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 1934

For the quarterly period ended March 31, 2004

OR

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

                         Commission File Number 0-11132

                           FIRST BANKING CENTER, INC.
             (Exact name of registrant as specified in its charter)

               Wisconsin                               39-1391327
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                 Identification No.)



        400 Milwaukee Ave., Burlington, WI            53105
     (Address of principal executive offices)       (Zip Code)



                                 (262) 763-3581
              (Registrant's telephone number, including area code)

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 whether the registrant is an accelerated filer (as define
in Rule 12b-2 of the Act).

Yes     [   ]     No [ X ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock,  as of May 17, 2004,  Common  stock,  $1.00 par value,  1,492,083
shares outstanding.


<PAGE>

                    FIRST BANKING CENTER, INC AND SUBSIDIARY
                                TABLE OF CONTENTS
                                 March 31, 2004


                                                                        Page
                                                                        ----
Part I   Financial Information

         Item 1  Consolidated Financial Statements

                 Unaudited Consolidated Balance Sheets,
                 March 31, 2004 and December 31, 2003                     3

                 Unaudited Consolidated Statements of Income,
                 For the three months ended March 31, 2004 and 2003       4

                 Unaudited Consolidated Statements of Cash Flows,
                 For the three months ended March 31, 2004 and 2003       5

                 Notes to Unaudited Consolidated Financial Statements    6-9

         Item 2  Management's Discussion and Analysis of
                 Financial Condition and Results of Operations          10-17

         Item 3  Quantitative and Qualitative Disclosures about Market   18
                 Risk

         Item 4  Controls and Procedures                                 19

Part II  Other Information

         Item 1  Legal Proceedings                                       20

         Item 2  Changes in Securities, Use of Proceeds and Issuer
                 Purchases of Equity Securities                          20

         Item 3  Defaults upon Senior Securities                         20

         Item 4  Submission of Matters to a Vote of Security Holders     20

         Item 5  Other Information                                       20

         Item 6  Exhibits and Reports on Form 8-K                       21-26

         Signatures                                                     22-26






                                       2
<PAGE>



PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>

                                         FIRST BANKING CENTER, INC. AND SUBSIDIARY
                                           UNAUDITED CONSOLIDATED BALANCE SHEETS

<CAPTION>

                                                                                March 31,       December 31,
ASSETS                                                                            2004             2003
                                                                                ----------------------------
                                                                                   (Dollars in thousands)
 <S>                                                                           <C>             <C>
  Cash and due from banks                                                       $  14,214       $  19,960
  Federal funds sold                                                                3,512           3,047
  Interest-bearing deposits in banks                                                  280             274
  Available for sale securities                                                    77,532          82,672
  Loans, less allowance for loan losses of $4,629 and
    $4,617 at 2004 and 2003, respectively                                         424,331         403,252
  Office buildings and equipment, net                                              12,451          11,818
  Other real estate owned                                                           1,750           1,899
  Federal Home Loan Bank Stock                                                     11,487          11,755
  Other assets                                                                      9,656           9,240
                                                                                ----------------------------
      TOTAL ASSETS                                                              $ 555,213       $ 543,917
                                                                                ============================

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
  Deposits
    Demand                                                                      $  57,980       $  67,961
    Savings and NOW accounts                                                      191,219         194,419
    Time                                                                          143,977         145,072
                                                                                ----------------------------
      Total Deposits                                                              393,176         407,452
  Short-term borrowings                                                            57,681          34,176
  Other borrowings                                                                 44,653          44,673
  Other liabilities                                                                 4,713           4,076
                                                                                ----------------------------
      TOTAL LIABILITIES                                                         $ 500,223       $ 490,377
                                                                                ----------------------------

STOCKHOLDERS' EQUITY
  Common Stock, $1.00 par value 3,000,000 shares authorized;
    1,502,543 and 1,501,277 shares issued as of March 31, 2004 and
    December 31, 2003, respectively; 1,497,271 and 1,500,760 shares
    outstanding as of March 31, 2004 and December 31, 2003, respectively            1,503           1,501
  Surplus                                                                           4,667           4,612
  Retained Earnings                                                                47,611          46,161
  Accumulated other comprehensive income                                            1,457           1,290
  Common stock in treasury, at cost-5,272 and 517 shares
    as of March 31, 2004 and December 31, 2003, respectively                         (248)            (24)
                                                                                ----------------------------
      TOTAL STOCKHOLDERS' EQUITY                                                $  54,990       $  53,540
                                                                                ----------------------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $ 555,213       $ 543,917
                                                                                ============================



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





                                       3
<PAGE>


<TABLE>

                                     FIRST BANKING CENTER, INC. AND SUBSIDIARY
                                    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

<CAPTION>


                                                                                     Three Months Ended
                                                                                          March 31,
                                                                                     2004           2003
                                                                                -----------------------------
                                                                                (Dollars in thousands, except
                                                                                       per share data)
<S>                                                                              <C>            <C>
INTEREST INCOME


  Interest and fees on loans                                                      $   5,767      $   5,404
  Interest and dividends on securities:
    Taxable                                                                             280            325
    Non-taxable                                                                         393            425
  Interest on federal funds sold                                                          4             38
  Interest on interest-bearing deposits in banks                                          1             14
  Other interest                                                                        189            177
                                                                                -----------------------------
      TOTAL INTEREST INCOME                                                           6,634          6,383
                                                                                -----------------------------

INTEREST EXPENSE
  Interest on deposits                                                                1,176          1,462
  Interest on short-term borrowings                                                     158             72
  Interest on other borrowings                                                          431            460
                                                                                -----------------------------
      TOTAL INTEREST EXPENSE                                                          1,765          1,994
                                                                                -----------------------------
      NET INTEREST INCOME                                                             4,869          4,389

  Provision for loan losses                                                              50             90
                                                                                -----------------------------
      NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                             4,819          4,299
                                                                                -----------------------------

