SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended                                        March 31, 2000

Commission file number                                       0-18166

                      STATE FINANCIAL SERVICES CORPORATION
             (Exact name of registrant as specified in its charter)



              WISCONSIN                                39-1489983
              ---------                                ----------
   (State or other jurisdiction of        (I.R.S. Employer identification No.)
    incorporation or organization)



           10708 WEST JANESVILLE ROAD, HALES CORNERS, WISCONSIN 53130
           ----------------------------------------------------------
             (Address and Zip Code of principal executive offices)

                                 Not applicable
               ---------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


                                 (414) 425-1600
                                 --------------
              (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.  Yes __X__   No ___

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

     As of May 5, 2000,  there were 8,461,061  shares of Registrant's  $0.10 Par
     Value Common Stock outstanding.

<PAGE>

                                    FORM 10-Q

                      STATE FINANCIAL SERVICES CORPORATION

                                      INDEX


                         PART I - FINANCIAL INFORMATION


                                                                       Page No.

Item 1.         Financial Statements (Unaudited)

                Consolidated Balance Sheets as of
                March 31, 2000 and December 31, 1999                        2

                Consolidated Statements of Income for the
                Three Months ended March 31, 2000 and 1999                  3

                Consolidated Statements of Cash Flows for the
                Three Months ended March 31, 2000 and 1999                  4

                Notes to Consolidated Financial Statements                  5

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



                           PART II - OTHER INFORMATION

Items 1-6                                                                  15

Signatures                                                                 16

<PAGE>
     Part I.         Financial Information
     Item 1.         Financial Statements
<TABLE>

STATE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
<CAPTION>
                                                                                        March 31,                December 31,
                                                                                          2000                      1999
                                                                                     ---------------           ---------------
ASSETS
<S>                                                                                  <C>                       <C>
  Cash and due from banks                                                            $    33,059,117           $    51,710,232
  Federal funds sold                                                                      16,284,096                   945,576
  Interest-earning deposits                                                                5,076,238                 7,128,225
                                                                                     ---------------           ---------------
  Cash and cash equivalents                                                               54,419,451                59,784,033
  Investment securities
   Held-to-maturity (fair value $3,346,079 - March 31, 2000
      and $3,366,087 - December 31, 1999)                                                  3,323,488                 3,333,183
   Available for sale (at fair value)                                                    266,597,538               218,602,218

  Loans (net of allowance for loan losses of $7,073,709 -
    March 31, 2000 and $6,904,980 -December 31, 1999)                                    716,060,445               742,196,119

  Premises and equipment                                                                  24,286,454                22,819,347
  Accrued interest receivable                                                              6,054,357                 5,810,538
  Goodwill                                                                                28,327,077                28,306,540
  Other assets                                                                             8,409,325                 9,172,363
                                                                                     ---------------           ---------------
                                                                  TOTAL ASSETS       $ 1,107,478,135           $ 1,090,024,341
                                                                                     ===============           ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
  Deposits:
    Demand                                                                               111,804,277               117,298,997
    Savings                                                                              251,895,443               269,317,506
    Money market                                                                         185,818,871               160,169,964
    Other time                                                                           291,321,618               300,264,097
                                                                                     ---------------           ---------------
                                                                TOTAL DEPOSITS           840,840,209               847,050,564

  Notes payable                                                                           39,958,609                39,958,609
  Securities sold under agreements to repurchase                                          12,556,750                 3,433,809
  Federal Funds Purchased                                                                  5,575,000                15,400,000
  Federal Home Loan Bank advances                                                         94,500,000                70,800,000
  Accrued expenses and other liabilities                                                   1,658,324                 1,520,251
  Accrued interest payable                                                                 2,444,685                 2,193,555
                                                                                     ---------------           ---------------
                                                             TOTAL LIABILITIES           997,533,577               980,356,788

Stockholders' equity:
    Preferred stock, $1 par value; authorized--100,000 shares;
       issued and outstanding--none
    Common stock, $0.10 par value; authorized--10,000,000 shares
       issued and outstanding--10,102,501 shares in 2000
       and 10,092,684 in 1999, including 1,515,140 treasury shares                         1,010,250                 1,009,268
    Capital surplus                                                                       94,989,907                94,923,188
    Accumulated other comprehensive loss                                                 (3,220,228)               (2,709,310)
    Retained earnings                                                                     47,532,719                46,812,497
    Unearned shares held by ESOP                                                         (5,131,608)               (5,131,608)
    Treasury Stock                                                                      (25,236,482)              (25,236,482)
                                                                                     ---------------           ---------------
                                                    TOTAL STOCKHOLDERS' EQUITY           109,944,558               109,667,553
                                                                                     ---------------           ---------------
                                    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 1,107,478,135           $ 1,090,024,341
                                                                                     ===============           ===============

