value; authorized 25,000,000 shares; issued 9,647,073 shares in 2005 and 9,623,301 shares in 2004, outstanding 6,924,233 and 6,900,461 shares in 2005 and 2004		964,707			962,330
Additional paid-in capital		87,294,983			86,885,929
Retained earnings		75,865,314			73,313,612
Accumulated other comprehensive (loss) income		(1,737,292	)		1,054,948
Unearned shares held by ESOP		(3,981,303	)		(3,981,303	)
Treasury stock-2,722,840 shares in 2005 and 2004		(43,353,190	)		(43,353,190	)
Total Shareholders’ Equity		115,053,219			114,882,326
Total Liabilities and Shareholders’ Equity	$	1,506,804,154		$	1,475,882,901

See notes to unaudited consolidated financial statements.

State Financial Services Corporation And Subsidiaries

Consolidated Statements of Income (Unaudited)

	Three Months Ended March 31,
	2005		2004
Interest income:
Loans and leases	$	15,706,902	$	12,863,766
Investment securities:
Taxable		3,543,599		3,461,179
Tax-exempt		554,028		544,337
Federal funds sold and other short-term investments		25,581		48,145
Total interest income		19,830,110		16,917,427

Interest expense:
Deposits		3,823,757		3,185,396
Securities sold under agreements to repurchase		844,662		773,278
Federal Home Loan Bank advances		730,148		789,391
Other borrowings		1,130,164		540,979
Total interest expense		6,528,731		5,289,044
Net interest income		13,301,379		11,628,383

Provision for loan and lease losses		528,010		600,000
Net interest income after provision for loan and lease losses		12,773,369		11,028,383

Other income:
Service charges on deposit accounts		766,477		845,864
ATM and merchant service fees		260,972		215,063
Security commissions and management fees		140,775		173,139
Investment securities gains, net