NON-INTEREST INCOME
  Trust fees                                                                            150            119
  Service charges on deposit accounts                                                   462            465
  Commissions                                                                            42             41
  Automated banking fees                                                                 86             85
  Securities gains, net                                                                 123              0
  Loan gains, net                                                                       226            514
  Other                                                                                 269            171
                                                                                -----------------------------
      TOTAL NON-INTEREST INCOME                                                       1,358          1,395
                                                                                -----------------------------

NON-INTEREST EXPENSE
  Salary and employee benefits                                                        2,379          2,198
  Occupancy                                                                             330            284
  Equipment                                                                             347            341
  Data Processing services                                                              275            245
  Other                                                                                 830            748
                                                                                -----------------------------
      TOTAL NON-INTEREST EXPENSE                                                      4,161          3,816
                                                                                -----------------------------

      INCOME BEFORE INCOME TAXES                                                      2,016          1,878

  Income taxes                                                                          566            490
                                                                                -----------------------------

      NET INCOME                                                                  $   1,450      $   1,388
                                                                                =============================

Basic earnings per share                                                          $    0.96      $    0.93
Diluted earnings per share                                                        $    0.94      $    0.91


                       See accompanying notes to unaudited consolidated financial statements

</TABLE>




                                       4
<PAGE>

<TABLE>

                                FIRST BANKING CENTER, INC. AND SUBSIDIARY
                             UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>


                                                                                    Three Months Ended
                                                                                        March 31,
                                                                                   2004           2003
                                                                                --------------------------
                                                                                  (Dollars in thousands)
<S>                                                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                    $   1,450      $   1,388
  Adjustments to reconcile net income to net cash
   provided by (used in) operating activities:
    Depreciation                                                                      267            223
    Provision for loan losses                                                          50             90
    Loan gains, net                                                                  (226)          (514)
    Amortization of premiums and accretion of discounts
     on securities, net                                                                72             70
    Amortization                                                                       45             26
    Securities (gains), net                                                          (123)             -
    Tax benefit of nonqualified stock options exercised                                15              -
    (Increase) decrease in other assets                                              (129)             4
    Increase in other liabilities                                                     638          3,084
                                                                                --------------------------
     Net cash provided by operations before loan originations and sales             2,059          4,371
    Loans originated for sale                                                     (13,010)       (11,447)
    Proceeds from sale of loans                                                    12,606         14,620
                                                                                --------------------------
        NET CASH PROVIDED BY OPERATING ACTIVITIES                                   1,655          7,544
                                                                                --------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net (increase) decrease in interest-bearing deposits in banks                        (6)           229
  Net (increase) decrease in federal funds sold                                      (465)         4,965
  Proceeds from sales of available-for-sale securities                              6,297              -
  Proceeds from maturities and calls of available-for-sale securities              33,414         34,707
  Purchase of available-for-sale securities                                       (34,268)       (33,000)
  Net (increase) decrease in loans                                                (20,499)         1,101
  Purchase of office buildings and equipment                                         (900)          (580)
                                                                                --------------------------
        NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                       (16,427)         7,422
                                                                                --------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net decrease in deposits                                                        (14,276)       (17,553)
  Payments on other borrowings                                                        (20)          (418)
  Net increase (decrease) in short-term borrowings                                 23,505         (2,390)
  Sale of common stock for the exercise of stock options                               41             40
  Purchase of treasury stock                                                         (293)           (32)
  Sale of treasury stock for the exercise of stock options                             69             19
                                                                                --------------------------
        NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                         9,026        (20,334)
                                                                                --------------------------
    NET DECREASE IN CASH AND DUE FROM BANKS                                        (5,746)        (5,368)

CASH AND DUE FROM BANKS:
  Beginning                                                                        19,960         22,203
                                                                                --------------------------
  Ending                                                                        $  14,214      $  16,835
                                                                                ==========================

Supplemental Disclosures of Cash Flow Information,
  Cash Paid During the Year for:
    Interest                                                                    $   1,819      $   2,103
    Income taxes                                                                $      15      $     (79)

Supplemental Schedule of Noncash Investing Activities,
  Change in Accumulated Other Comprehensive Income,
    Unrealized gains (losses) on Available-for-Sale Securities, Net             $     167      $     (87)
  Other Real Estate aquired in settlement of loans                              $       -      $       -

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



                                       5
<PAGE>


                    FIRST BANKING CENTER, INC AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

NOTE 1 - Basis of Presentation

The unaudited  consolidated  financial  statements include the accounts of First
Banking Center,  Inc. (the "Company") and First Banking Center, its wholly owned
subsidiary.  In the opinion of management,  all adjustments  (consisting only of
normal recurring adjustments) necessary for a fair presentation of the financial
position,  results of operation and cash flows for the interim periods have been
made.  The results of  operations  for the three months ended March 31, 2004 are
not  necessarily  indicative of the results to be expected for the entire fiscal
year.

The unaudited interim financial statements have been prepared in conformity with
accounting  principles  generally  accepted in the United  States of America and
industry practice.  Certain information in footnote disclosure normally included
in  financial  statements  prepared in  accordance  with  accounting  principles
generally  accepted in the United  States of America and  industry  practice has
been  condensed or omitted  pursuant to rules and  regulations of the Securities
and  Exchange   Commission.   These  financial  statements  should  be  read  in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included in the Company's December 31, 2003 audited financial statements.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  which  affect  the  reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities as of the date
of the  financial  statements,  as well as the  reported  amounts  of income and
expenses  during the reported  periods.  Actual  results could differ from those
estimates.