See notes to unaudited consolidated financial statements.
</TABLE>

                                       2
<PAGE>
<TABLE>
STATE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
<CAPTION>
                                                                                         Three months ended March 31,
                                                                                          2000                      1999
                                                                                     ---------------           ---------------
INTEREST INCOME:
<S>                                                                                  <C>                       <C>
  Loans, including fees                                                                  $15,515,218               $12,178,444
  Investment securities
    Taxable                                                                                3,261,423                 1,567,087
    Tax-exempt                                                                               462,273                   361,625
  Federal funds sold                                                                         140,676                   152,716
                                                                                     ---------------           ---------------
                                                         TOTAL INTEREST INCOME            19,379,590                14,259,872
INTEREST EXPENSE:
  Deposits                                                                                 7,463,745                 5,654,750
  Notes payable and other borrowings                                                       2,198,621                   646,780
                                                                                     ---------------           ---------------
                                                        TOTAL INTEREST EXPENSE             9,662,366                 6,301,530
                                                                                     ---------------           ---------------
                                                           NET INTEREST INCOME             9,717,224                 7,958,342
Provision for loan losses                                                                    202,500                   172,500
                                                                                     ---------------           ---------------
                                                     NET INTEREST INCOME AFTER
                                                     PROVISION FOR LOAN LOSSES             9,514,724                 7,785,842
OTHER INCOME:
  Service charges on deposit accounts                                                        466,280                   476,740
  Merchant service fees                                                                      435,501                   332,362
  Building rent                                                                               60,463                    69,511
  ATM fees                                                                                   139,805                   166,238
  Security transaction commissions                                                           181,602                   117,447
  Asset management fees                                                                      181,084                   150,388
  Gains on sale of loans                                                                     145,218                   205,872
  Investment security gains                                                                      -0-                   208,705
  Other                                                                                      266,713                   116,945
                                                                                     ---------------           ---------------
                                                            TOTAL OTHER INCOME             1,876,666                 1,844,208
OTHER EXPENSES:
  Salaries and employee benefits                                                           3,739,377                 2,954,593
  Net occupancy expense                                                                      530,851                   325,921
  Equipment rentals, depreciation and maintenance                                            999,819                   729,089
  Data processing                                                                            521,863                   539,129
  Legal and professional                                                                     497,864                   239,518
  Merchant service charges                                                                   304,113                   228,422
  ATM charges                                                                                 89,178                   145,702
  Advertising                                                                                276,640                   177,799
  Goodwill amortization                                                                      513,262                   177,689
  Merger-related charges                                                                         -0-                   598,292
  Other                                                                                    1,093,850                   802,053
                                                                                     ---------------           ---------------
                                                          TOTAL OTHER EXPENSES             8,566,817                 6,918,207
                                                    INCOME BEFORE INCOME TAXES             2,824,573                 2,711,843
Income taxes                                                                               1,118,937                 1,184,788
                                                                                     ---------------           ---------------
                                                                    NET INCOME            $1,705,636               $ 1,527,055
                                                                                     ===============           ===============
 Basic earnings per common share                                                              $ 0.21                    $ 0.16
 Diluted earnings per common share                                                              0.20                      0.16
 Dividends per common share                                                                     0.12                      0.12
 Basic weighted average common shares outstanding                                          8,190,260                 9,634,927
 Diluted weighted average common shares outstanding                                        8,573,829                 9,654,394

See notes to unaudited consolidated financial statements.
</TABLE>

                                       3
<PAGE>
<TABLE>
STATE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
                                                                                          Three months ended March 31,
                                                                                          2000                      1999
                                                                                     ---------------           ---------------
OPERATING ACTIVITIES
<S>                                                                                  <C>                       <C>
  Net income                                                                            $  1,705,636              $  1,527,055
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Provision for loan losses                                                              202,500                   172,500
      Provision for depreciation                                                             655,565                   357,325
      Amortization of investment security
        premiums and accretion of discounts-net                                               86,351                    28,304
      Amortization of goodwill                                                               513,262                   177,689
      Market adjustment for committed ESOP shares                                                -0-                   598,291
      Increase in interest receivable                                                      (243,819)                  (31,124)
      Increase in interest payable                                                           251,130                   192,164
      Realized investment security gains-net                                                     -0-                 (208,705)
      Other                                                                                  631,839                   889,778
                                                                                     ---------------           ---------------
                                     NET CASH PROVIDED BY OPERATING ACTIVITIES             3,802,464                 3,703,277
INVESTING ACTIVITIES
  Maturities of investment securities                                                          5,729                 2,005,892
  Purchases of securities available for sale                                            (56,443,493)              (10,588,946)
  Maturities and sales  of securities available for sale                                   7,590,343                 9,034,323
  Net decrease (increase) in loans                                                        25,933,174               (7,357,697)
  Purchases of premises and equipment                                                    (2,122,672)                 (743,382)
                                                                                     ---------------           ---------------
                                     NET CASH USED BY INVESTING ACTIVITIES               (25,036,919)               (7,649,810)
FINANCING ACTIVITIES
  Decrease in deposits                                                                   (6,210,355)               (9,865,759)
  Decrease in notes payable                                                                      -0-               (6,750,000)
  Decrease in guaranteed ESOP obligation                                                         -0-                   123,273
  Net proceeds from securities sold under agreement to
repurchase                                                                                 9,122,941                 6,806,483
  Increase in Federal Home Loan Bank advances                                             23,700,000                25,000,000
  Repayments of federal funds purchased                                                  (9,825,000)                       -0-
  Cash dividends                                                                           (985,415)               (1,156,290)
  Proceeds from exercise of stock options                                                     67,702                    48,973
                                                                                     ---------------           ---------------
                                     NET CASH PROVIDED BY FINANCING ACTIVITIES            15,869,873                14,206,680
                                                                                     ---------------           ---------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         (5,364,582)                10,260,147

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          59,784,033                82,229,831
                                                                                     ---------------           ---------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $ 54,419,451              $ 92,489,978
                                                                                     ===============           ===============
 Supplemental information:
  Interest paid                                                                         $ 12,156,236                $6,109,366
  Income taxes paid                                                                          104,121                   786,500

See notes to unaudited consolidated financial statements.
</TABLE>

                                       4
<PAGE>
STATE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
March 31, 2000