NOTE 2 - Earnings per Share

<TABLE>

The following information  calculates the computation of earnings per share on a
basic and diluted basis.
<CAPTION>
                                                                 Three Months Ended
                                                                      March 31,
                                                                  2004         2003
                                                               ----------------------
                                                               (Amounts in thousands,
                                                               except per share data)
<S>                                                           <C>          <C>
Basic
Net income                                                     $  1,450     $  1,388
Weighted average shares outstanding                               1,503        1,495
Basic earnings per share                                       $   0.96     $   0.93

Diluted
Net income                                                     $  1,450     $  1,388
Weighted average shares outstanding                               1,503        1,495
Effect of dilutive stock options outstanding                         38           30
                                                               ----------------------
Diluted weighted average shares outstanding                       1,541        1,525
Diluted earnings per share                                     $   0.94     $   0.91

</TABLE>

NOTE 3 - Comprehensive Income

<TABLE>

The following table presents our comprehensive income.
<CAPTION>

                                                                 Three Months Ended
                                                                      March 31,
                                                                  2004        2003
                                                               ----------------------
                                                               (Dollars in thousands)
<S>                                                           <C>          <C>
Net income                                                     $  1,450     $  1,388
Other comprehensive income
  Net change in unrealized gain (loss) on available for
   sale securities                                                  167          (87)
                                                               ----------------------
Total comprehensive income                                     $  1,617     $  1,301
                                                               ======================
</TABLE>

                                       6
<PAGE>


NOTE 4 - Stock-based Compensation Plan:

For the three months ended March 31, 2004,  and March 31, 2003,  the Company had
one stock-based  compensation  plan for officers and key employees.  The Company
accounts for this plan under the recognitions and measurement  principles of APB
Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,   and  related
Interpretations.  No stock-based employee  compensation cost is reflected in the
income,  as all options granted under those plans had an exercise price equal to
the  market  value of the  underlying  common  stock on the date of  grant.  The
following  table  illustrates the effect on net income and earnings per share if
the  Company  had applied the fair value  recognition  provisions  of  Financial
Accounting  Standards Board (FASB) Statement No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                      March 31,
                                                                  2004        2003
                                                             --------------------------
                                                               (Amounts in thousands,
                                                             except for per share data)
<S>                                                           <C>         <C>
Net income, as reported                                        $   1,450   $   1,388
Deduct total stock-based employee compensation expense
 determined under fair value based method for all
 awards, net of related tax effects                                 (170)       (201)
                                                             --------------------------
Pro forma net income                                           $   1,280   $   1,187
                                                             ==========================

Earnings per share:
 Basic:
  As reported                                                  $    0.96   $    0.93
  Pro forma                                                         0.85        0.79
 Diluted:
  As reported                                                  $    0.94   $    0.91
  Pro forma                                                         0.83        0.78

</TABLE>

In  determining  compensation  cost using the fair value  method  prescribed  in
Statement  No. 123,  the value of each grant is estimated at the grant date with
the following  weighted-average  assumptions  used for grants on March 31, 2004,
and March 31, 2003, respectively: dividend yield of 1.7 percent and 1.7 percent;
expected price  volatility of 5.2 percent  and  5.2 percent,  blended  risk-free
interest rates of 3.9 percent and  4.3 percent;  and expected lives of 10 years,
respectively.

NOTE 5 - Commitments and Contingencies

Information  in the following  table  provides a summary of the Company's  other
contractual obligations and commercial commitments as of March 31, 2004, as well
as that information for its depository products:

<TABLE>
<CAPTION>
                                                                              Payments Due by Fiscal Period
                                                                                     (in thousands)
                                                             ---------------------------------------------------------------
Contractual Obligations (a)                                                Remaining in  2005-2006   2007-2008    2009 and
                                                                Total          2004                              thereafter
                                                             ---------------------------------------------------------------
<S>                                                         <C>             <C>          <C>         <C>          <C>
Deposits, Certificates of Deposit                            $ 143,977       $ 81,069     $ 52,802    $  9,928     $    178
  and similar products
Short-term Obligations                       (b)                57,681         57,681
Other Borrowings                             (c)                44,653         19,382       11,060      11,211        3,000
Operating leases                                                   332             95          174          63            -
Other long-term obligations                  (d)                 2,472            194          357         287        1,634
                                                             ---------------------------------------------------------------
    Total contractual cash obligations                       $ 249,115      $ 158,421     $ 64,393    $ 21,489     $  4,812
                                                             ===============================================================

</TABLE>

                                       7
<PAGE>



Notes

a.   Excluding the "off balance sheet" lending commitments discussed below.

b.   See Note 8 in the Notes to Consolidated  Financial  Statements for the year
     ended  December  31,  2003  for a  description  of  the  Company's  various
     short-term  borrowings.  Many  short-term  borrowings  such  as  fed  funds
     purchased and security  repurchase  agreements  are expected to be reissued
     and, therefore, do not necessarily represent an immediate need for cash.

c.   See Note 9 in the Notes to Consolidated  Financial  Statements for the year
     ended  December 31, 2003 for a description  of the Company's  various other
     borrowings.

d.   Other  long-term  obligations  consisted  primarily of salary  continuation
     agreements and Benefit Plans.  See Exhibits 10.1, 10.2, 10.3 and 10.4 filed
     with Form 10-K as of December  31, 2003 for a detailed  description  of the
     Company's Salary continuation agreements and Benefit Plans.


In the  ordinary  course of business,  the Company is involved in various  legal
proceedings.  In the opinion of  management,  any liability  resulting from such
proceedings  would  not  have a  material  adverse  effect  on the  consolidated
financial statements.

The Company is party to financial instruments with off-balance-sheet risk in the
ordinary  course of its  banking  business  to meet the  financing  needs of its
customers.  These financial  instruments  include  commitments to extend credit,
financial  guarantees,  and standby letters of credit.  They involve, to varying
degrees,  elements  of  credit  risk in  excess  of  amounts  recognized  on the
consolidated balance sheets.

The  Company's  exposure  to credit loss in the event of  nonperformance  by the
other party to the financial  instrument  for  commitments  to extend credit and
standby letters of credit is represented by the  contractual  notional amount of
those  instruments.  The  Company  uses  the  same  credit  policies  in  making
commitments  and  issuing  letters  of  credit  as they do for  on-balance-sheet
instruments.