NOTE A--BASIS OF PRESENTATION

     The accompanying  unaudited  consolidated  financial statements include the
accounts of State Financial Services  Corporation (the "Company" or "State") and
its  subsidiaries - State  Financial Bank  (Wisconsin),  State  Financial Bank -
Waterford ("Waterford"),  State Financial Mortgage Company, State Financial Bank
(Illinois,  "Richmond"),  Lokken, Chesnut and Cape ("LCC"), Home Federal Savings
and Loan  Association  of Elgin  ("Home"),  and Bank of Northern  Illinois  N.A.
("BNI").  State  Financial  Bank also  includes the accounts of its wholly owned
subsidiaries, Hales Corners Development Corporation and Hales Corners Investment
Corporation.   Waterford   also  includes  the  accounts  of  its  wholly  owned
subsidiary,  Waterford  Investment  Corporation.   Richmond  also  includes  the
accounts of its wholly owned subsidiary,  State Financial  Insurance Agency. BNI
also  includes  the  accounts of its wholly owned  subsidiary,  State  Financial
Funding Corp.  State  Financial  Funding Corp. also includes the accounts of its
wholly owned  subsidiary,  State  Financial  Real Estate  Investment  Corp.  All
significant intercompany balances and transactions have been eliminated.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Interim operating results are not necessarily  indicative of the
results that may be expected for the year. For further information, refer to the
consolidated   financial  statements  and  footnotes  thereto  included  in  the
Company's annual report to stockholders for the year ended December 31, 1999.

NOTE B--EARNINGS PER SHARE

     Basic  earnings  per  share is  computed  by  dividing  net  income  by the
weighted-average  common shares  outstanding less unearned ESOP shares.  Diluted
earnings  per share is computed by dividing  net income by the  weighted-average
common  shares  outstanding  less  unallocated  ESOP  shares  plus  the  assumed
conversion of all potentially  dilutive  securities.  The  denominators  for the
earnings per share amounts are as follows:

                                                  For the three months ended
                                                  March 31,         March 31,
                                                   2000               1999
                                             ----------------------------------
Basic:
Weighted-average number of
 shares outstanding                              8,581,718         10,079,764
Less: weighted-average number
of unearned ESOP shares                           (391,458)          (444,611)
                                             ----------------------------------
Denominator for basic earnings per share         8,190,206          9,635,151
                                             ----------------------------------
Fully diluted:
Denominator for basic earnings per share         8,190,206          9,635,151
Add: assumed conversion of stock
options using the treasury stock method              8,706             19,467
                                             ==================================
Denominator for fully diluted
 earnings per share                              8,198,912          9,654,618
                                             ==================================


                                       5
<PAGE>

NOTE D - COMPREHENSIVE INCOME

     On January 1, 1998, the Company adopted  Statement of Financial  Accounting
Standards No. 130, "Reporting  Comprehensive Income." This statement establishes
standards for reporting and display of  comprehensive  income and its components
in a complete set of financial statements.  Comprehensive income is the total of
reported  net income and all other  revenues,  expenses,  gains and losses  that
under generally  accepted  accounting  principles are not includable in reported
net income but are reflected in shareholders'  equity.  The standard permits the
statement  of  changes  in  shareholders'  equity  to be  used  to  satisfy  its
requirements   and  requires   companies  to  report   comparative   totals  for
comprehensive income in interim reports.

                                        For the three months ended
                                          March 31,          March 31,
                                            2000               1999
                                     ----------------------------------

Net income                               $1,705,636         $1,527,055

Other comprehensive income

Change in unrealized
securities losses, net of tax              (510,918)          (221,458)
Reclassification adjustment
 for realized gains included
 in net income                                  -0-           (208,705)
Estimated income tax on
   Realized securities gains                    -0-             81,833
                                     ----------------------------------
Total comprehensive income               $1,194,718         $1,178,725
                                     ==================================


NOTE E--SEGMENT INFORMATION

     The Company  evaluates  segment  performance for each subsidiary  financial
institution,  which is  differentiated  primarily by  geographic  location.  The
Company has five reportable  segments:  State Financial Bank (Wisconsin),  State
Financial  Bank -  Waterford,  State  Financial  Bank  (Illinois),  Home Federal
Savings and Loan Association of Elgin, and Bank of Northern Illinois,  N.A. Each
institution  provides a full range of retail and  commercial  banking  services.
Additionally,  State Financial Bank (Illinois)  provides insurance and brokerage
services.

     Management  evaluates the after-tax  performance  of each of the subsidiary
financial institutions on that institution's actual earning assets,  non-earning
assets, and funding sources.  Each subsidiary financial  institution has its own
net interest  income,  provision  for loan losses,  other  income,  non-interest
expense and income tax  provision  as captured by the  institution's  accounting
systems.  The "all other" category includes  primarily the results of the parent
company and Lokken,  Chesnut & Cape.  Intercompany and other amounts,  which are
included in "all other" are not material.


                                       6
<PAGE>
     The  following  tables  contain  profit (loss)  statements  for each of the
subsidiary financial  institutions for the three months ended March 31, 2000 and
1999.
<TABLE>
                                             For the three months ended March 31, 2000
<CAPTION>
                                                                          Home
                                                                         Federal
                                State         State          State     Savings and
                              Financial     Financial      Financial      Loan         Bank of
                                Bank          Bank -         Bank      Association     Northern          All
                             (Wisconsin)    Waterford     (Illinois)    of Elgin     Illinois,N.A.      Other      Consolidated
                           ------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>           <C>           <C>            <C>             <C>           <C>
Interest income               $5,761,217    $1,156,968   $ 1,310,987    $ 7,554,582    $ 3,550,332     $ 45,504    $ 19,379,590
Interest expense               2,432,551       565,864       639,287      3,632,677      1,716,624      675,363       9,662,366
                           ------------------------------------------------------------------------------------------------------
Net interest income            3,328,666       591,104       671,700      3,921,905      1,833,708     (629,859)       9,717,224
Provision for loan losses         75,000         7,500        60,000         30,000         30,000            0         202,500
                           ------------------------------------------------------------------------------------------------------
Net interest income after
 provision for loan losses     3,253,666       583,604       611,700      3,891,905      1,803,708     (629,859)       9,514,724
Other income                     883,377        92,822       193,083        245,525        304,910      156,949       1,876,666
Other non-interest
 expense                       2,794,503       522,939       727,672      2,299,861      1,841,934      379,908       8,566,817
                           ------------------------------------------------------------------------------------------------------
Income (loss) before
 income taxes                  1,342,540       153,487        77,111      1,837,569        266,684     (852,818)       2,824,573
Income taxes                     390,931        43,478        54,863        717,308        178,963     (266,606)       1,118,937
                           ------------------------------------------------------------------------------------------------------
Net income (loss)              $ 951,609     $ 110,009      $ 22,248    $ 1,120,261       $ 87,721   $ (586,212)     $ 1,705,636
                           ======================================================================================================

Total assets               $ 306,994,220  $ 70,017,465  $ 75,367,611  $ 421,881,478  $ 225,480,646   $7,736,715   $1,107,478,135
                           ======================================================================================================
</TABLE>


<TABLE>
                                             For the three months ended March 31, 2000
<CAPTION>
                                                                                Home
                                                                               Federal
                                State           State            State       Savings and
                              Financial       Financial        Financial        Loan
                                Bank            Bank -           Bank        Association          All
                             (Wisconsin)      Waterford       (Illinois)      of Elgin           Other          Consolidated
                           ------------------------------------------------------------------------------------------------------
<S>                        <C>              <C>             <C>             <C>                 <C>             <C>
Interest income                5,101,623         953,774       1,352,260        6,825,033           27,182       $ 14,259,872
Interest expense               1,990,915         436,941         670,910        3,331,679         (128,915)         6,301,530
                           ------------------------------------------------------------------------------------------------------
Net interest income            3,110,708         516,833         681,350        3,493,354          156,097          7,958,342
Provision for loan losses         75,000           7,500          60,000           30,000                0            172,500
                           ------------------------------------------------------------------------------------------------------
Net interest income after
 provision for loan losses     3,035,708         509,333         621,350        3,463,354          156,097          7,785,842
Other income                     892,521          87,705         245,359          280,870          337,753          1,844,208
Other non-interest
 expense                       2,391,283         451,763         950,567        2,831,756          292,838          6,918,207
                           ------------------------------------------------------------------------------------------------------
Income (loss) before
 income taxes                  1,536,946         145,275         (83,858)         912,468          201,012          2,711,843
Income taxes                     477,318          41,045         (11,678)         587,313           90,790          1,184,788
                           ------------------------------------------------------------------------------------------------------
Net income (loss)            $ 1,059,628       $ 104,230       ($ 72,180)        $325,155        $ 110,222        $ 1,527,055
                           ======================================================================================================

Total assets               $ 291,148,085    $ 54,868,114    $ 79,381,485    $ 411,957,014       $7,932,635      $ 845,287,333
                           ======================================================================================================
</TABLE>


NOTE F - STOCK REPURCHASE PROGRAM

     On  June  15,  1999,  the  Company's  Board  of  Directors  authorized  the
repurchase  of up to 15% or  approximately  1.5 million  shares of the Company's
common stock.  The Company  commenced the stock  repurchase  program on July 19,
1999.  The Company  completed  this  Repurchase  Program on November  30,  1999,
repurchasing a total of 1,515,140 shares at an average price of $16.66.

     On  March  8,  2000,  the  Company's  Board  of  Directors  authorized  the
repurchase of up to an additional  600,000 shares of the Company's Common Stock.
As of May 4, 2000 the Company has repurchased 112,300 shares at an average price
of $10.00.


                                       7
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Changes in Financial Condition

     At  March  31,  2000,   total  assets  were   $1,107,478,000   compared  to
$1,090,024,000 at December 31, 1999. At March 31, 2000, total deposits decreased
$6,210,000  compared  to December  31,  1999 mainly due to cyclical  declines in
demand and  savings  balances  and lower time  deposit  balances  as  depositors
continue to prefer  money  market  accounts to keep their  funds  liquid.  Other
significant  uses of funds  during the first three  months of 2000  consisted of
$5,365,000 in decreased cash and cash equivalents (mainly short-term investments
and  interest-earning  deposits),   $48,847,000  in  net  investment  securities
purchases,  the  payment of  $985,000  in cash  dividends,  and the  purchase of
$2,123,000 in fixed assets, mainly due to the opening of the new Waukesha office
in January, 2000. Funding sources came from a $25,933,000 net decrease in loans,
a $23,700,000 increase in Federal Home Loan Bank Advances, a $9,123,000 increase
in  securities  sold under  agreements  to  repurchase,  $3,802,000  in net cash
provided by operating activities, $25,933,000 in net loan decreases, and $68,000
in proceeds from exercised stock options.

     The  decrease in net loans and the  investment  securities  purchases  were
primarily  impacted by the sale of $42,000,000 in securitized  mortgage loans at
Home during first  quarter 2000,  which were marked to market in fourth  quarter
1999.  The Company  invested the proceeds  from the mortgage  securitization  in
mortgage backed  investment  securities,  accounting for the majority of the net
increase  in  investments.  Exclusive  of  the  mortgage  securitization,  loans
increased approximately $16,000,000 or 2.2% from the end of 1999.