Information  in the  following  table  provides  a summary  of the  contract  or
notional amount of the Company's exposure to off-balance-sheet  risk as of March
31, 2004 is as follows:

<TABLE>
<S>                                                             <C>
Commitments to extend credit
  Unused revolving home equity, consumer lines of credit         $ 19,759
  Unused commercial lines of credit                                64,262
Standby letters of credit                                           2,817
</TABLE>

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash requirements.

Standby  letters of credit  are  conditional  commitments  issued by the Bank to
guarantee the performance of a customer to a third-party.  Those  guarantees are
primarily  issued to support  public and  private  borrowing  arrangements  and,
generally,  have terms of one year or less.  The credit risk involved in issuing
letters of credit is  essentially  the same as that  involved in extending  loan
facilities to customers.  The Bank holds collateral,  which may include accounts

                                       8
<PAGE>

receivable,  inventory,  property,  equipment, and income-producing  properties,
supporting those commitments if deemed necessary. In the event the customer does
not perform in accordance with the terms of the agreement with the  third-party,
the Bank would be required to fund the commitment.  The maximum potential amount
of future  payments  the Bank could be  required to make is  represented  by the
contractual  amount shown in the summary on the previous page. If the commitment
is funded the Bank would be  entitled to seek  recovery  from the  customer.  At
March  31,  2004 and  December  31,  2003,  no  amounts  have been  recorded  as
liabilities for the Bank's potential obligations under these guarantees.


                                       9
<PAGE>

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

                    FIRST BANKING CENTER, INC AND SUBSIDIARY
                       MANAGEMENTS DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              As of March 31, 2004

The following discussion provides additional analysis of the financial condition
and results of  operations  of the Company for the three  months ended March 31,
2004.  This  discussion  focuses on the  significant  factors that  affected the
Company's  earnings so far in 2004,  with  comparisons  to 2003. As of March 31,
2004,  First Banking  Center (the "Bank") was the only direct  subsidiary of the
Company and its operations  contributed  nearly all of the revenue for the year.
The Company provides various support functions for the Bank and receives payment
from the Bank for these services. These intercompany payments are eliminated for
the  purpose  of these  consolidated  financial  statements.  The Bank has three
wholly owned  subsidiaries,  FBC  Financial  Services,  Corp.,  a brokerage  and
financial services subsidiary,  FBC-Burlington,  Inc., an investment  subsidiary
located in Nevada and Burco  Holdings,  LLC, a real  estate  subsidiary  for the
purpose of holding and liquidating property acquired as other real estate.

Overview

As of March 31, 2004,  total Company assets were $555.2 million  increasing 2.1%
from $543.9 million as of December 31, 2003. Total income,  for the three months
ended March 31, 2004,  was $1.5 million or $0.94 per diluted  share,  increasing
$62,000  or 4.5%  from $1.4  million  or $0.91  per  diluted  share in the first
quarter of 2003. The significant items resulting in the above-mentioned  results
are discussed below.

Financial Condition

Loans

Loans  outstanding  were $429.0 million and $407.9 million on March 31, 2004 and
December 31, 2003 respectively.  This represents an increase of $21.1 million or
5.2%.  The  increase is  primarily  the result of  continued  strong  demand for
commercial  loans in the Bank's market area. The following table  summarizes the
changes to date in the major loan classifications.

<TABLE>
<CAPTION>

                                                                                                   As a % of Total Loans
                                             March 31,      December 31,    Change in           March 31,      December 31,
                                               2004             2003         Balance              2004             2003
                                          ---------------------------------------------      --------------------------------
                                                     (Dollars in millions)
<S>                                          <C>              <C>            <C>                 <C>              <C>
Residential Real Estate                       $171.7           $178.5         ($6.8)              40.0%            43.8%
Commercial Real Estate                        $113.7           $101.1         $12.6               26.5%            24.8%
Construction and Land Development              $50.6            $43.0          $7.6               11.8%            10.5%
Commercial                                     $33.8            $27.6          $6.2                7.9%             6.8%
Agricultural Real Estate                       $29.6            $25.9          $3.7                6.9%             6.4%
</TABLE>


Allowance for Loan Losses

The  allowance for loan losses was $4.6 million or 1.08% of gross loans on March
31,  2004,  compared  with $4.6  million or 1.13% of gross loans on December 31,
2003.  Net  charge-offs  were $38,000 or .01% of gross loans and $40,000 or .01%
for the three months ended March 31, 2004 and 2003 respectively.

The allowance for loan losses is established through a provision for loan losses
charged to expense. See "Provision for Loan Losses" below for information on the
provision  during the periods.  Loans are charged against the allowance for loan
losses when  management  believes  that the  collectibility  of the principal is
unlikely.  The  allowance for loan losses is adequate to cover  probable  credit
losses  relating to  specifically  identified  loans, as well as probable credit
losses  inherent in the balance of the loan  portfolio.  In accordance with FASB
Statements  5 and 114,  the  allowance  is  provided  for losses  that have been
incurred as of the balance sheet date. The allowance is based on past events and

                                       10
<PAGE>

current economic conditions, and does not include the effects of expected losses
on  specific  loans or  groups of loans  that are  related  to future  events or
expected changes in economic conditions. Management reviews a calculation of the
allowance for loan losses on a quarterly  basis.  While management uses the best
information  available  to  make  its  evaluation,  future  adjustments  to  the
allowance  may be  necessary  if  there  are  significant  changes  in  economic
conditions.  Impaired  loans are measured based on the present value of expected
future cash flows  discounted  at the loan's  effective  interest  rate or, as a
practical expedient,  at the loan's observable market price or the fair value of
the collateral if the loan is collateral  dependent.  A loan is impaired when it
is probable the company will be unable to collect all contractual  principal and
interest payments due in accordance with the terms of the loan agreement.

In addition,  various regulatory agencies  periodically review the allowance for
loan  losses.  These  agencies  may  require the bank to make  additions  to the
allowance for loan losses based on their  judgments of  collectibility  based on
information available to them at the time of their examination.