Asset Quality

     At March 31, 2000,  non-performing  assets were  $5,485,000,  a decrease of
$6,000 from December 31, 1999 due to an decrease of $53,000 in non-accrual loans
and  accruing  loans past due 90 days or more offset by a increase of $47,000 in
other real estate. Total  non-performing  assets as a percentage of total assets
is 0.50% at both March 31, 2000 and December 31, 1999.  As a percentage of total
loans outstanding, the level of non-performing loans increased to 0.65% at March
31, 2000 from 0.64% at December  31, 1999 due to the  decrease in the balance of
loans outstanding  between March 31, 2000 and year end 1999, due to the mortgage
loan securitization.

     At March 31, 2000,  available  information  would  suggest that  additional
loans totaling  approximately  $606,000 would likely be included as non-accrual,
past due or restructured during the second quarter of 2000.

     The following table summarizes non-performing assets on the dates indicated
(dollars in thousands).
<TABLE>
<CAPTION>
                                                       Mar. 31       Dec 31       Sep. 30      Jun. 30       Mar. 31
                                                          2000         1999          1999         1999          1999
<S>                                                 <C>          <C>          <C>           <C>          <C>
Nonaccrual loans                                    $    4,694   $    4,737   $     4,642   $    4,701   $     2,904
Accruing loans past due 90 days or more                      4           14           242           18           546
Restructured loans                                           0            0             0            0             0
                                                   --------------------------------------------------------------------
Total non-performing and restructured
 loans
                                                         4,698        4,751         4,884        4,719         3,450
Other real estate owned                                    787          740           537          250           460
                                                   --------------------------------------------------------------------
Total non-performing assets                         $    5,485   $    5,491   $     5,421   $    4,969   $     3,910
                                                   ====================================================================
Ratios:
  Non-performing loans to total loans                     0.65%        0.64%         0.67%        0.65%         0.65%
  Allowance to non-performing loans                     150.54       145.34        145.73       147.55        133.68
  Non-performing assets to total assets                   0.50         0.50          0.52         0.47          0.46
                                                   ====================================================================
</TABLE>

                                       8
<PAGE>

     When,  in  the  opinion  of  management,  serious  doubt  exists  as to the
collectibility of a loan, the loan is placed on non-accrual  status. At the time
a loan is classified as non-accrual, interest income accrued in the current year
is  reversed  and  interest  income  accrued in the prior year is charged to the
allowance for loan losses.  With the exception of credit cards, the Company does
not recognize income on loans past due 90 days or more.


Allowance for Loan Losses and Net Charge-offs

     Management  maintains the allowance for loan losses (the  "Allowance") at a
level  considered  adequate to provide for future loan losses.  The Allowance is
increased by provisions  charged to earnings and is reduced by charge-offs,  net
of recoveries.  At March 31, 2000, the Allowance was $7,074,000,  an increase of
$169,000  from the balance at December 31, 1999.  This  increase was due to loan
loss  provisions  exceeding  net  charge-offs  through the first three months of
2000.

     The  adequacy  of the  Allowance  is  determined  quarterly  based  upon an
evaluation of the Company's  loan  portfolio by the internal loan review officer
and management.  These evaluations consider a variety of factors, including, but
not  limited  to,  general   economic   conditions,   loan  portfolio  size  and
composition,  previous loss  experience,  the  borrower's  financial  condition,
collateral  adequacy,  the  level  of  non-performing  loans,  and  management's
estimation of future losses.  As a percentage of loans,  the Allowance was 0.98%
at March 31,  2000  compared  to 0.92% at  December  31,  1999.  Based  upon its
analyses,  management  considers  the  Allowance  adequate to recognize the risk
inherent in the Company's loan portfolio at March 31, 2000.





            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       9
<PAGE>

     The following  table sets forth an analysis of the Company's  Allowance and
actual loss experience for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
                                                                     Three months
                                                                         ended             Year ended
                                                                    March 31, 2000       Dec. 31, 1999
                                                                  ---------------------------------------
<S>                                                               <C>                  <C>
   Balance at beginning of period                                 $           6,905    $         4,485
   Charge-offs:
      Commercial                                                                 68                776
      Real estate                                                                48                 57
      Installment                                                                15                283
      Other                                                                       8                 48
                                                                  ---------------------------------------
      Total charge-offs                                                         139              1,164
                                                                  ---------------------------------------
   Recoveries:
      Commercial                                                                 33                445
      Real estate                                                                 0                 14
      Installment                                                                69                121
      Other                                                                       3                 25
                                                                  ---------------------------------------
      Total recoveries                                                          105                605
   Net charge-offs                                                               34                559
   Balance of acquired allowance at date of acquisition                           0              2,229
   Additions charged to operations                                              203                750
                                                                  =======================================
   Balance at end of period                                       $           7,074    $         6,905
                                                                  =======================================
   Ratios:
      Net charge-offs to
        average loans outstanding1                                             0.02 %             0.08 %
     Net charge-offs to total allowance1                                       1.91               8.10
     Allowance to period end
        loans outstanding                                                      0.98               0.92
   ---------------------------------------------------------------=======================================
     1.   Annualized
</TABLE>

     Net  charge-offs  to average  loans  outstanding  decreased  to 0.02% on an
annualized  basis compared to 0.08% for the year ended  December 31, 1999.  This
decrease  was  primarily  due  to  a  reduction  in  the  annualized  amount  of
commercial,  installment,  and other loan charge-offs incurred through the first
three months of 2000

Results of Operation -  Comparison  of the Three Months Ended March 31, 2000 and
1999

General

     For the quarter  ended March 31, 2000,  the Company  reported net income of
$1,706,000,  an increase of $179,000 or 11.7% from the  $1,527,000  reported for
the quarter ended March 31, 1999.  First  quarter 2000  included  $88,000 in net
income  from  BNI,  which  was not  part of the  Company's  first  quarter  1999
operations.