The  following  table  provides a detailed  analysis of changes in the indicated
periods in the allowance for estimated loan losses:

<TABLE>
<CAPTION>

                                                                     Three Months Ended March 31,
                                                                       2004                2003
                                                                   --------------------------------
                                                                        (Dollars in thousands)
<S>                                                               <C>                 <C>
Balance, beginning of fiscal year                                  $   4,617           $   4,988

Charge-offs:
     Commercial                                                            0                   0
     Agricultural production                                               0                   0
     Real Estate:
     Construction                                                          0                   0
     Commercial                                                            0                   0
     Agriculture                                                           0                  42
     Other Mortgages                                                      46                   0
     Consumer (including installmment loans)                               2                   0
                                                                   --------------------------------
       Total Charge-offs                                                  48                  42
                                                                   --------------------------------

Recoveries:
     Commercial                                                            0                   1
     Agricultural production                                               0                   0
     Real Estate:
     Construction                                                          0                   0
     Commercial                                                            0                   0
     Agriculture                                                           0                   0
     Other Mortgages                                                       8                   0
     Consumer (including installment loans)                                2                   1
                                                                   --------------------------------
       Total Recoveries                                                   10                   2
                                                                   --------------------------------
Net Charge-offs                                                           38                  40

Provision charged to operations                                           50                  90
                                                                   --------------------------------
Balance, end of period                                             $   4,629           $   5,038
                                                                   ================================

Average amount of loans outstanding before allowance
 for estimated losses on loans                                     $ 392,209           $ 367,724
                                                                   ================================

Ratio of net charge-offs during the period to average
 loans outstanding during the period                                   0.010%              0.011%
                                                                   ================================
</TABLE>

                                       11
<PAGE>


Non-accrual, Past Due and Renegotiated Loans

<TABLE>
<CAPTION>

                                                                      March 31,       December 31,
                                                                         2004             2003
                                                                   ----------------------------------
                                                                         (Dollars in thousands)
<S>                                                                    <C>              <C>
Non-accrual Loans (a)                                                   $2,500           $2,041
Past Due 90 days + (b)                                                       0                0
Restructured Loans                                                           0                0

</TABLE>

The policy of the Company is to place a loan on non-accrual status if:
(a)  payment in full of interest and principal is not expected, or
(b)  principal  or interest  has been in default for a period of 90 days or more
     unless  the  obligation  is both in the  process  of  collection  and  well
     secured. Well secured is defined as collateral with sufficient market value
     to repay  principal and all accrued  interest.  A debt is in the process of
     collection  if  collection  of the debt is  proceeding in due course either
     through legal action,  including  judgment  enforcement  procedures,  or in
     appropriate  circumstances,  through collection efforts not involving legal
     action which are reasonably  expected to result in repayment of the debt or
     in its restoration to current status.

The non-accrual loans consisted  primarily of $314,000 of commercial real estate
loans,   $1.8  million  of  residential   real  estate  loans  and  $159,000  of
agricultural  real estate.  On March 31, 2004, the ratio of non-accrual loans to
the allowance for loan losses was 54.0%  compared to 44.2% on December 31, 2003.
The increase  during the quarter was due primarily to an increase in non-accrual
residential  real estate  loans,  in which the Company  believes it has adequate
collateral  and  anticipates  minimal  losses.  The  Company  believes it has an
adequate allowance for any anticipated losses for these loans.

As of March 31, 2004,  the Company had loans totaling $25.5 million (in addition
to those listed as non-accrual,  past due or restructured)  that were identified
by the Bank's internal asset rating systems as classified assets and loans which
management has determined  require  additional  monitoring.  This  represents an
increase  of $7.1  million or 38.6% from  December  31,  2003.  The  increase is
primarily the result of continued monitoring of the loan portfolio and the early
identification  of loans the Company  believes  should be monitored more closely
than non-classified loans. A portion of the increase, $1.2 million, represents a
change in the way the Company treats the guaranteed portion of a loan. Beginning
with the first quarter of 2004, the Company included the guaranteed portion of a
classified  loan in the  classified  loan  total.  The  Company  believes it has
adequate reserves for anticipated  losses that could result from the increase in
classified  assets.  Management is not aware of any significant  loans, group of
loans  or  segments  of the  loan  portfolio  not  included  above,  where  full
collectibility cannot reasonably be expected. Management has committed resources
and is focusing on efforts designed to control the amount of classified  assets.
The Company does not have a substantial portion of its loans concentrated in one
or a few industries  nor does it have any foreign loans  outstanding as of March
31, 2004. The Company's loans are concentrated  geographically  in the Wisconsin
counties of Racine, Walworth, Kenosha, Lafayette and Green.

Investments securities - Available for Sale

The fair value of the securities available-for-sale portfolio at March 31, 2004,
decreased  $5.1 million or 6.2% from December 31, 2003. For the purposes of this
discussion,  changes in  investment  security  balances  are based on  amortized
costs.  The  decrease  came  from  three  areas of the  portfolio.  The  Company
purchased $32.0 million of U.S.  Government Agency and $2.3 million of municipal
securities.  The Company sold $4.6 million of U.S.  Government  Agency Notes and
$1.7 million of municipal  securities.  There were maturities and calls of $32.3
million  of  U.S.   Government   Agency   Notes  and  U.S.   Government   Agency
mortgage-backed securities and $1.2 million of municipal securities.


                                       12
<PAGE>


Deposits

Total  deposits were $393.2 million on March 31, 2004 compared to $407.5 million
on December 31, 2003.  This is a decrease of $14.3 million or 3.6%.  Most of the
decrease  was  in  demand  deposits  and  is  primarily  a  result  of  seasonal
fluctuations in municipal deposits.

<TABLE>
<CAPTION>
                                                            March 31,        December 31,             Change in
                                                              2004              2003                   Balance
                                                        -----------------------------------         -------------
                                                               (Amount in millions)
<S>                                                      <C>               <C>                       <C>
Money Market and Savings                                  $    146.3        $    149.2                $   (2.9)
NOW Accounts                                                    44.9              45.2                    (0.3)
Demand  Deposits                                                58.0              68.0                   (10.0)
Time Deposits less than $100,000                                86.3              87.1                    (0.8)
Time Deposits equal or greater than $100,000                    57.7              57.9                    (0.2)

</TABLE>

Borrowed Funds

Total borrowed  funds were $102.3  million on March 31, 2004,  compared to $78.8
million on December 31, 2003. This is an increase of $23.5 million or 29.8%. The
Company  increased  its  borrowings  because  demand for loans has been  growing
faster than deposits.  The following table summarizes changes during 2004 in the
major classifications of borrowed funds.

<TABLE>
<CAPTION>
                                                            March 31,        December 31,             Change in
                                                              2004              2003                   Balance
                                                        -----------------------------------         -------------
                                                               (Amounts in millions)
<S>                                                      <C>               <C>                      <C>
Securities sold under agreement to repurchase             $     27.1        $     27.4               $    (0.3)
Federal Home Loan Borrowings                                    44.2              44.2                      -
Federal Funds Borrowed                                          30.5               6.7                    23.8

</TABLE>

Further  information  regarding  our FHLB  borrowings as of December 31, 2003 is
included in the Note 9 of our  Consolidated  Financial  Statements in our annual
report on Form 10-K for the year ended December 31, 2003.

Capital resources

As of March 31, 2004, the Company's  stockholders' equity increased $1.5 million
or 2.7% from  December  31,  2003.  Net income of $1.5  million  was the primary
reason for the  increase.  In addition,  other  comprehensive  income  increased
$167,000  from $1.3 million to $1.5  million.  These  increases  were  partially
offset by net  repurchases  of stock;  the Company  purchased  $293,000 and sold
$69,000 of treasury stock during the first three months of 2004.

Under the Federal Reserve  Board's  risk-based  guidelines,  capital is measured
against the Company's subsidiary bank's risk-weighted assets. The Company's tier
1 capital (common  stockholders'  equity less goodwill) to risk-weighted  assets
was 12.1% at March 31, 2004, well above the 4% minimum  required.  Total capital
to risk-adjusted  assets was 13.2%; also well above the 8% minimum  requirement.
The leverage ratio was at 9.6% compared to the 4% minimum requirement. According
to FDIC capital guidelines, the Bank is considered to be "well capitalized."

Asset/liability management

The principal  function of  asset/liability  management is to manage the balance
sheet mix,  maturities,  repricing  characteristics  and pricing  components  to
provide an adequate and stable net interest  margin with an acceptable  level of
risk over time and through interest rate cycles.

Interest-sensitive  assets  and  liabilities  are  those  that  are  subject  to
repricing   within  a  specific   relevant  time  horizon.   The  Bank  measures
interest-sensitive  assets and  liabilities,  and their  relationship  with each
other at terms of immediate, quarterly intervals up to 1 year, and over 1 year.


                                       13
<PAGE>

Changes in net interest income,  other than volume related,  arise when interest
rates on assets  reprice in a time frame or interest  rate  environment  that is
different  from the repricing  period for  liabilities.  Changes in net interest
income  also  arise  from  changes  in the mix of  interest  earning  assets and
interest-bearing liabilities.

The Bank's  strategy with respect to  asset/liability  management is to maximize
net  interest  income  while  limiting  its  exposure  to a  potential  downward
movement.  Strategy is implemented by the Bank's management,  which takes action
based upon its analysis of the Bank's  present  positioning,  its desired future
positioning,  economic  forecasts,  and its goals.  It is the  Bank's  desire to
maintain a cumulative GAP of positive or negative 15% of rate  sensitive  assets
at the 1-year  time frame.  The  current  percentage  is a positive  19%,  which
compares to a positive 20% as of December 31,  2003.  Although  these ratios are
outside the Bank's target range,  and the Bank is therefore  somewhat exposed to
declining  rates,  the Company's  management feels the ratios are appropriate at
this time due to management's projection for future interest rates.

Liquidity

Liquidity  measures our ability to meet  maturing  obligations  and its existing
commitments,   to  withstand   fluctuations  in  deposit  levels,  to  fund  its
operations,  and to provide for customers' credit needs. One source of liquidity
is cash and short-term assets, such as interest-bearing  deposits in other banks
and federal funds sold, which totaled $18.0 million at March 31, 2004,  compared
with $23.3  million at December 31,  2003.  The Bank has a variety of sources of
short-term  liquidity  available to it,  including  federal funds purchased from
correspondent  banks,  sales of securities  available for sale,  FHLB  advances,
lines of credit and loan  participations  or sales.  During the first quarter of
2004, the Bank became  increasingly  dependent upon borrowed funds, as its loans
outstanding increased while deposits modestly decreased. While the Bank believes
that these types of borrowings are available on reasonable  terms,  there can be
no  assurance  they will  continue to be. We also  generate  liquidity  from the
regular  principal  payments and prepayments  made on its portfolio of loans and
mortgage-backed securities.  Although changes in interest rates could negatively
impact  liquidity,  the Bank feels it has adequate sources to meet its liquidity
needs.  Any effects  changes in interest rates have on income would have minimal
effect on liquidity.

The cash  position  of the  Bank is  determined  by  activity  in three  primary
classifications: cash flows from operating activities, cash flows from investing
activities,  and cash flows from financing activities.  As a net result of these
activities,  the Bank's cash  decreased  slightly  in the first three  months of
2004.  Net cash  provided by operating  activities  was $1.7  million.  This was
primarily a result of normal increases and decreases in operations offset by net
originating secondary market loans over secondary market loan proceeds. Net cash
used in  investing  activities,  consisting  primarily  of loan  funding and the
purchase of  securities,  was $16.4  million.  Net cash  provided  by  financing
activities,  consisting  primarily  of a $23.5  million  increase  in short term
borrowings offset by the decrease in deposits,  was $9.0 million,  for the three
months ended March 31, 2004.