                                       10
<PAGE>

Net Interest Income

         The  following  table sets forth  average  balances,  related  interest
income  and  expenses,  and  effective  interest  yields and rates for the three
months ended March 31, 2000 and March 31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
                                                                 2000                               1999
                                                   -----------------------------------------------------------------
                                                      Average             Yield/         Average              Yield/
                                                      Balance   Interest   Rate4         Balance   Interest    Rate4
                                                   -----------------------------------------------------------------
ASSETS
Interest-earning assets:
<S>     <C>                                         <C>          <C>       <C>         <C>          <C>        <C>
  Loans 1,2,3                                       $  746,627   $15,547   8.37%       $ 617,932    $12,211    8.01%
  Taxable investment securities                        190,019     3,134   6.63           71,579      1,047    5.93
  Tax-exempt investment securities 3                    40,018       700   7.04           32,755        548    6.79
  Other short-term investments                               0         0   0.00           17,196        220    5.19
  Interest-earning deposits                              7,765       128   6.63           30,038        300    4.05
  Federal funds sold                                     9,928       141   5.71           12,338        153    5.03
                                                   -----------------------------------------------------------------
Total interest-earning assets                          994,357    19,650   7.95          781,838     14,479    7.51
Non-interest-earning assets:
  Cash and due from banks                               33,594                           31,614
  Premises and equipment, net                           23,926                           13,460
  Other assets                                          41,297                           19,633
Less: Allowance for loan losses                         (7,034)                          (4,531)
                                                    -----------                        ---------
TOTAL                                               $1,086,140                         $ 842,014
                                                    ===========                        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
  Now accounts                                      $  105,422   $   445   1.70%       $  86,809    $   395    1.85%
  Money market accounts                                177,181     2,035   4.62          127,943      1,192    3.78
  Savings deposits                                     144,161       987   2.75          106,927        652    2.47
  Time deposits                                        296,062     3,996   5.43          248,557      3,416    5.57
  Notes payable                                         39,959       797   8.02            2,325         50    8.72
  FHLB borrowings                                       71,533     1,024   5.76           41,667        459    4.47
  Federal funds purchased                               13,890       214   6.20            2,651         33    5.05
  Securities sold under
    agreement to repurchase                             19,323       164   3.41            8,920        105    4.77
                                                   -----------------------------------------------------------------
Total interest-bearing liabilities                     867,531     9,663   4.48          625,799      6,302    4.08
Non-interest-bearing liabilities:
  Demand deposits                                      106,633                            76,266
  Other                                                  2,817                             4,915
                                                    ----------                         ---------
Total liabilities                                      976,981                           706,980
                                                    ----------                         ---------
Stockholders' equity                                   109,159                           135,034
                                                    ==========                         =========
TOTAL                                               $1,086,140                         $ 842,014
                                                    ==========                         =========

Net interest earning and interest rate spread                    $ 9,987   3.47%                    $ 8,177    3.43%
                                                                 ================                   =================
Net yield on interest-earning assets                                       4.04%                               4.24%
---------------------------------------------                            ========                             =======
   1. For the purposes of these computations, non-accrual loans are included in the daily average loan amounts outstanding.
   2. Interest  earned on loans  includes  loan fees (which are not  material in amount) and  interest  income which has been
      received from borrowers whose loans were removed from non-accrual during the period indicated.
   3. Taxable-equivalent  adjustments  are made in  calculating  interest  income and  yields  using a 34% rate for all years
      presented.
   4. Annualized
</TABLE>

                                       11
<PAGE>

     For  the   quarter   ended   March   31,   2000,   the   Company   reported
taxable-equivalent net interest income of $9,987,000,  an increase of $1,810,000
or 22.1% from the $8,177,000  reported for the quarter ended March 31, 1999. The
inclusion  of  BNI  added   $1,466,000  to  the  Company's  first  quarter  2000
taxable-equivalent  net interest  income.  Exclusive of BNI,  first quarter 2000
taxable  equivalent net interest  income  decreased  $344,000 or 4.2% over first
quarter 1999 mainly due to volume  increases.  The Company's  taxable-equivalent
yield on  interest-earning  assets (net  interest  margin)  declined to 4.04% in
first  quarter 2000 from 4.24% in first  quarter  1999.  The margin  decline was
mainly due to the general  increase in market interest rates over the preceeding
twelve months more quickly impacting  funding costs and a greater  percentage of
the Company's  assets funded by  interest-bearing  liabilities  in 2000,  mainly
resulting from the borrowings  incurred to fund the Company's  stock  repurchase
activities.

     Taxable-equivalent  total  interest  income  increased  $5,171,000  for the
quarter  ended  March 31,  2000  compared  to the  first  quarter  of 1999.  The
inclusion  of BNI in the  first  quarter  2000  contributed  $3,550,000  to this
improvement  and the  remaining  increase was mainly due to volume  increases in
interest-earning assets over the preceding twelve months. The Company reported a
$212,519,000 or 27.2% increase in the volume of average  interest-earning assets
in first  quarter 2000 over first  quarter  1999.  BNI's  inclusion in the first
quarter 2000 accounts for  $189,179,000  of this increase and the remainder came
from increased average loan volume resulting mainly from continued mortgage loan
growth.  Average  loans  outstanding  increased  $128,695,000  or 20.8% in first
quarter 2000 over first quarter  1999.  BNI added  $86,694,000  to the Company's
average loans in first quarter 2000.  Exclusive of BNI,  average loans increased
$42,000,000  or 6.87%  compared to first quarter 1999.  The general  increase in
interest  rates over the preceding  twelve  months added to the positive  volume
impacts on the Company's total interest income.  For the quarter ended March 31,
2000, the Company's taxable-equivalent yield on interest-earning assets improved
to 7.95% from 7.51% for the quarter ended March 31, 1999.  The  Company's  first
quarter  2000 loan yield  increased to 8.37% from 8.01% in first  quarter  1999.
This increase was mainly due to loans  repricing into the  comparatively  higher
interest rate environment  prevalent in 2000. The Company also experienced yield
improvements in its taxable and tax-exempt investment securities due to maturing
investments repricing into 2000's higher rate environment. For the quarter ended
March 31, 2000, the yield on taxable  investment  securities  increased to 6.63%
and  tax-exempt  investment  yields  increased  to 7.04%  from  5.93%  and 6.79%
respectively for the quarter ended March 31, 1999.

     Funding  costs were also impacted by the higher  interest rate  environment
prevalent  over  the  previous  twelve  months.  The  cost  of  interest-bearing
liabilities  increased  to 4.48% for  first  quarter  2000 from  4.08% for first
quarter 1999 mainly due to the higher rate environment,  a greater percentage of
interest-bearing  liabilities  in wholesale  borrowings,  and the increased debt
incurred to fund the Company's stock repurchase activities. In the first quarter
2000,  FHLB  borrowings,  federal funds  purchased,  and  securities  sold under
agreements  to  repurchase  comprised  11.2% of the  Company's  interest-bearing
liabilities  compared to 8.5% in first quarter 1999. This increase was necessary
to fund asset growth not supported by deposit growth. Historically these funding
sources carry a comparatively  higher cost than core deposits and have increased
in cost over the  preceding  twelve  months due to the higher rate  environment.
Additionally,  the Company  averaged $37 million more  outstanding  on its notes
payable  resulting from borrowings used to fund the stock  repurchase  plan. The
cost of money  market  accounts  increased  to 4.62% in first  quarter 2000 from
3.78% in first  quarter  1999 mainly due to the general  increase in  short-term
interest rates over the last twelve months.  Savings  deposit costs increased to
2.75% in 2000 from 2.47% in 1999 due to the  inclusion  of BNI.  The cost of NOW
accounts  decreased to 1.70% in first  quarter 2000 from 1.85% in first  quarter
1999 due to rate  adjustments  over the preceding  twelve  months.  Time deposit
costs fell to 5.43% in first  quarter 2000 from 5.57% in first  quarter 1999 due
to higher priced deposits maturing and not being reinvested and the inclusion of
BNI's  slightly  lower cost time deposit  portfolio.  The Company  experienced a
$47,505,000  increase in the volume of  outstanding  average time deposits and a
$49,238,000 increase in the volume of average money market accounts.

Provision for Loan Losses

     The  provision  for loan  losses in first  quarter  2000 was  $202,500  and
$172,500  for the  first  quarter  1999.  The  $30,000  increase  was due to the
inclusion of BNI.


                                       12
<PAGE>

Other Income

     Total  other  income  increased  $32,000 in first  quarter  2000 over first
quarter 1999. The inclusion of BNI's other income accounted for $305,000 of this
increase.  Exclusive  of BNI,  total  other  income  decreased  $273,000  due to
decreases in service charges on deposit  accounts,  ATM Fees,  gains on mortgage
origination  sales,  and  investment  security  gains,  offset by  increases  in
merchant services, security transaction commissions,  asset management fees, and
other income.  Exclusive of BNI, gains on mortgage  origination  sales decreased
$185,000 for the quarter  ended March 31, 2000 over the quarter  ended March 31,
1999,  due  to  decreased  volume  resulting  from  the  generally  higher  rate
environment decreasing mortgage origination volume. ATM fees declined $56,000 in
first quarter 2000 due to lower volume in foreign  transactions at the Company's
terminals. Service charges on deposit accounts decreased $94,000, due to reduced
business  service charge income  negatively  impacted by higher earnings credits
related to the increased  rate  environment  and lower volume in fees  generated
from checks  returned due to insufficient  funds.  The Company had no investment
securities gains in the first quarter 2000 compared to $209,000 in first quarter
1999.  Offsetting  these  declines  were  improvements  in security  transaction
commissions of $61,000 due to volume increases in brokerage activities. Merchant
services income increased  $91,000 due to increased volume and rate adjustments.
Other income increased $98,000,  due to increases in amounts realized from other
real  estate  sales  gains,   check  printing   commissions,   cashier's   check
commissions, safe deposit rent, and insurance commission income.


Other Expenses

     Exclusive of merger-related  charges other expenses increased $2,247,000 in
first quarter 2000 over first quarter 1999, which included $1,842,000 related to
BNI.  Exclusive of BNI, total other expenses increased $405,000 due to increases
in salaries,  occupancy  expense,  legal and  professional,  merchant  services,
advertising,  and other  expenses  offset by decreases in data  processing,  ATM
expense,  and merger-related  charges recognized in first quarter 1999 resulting
from the dissolution of Home's ESOP. Exclusive of BNI, personnel costs increased
$19,000 mainly due to additional  staff  associated  with opening the new Elkorn
office in October 1999 and the Waukesha  office in January  2000.  Net occupancy
and equipment  expense  increased  $167,000 mainly due to the opening of the new
branches and increased depreciation costs associated with the installation of an
upgraded computer network,  communications  system, and related equipment during
1999. Legal and professional fees increased $133,000 due to certain nonrecurring
legal matters and increased  audit costs  resulting from State's growth over the
preceding  two years.  Merchant  services  expense rose $76,000 due to increased
customer   volume.   Advertising   expense   increased   $81,000  due  to  State
strategically  increasing its marketing budget to heighten its profile in all of
its markets.  Other expenses  increased  $95,000 primarily due to the additional
connectivity  costs  associated  with the Company's  newly  installed  wide area
network.  Offsetting the  aforementioned  increases in total other expenses were
decreases  in  data  processing  of  $105,000,   ATM  expense  of  $67,000,  and
merger-related charges of $598,000. Data processing expense decreased due to the
conversion of Richmond, Home, and BNI to the Company's services provider and the
related  re-negotiation of the Company's contract. ATM expenses decreased due to
the Company converting the service bureau used to drive its ATM's.