For the three  months  ending  March 31,  2003,  net cash  provided by operating
activities was $7.5 million. This was primarily a result of net secondary market
loan  proceeds over  originating  secondary  market loans.  Net cash provided by
investing  activities,  consisting primarily of loan funding and the purchase of
securities was $7.4 million. Net cash used in financing  activities,  consisting
primarily of deposit growth and short term borrowings, was $20.3 million.

Impact of Inflation and Changing Prices

The  consolidated  financial  statements  and the  accompanying  notes have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America,  which require the  measurement of financial  position
and operating results in terms of historical dollar amounts without  considering
the  changes  in the  relative  purchasing  power  of  money  over  time  due to
inflation.  The impact of inflation is  reflected in the  increased  cost of our
operations.   Unlike  industrial  companies,   nearly  all  of  our  assets  and
liabilities are monetary in nature.  As a result,  interest rates have a greater
impact on our  performance  than do the effects of general  levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or to the same
extent as the price of goods and services.


                                       14
<PAGE>

Forward Looking  Statements- Safe Harbor Statement under the Private  Securities
Litigation Reform Act of 1995

This report contains certain  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.  We intend such  forward-looking
statements  to be  covered by the safe  harbor  provisions  for  forward-looking
statements  contained  in the  Private  Securities  Reform  Act of 1995,  and is
including  this  statement  for  purposes  of  these  safe  harbor   provisions.
Forward-looking statements,  which are based on certain assumptions and describe
Our future plans,  strategies and expectations are generally identifiable by use
of the words "believe," "expect," "intend," "anticipate,"  "estimate," "project"
or similar expressions. First Banking Center's ability to predict results or the
actual effect of future plans or strategies  is  inherently  uncertain.  Factors
which  could  have a  material  adverse  affect  on our  operations  and  future
prospects include,  but are not limited to, changes in: interest rates,  general
economic  conditions,   legislative/regulatory   changes,  monetary  and  fiscal
policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal  Reserve  Board,  the quality or  composition  of the loan or investment
portfolios,  demand for loan products,  deposit flows,  competition,  demand for
financial  services in our market area, our  implementation of new technologies,
Our ability to develop and maintain secure and reliable  electronic  systems and
accounting  principles,  policies and guidelines.  These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.

Results of operations

Net Interest Income

Net interest income is the difference  between interest income and fees on loans
and interest expense,  and is the largest  contributing factor to net income for
the Company. All discussions of rate are on an annualized  tax-equivalent basis,
which accounts for income earned on nontaxable loans and securities that are not
fully subject to federal  taxes.  Net interest  income was $5.1 million and $4.6
million  for  the  three  months  ended  March  31,  2004  and  March  31,  2003
respectively.  Net interest  margin as a percentage  of average  earning  assets
(includes  loans placed on nonaccrual  status) was 3.99% and 3.84% for the three
months ended March 31, 2004 and March 31, 2003.

The major component of interest income and fees on loans is the income generated
by loans. Although average yield declined slightly,  from 5.89% to 5.54% for the
three  months  ending  March 31, 2003 to March 31, 2004  respectively,  interest
income  and fees on  loans  increased  as a result  of  increased  average  loan
balances.

The major  components of interest  expense are interest paid on  Certificates of
Deposit (Time Deposits) and on Money Market  Deposits.  Interest expense on Time
Deposits  decreased due to decreased rates paid on increased  average  balances.
The rates paid decreased  from 2.42% to 1.72%,  for the three months ended March
31,  2003 and 2004  respectively.  Interest  expense  on Money  Market  Deposits
decreased as a result of  decreased  rates on decreased  average  balances.  The
rates paid  decreased  from .78% to .74%,  for the three  months ended March 31,
2004 and 2003 respectively.


                                       15
<PAGE>

The  following  table  summarizes  the  changes  and  reasons for the changes in
interest earned and paid during the three months ended March 31, 2004 and 2003.

<TABLE>
<CAPTION>

                                                                             Three months ended
                                                                                 March 31,
                                                                2004                                2003
                                                   -----------------------------------------------------------------------
                                                              Interest   Average                    Interest    Average
                                                    Average    Earned     Yield         Average      Earned      Yield
                                                    Balance   or Paid    or Cost        Balance     or Paid     or Cost
                                                   -----------------------------------------------------------------------
                                                                            (Dollars in thousands)
<S>                                               <C>          <C>       <C>            <C>          <C>        <C>
Interest Income:
  Interest and fees on loans (a) (b)               $ 416,902    5,777     5.54%          367,724      5,415      5.89%
  Interest and dividends on securities:
    Taxable                                           52,073      469     3.60%           58,858        502      3.41%
    Nontaxable (a)                                    37,064      595     6.42%           36,531        644      7.05%
  Interest on Fed funds sold                           2,419        4     0.66%           13,368         38      1.14%
  Interest on interest-bearing deposits in banks         278        1     1.44%            4,706         14      1.19%
                                                   -----------------------------------------------------------------------
    Total Interest Income                          $ 508,736    6,846     5.38%          481,187      6,613      5.50%
                                                   =======================================================================

Interest Expense
  Interest on deposits                             $ 335,170    1,176     1.40%          316,691      1,462      1.85%
  Interest on short-term borrowings                   46,685      165     1.41%           26,052         72      1.11%
  Interest on other borrowings                        44,250      424     3.83%           45,985        460      4.00%
                                                   -----------------------------------------------------------------------
       Total Interest Expense                      $ 426,105    1,765     1.66%          388,728      1,994      2.05%
                                                   =======================================================================
Net interest margin                                            $5,081     3.99%                      $4,619      3.84%
                                                               ===================                   =====================
</TABLE>

(a)  The interest and average yield for  nontaxable  loans and  investments  are
     presented on an annualized  federal taxable equivalent basis assuming a 34%
     tax rate.
(b)  Interest and fees on loans decreased  $514,000 for the Quarter Ending March
     31, 2003 due to a reclassification of gains on the sales of loans.