Income Taxes

     Income taxes for the quarter  ended March 31, 2000  decreased  $66,000 on a
$113,000  increase in income before income taxes. As previously  described,  the
Company incurred $598,000 in merger-related  charges in first quarter 1999 which
were  not   tax-deductible   for  book   reporting   purposes.   Excluding   the
merger-related charges, income before income taxes decreased $486,000, resulting
in an  effective  tax rate of 39.6% for the first  quarter of 2000  compared  to
35.8% for the first quarter of 1999. The increase in the Company's effective tax
rate in 2000  was  due to  increased  goodwill  amortization,  which  is not tax
deductible.   The   Company's   effective   tax  rate,   exclusive  of  goodwill
amortization,  was 33.5%  for first  quarter  2000  compared  to 34.0% for first
quarter 1999.


                                       13
<PAGE>
Liquidity

     Liquidity management involves the ability to meet the cash flow requirement
of customers who may be either depositors wanting to withdraw funds or borrowers
needing  assurance that sufficient  funds will be available to meet their credit
needs.   Liquid  assets   (including   cash  deposits  with  banks,   short-term
investments,  interest-earning  deposits, and federal funds sold) are maintained
to meet  customers  needs.  The Company  had liquid  assets of  $54,419,000  and
$59,784,000 at March 31, 2000 and December 31, 1999, respectively.


Forward Looking Statements

     When used in this  report,  the words  "believes,"  "expects,"  and similar
expressions are intended to identify forward-looking  statements.  The Company's
actual results may differ materially from those described in the forward-looking
statements.  Factors which could cause such a variance to occur include, but are
not limited  to,  changes in interest  rates,  levels of consumer  bankruptcies,
customer loan and deposit  preferences,  issues related to integrating  acquired
operations, and changes in other general economic conditions.


Capital Resources

     There are certain  regulatory  constraints which affect the Company's level
of capital.  The following table sets forth these requirements and the Company's
capital  levels  and  ratios at March 31,  2000,  including  the Tier 1 leverage
ratio,  the  risk-based  capital  ratios  based upon Tier 1  capital,  and total
risk-based capital:

                                               Regulatory       Regulatory
                                                Minimum        Well-capitalized
                               Actual         Requirement        Requirement
                               ------         -----------        -----------
                                          (dollars in thousands)
                           Amount  Percent    Amount  Percent    Amount Percent
                          -------  -------   -------  -------   ------- -------
Tier 1 leverage           $84,809    8.02%   $42,706     4.0%   $53,382    5.0%
Tier 1 risk-based capital $84,809    12.6%   $25,492     4.0%   $38,238    6.0%
Risk-based capital        $91,912    13.6%   $50,984     8.0%   $63,730   10.0%

     The Company is pursuing a policy of continued asset growth,  which requires
the maintenance of appropriate ratios of capital to assets. The existing capital
levels allow for additional asset growth without further capital  injection.  It
is the Company's  desire to maintain its capital position at or in excess of the
"well-capitalized"  definition.  The Company seeks to obtain additional  capital
growth through earnings retention and a conservative dividend policy.


                                       14
<PAGE>
Part II.  Other Information

Item 1.   Legal Proceedings

      As of March 31,  2000,  the Company is involved in various  pending  legal
proceedings consisting of ordinary routine litigation incidental to the business
of the Company. None of these proceedings is considered material, either in part
or in the aggregate,  and are therefore not expected to have a material  adverse
impact on the Company's financial condition,  results of operations, cash flows,
and capital ratios.

Item 2.   Changes in Securities

           None

Item 3.   Defaults upon Senior Securities

           None

Item 4.   Submission of Matters to Vote of Security Holders

           None


Item 5.   Other Information

     The deadline for submission of shareholder proposals pursuant to Rule 14a-8
under the  Securities  Exchange Act of 1934,  as amended,  for  inclusion in the
Company's  proxy  statement  for its 2001  Annual  Meeting  of  Shareholders  is
November 24, 2000. Additionally, if the Company receives notice of a shareholder
proposal after  February 9, 2001, the persons named in proxies  solicited by the
Board of  Directors of the Company for its 2001 Annual  Meeting of  Shareholders
may exercise discretionary voting power with respect to such proposal.

Item 6.   Exhibits and Reports on Form 8-K

           None


                                       15

<PAGE>

                                   SIGNATURES


Pursuant  to the  requirement  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.


                                        STATE FINANCIAL SERVICES CORPORATION
                                        (Registrant)


Date: May 5, 2000                       /s/ Michael J. Falbo
      --------------                    ----------------------------------------
                                        Michael J. Falbo
                                        President and Chief Executive Officer


Date: May 5, 2000
      --------------                    /s/ Michael A. Reindl
                                        ----------------------------------------
                                        Michael A. Reindl
                                        Senior Vice President, Controller,
                                        and Chief Financial Officer



                                       16
<PAGE>

                                 EXHIBIT INDEX

Exhibit          Description
-------          -----------

27             Financial Data Schedule



                                       17