Provision for loan losses

For the three  months  ending  March 31,  2004,  $50,000  was charged to current
earnings and added to the allowance for loan losses  compared to $90,000  during
the first three months of 2003. Net  charge-offs  decreased  slightly to $38,000
from $40,000 for the period ended March 31, 2004 as compared to the period ended
March 31, 2003;  however,  non-accrual loans  increased  $500,000 and classified
loans increased $7.0 million during the first quarter of 2004. Even though total
loans and non-performing and classified assets increased,  the Bank charged less
to earnings  during the three  months  ending March 31, 2004 versus 2003 because
management believes the Bank's exposure to loss on the increased  non-performing
and  classified  loans is  minimal  and,  in our  judgment,  there  is  adequate
collateral to cover the loan balances.

See "Allowance  for Loan Losses" below for a description of the processes  which
the Company uses in  determining  the amount of the  provision and the allowance
for loan losses.

Non-interest income

Non-interest  income decreased  $37,000 or 2.7% for the three months ended March
31, 2004. The decrease was primarily the result of $288,000,  in decreased gains
from  the  sales  of  loans  offset  with  $123,000  of  gains  from the sale of
securities,  $53,000 of income from other real  estate  owned and an increase of
$31,000 from trust fees.

Non-interest expense

Non-interest expense increased $345,000 or 9.0% for the three months ended March
31, 2004 compared to the three months ended March 31, 2003. Salaries and benefit
costs  accounted for $181,000 for the three months ended March 31, 2004 compared
to the three months  ended March 31, 2003.  The increase in salaries and benefit
costs can be attributed to normal wage increases and increased  health insurance
benefit costs.  Occupancy  expense  increased $46,000 for the three months ended
March  31,  2004  compared  to the three  months  ended  March  31,  2003 due to
increases  in real estate  taxes,  depreciation  and  utilities.  Other  expense
increased  $118,000 for the three  months  ended March 31, 2004  compared to the
three months ended March 31, 2003.


                                       16
<PAGE>

Income Taxes

Income tax  expense for the three  months  ending  March 31,  2004 was  $566,000
compared to $490,000 for the three months  ending March 31, 2003.  The effective
tax  increased to 28.1% for the three months  ending March 31, 2004  compared to
26.1% for the three months ending March 31, 2003. The increase is primarily as a
result of an increase in taxable interest income net with a decrease in interest
expense.

Like  many  Wisconsin  financial  institutions,  the  Bank  has a  non-Wisconsin
subsidiary which holds and manages investments assets, the income from which has
not yet been subject to Wisconsin  tax. The Wisconsin  Department of Revenue has
instituted an audit program,  including an audit of the Bank, specifically aimed
at out of  state  bank  subsidiaries  and has  indicated  that  it may  withdraw
favorable rulings previously issued in connection with such  subsidiaries.  As a
result of these developments,  the Department may take the position that some or
all of the income of the out of state subsidiary is taxable in Wisconsin,  which
will likely be challenged by financial  institutions in state. If the Department
is successful in its efforts,  it could result in a substantial  negative impact
on the earnings of the Bank.


Critical Accounting Policies

Allowance for Loan Losses

Management  believes the allowance for loan losses accounting policy is critical
to the portrayal  and  understanding  of our financial  condition and results of
operations.  As such,  selection and  application of this  "critical  accounting
policy" involves judgments, estimates, and uncertainties that are susceptible to
change.  In the event that different  assumptions or conditions were to prevail,
and depending upon the severity of such changes,  the  possibility of materially
different   financial  condition  or  results  or  operations  is  a  reasonable
likelihood.   For  further  detail,   see  the  explanations   under  "Financial
Condition-Loans" above.

Income Taxes

See Note 1 of the notes to our audited consolidated financial statements for the
year ended  December 31, 2003 for our income tax accounting  policy.  Income tax
expense recorded in the consolidated  income statement  involves  interpretation
and application of certain  accounting  pronouncements and federal and state tax
codes, and is, therefore,  considered a critical  accounting  policy. We undergo
examinations by various regulatory taxing authorities. Such agencies may require
that changes in the amount of tax expense or valuation  allowance be  recognized
when  their  interpretations  differ  from those of  management,  based on their
judgments about information available to them at the time of their examinations.
In addition,  as noted above,  the Bank is undergoing a state tax audit relating
to  the  activities  and  holdings  of one of its  subsidiaries;  we  must  make
judgments   as  to  the  expected   effect  of  that  audit.   See  "Results  of
Operations-Income  Taxes" and Note 12 of the notes to our  audited  consolidated
financial  statements  for the year ended  December 31, 2003 for more income tax
information.


                                       17
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

First Banking Center,  like other financial  institutions,  is subject to direct
and  indirect  market risk.  Direct  market risk exists from changes in interest
rates.  First  Banking  Center's  net income is  dependent  on its net  interest
income.  Net interest  income is susceptible to interest rate risk to the degree
that  interest-bearing  liabilities  mature or reprice on a different basis than
interest-earning  assets.  When  interest-bearing  liabilities mature or reprice
more quickly  than  interest-earning  assets in a given  period,  a  significant
increase in market rates of interest could adversely affect net interest income.

Similarly,  when  interest-earning  assets  mature or reprice  more quickly than
interest-bearing liabilities,  falling interest rates could result in a decrease
in net income.

In an attempt to manage its  exposure to changes in interest  rates,  management
monitors  First  Banking  Center's  interest  rate  risk.  The   Asset/Liability
Committee  meets quarterly to review First Banking  Center's  interest rate risk
position  and   profitability,   and  to  make  or  recommend   adjustments  for
consideration  by the Board of  Directors.  Management  also  reviews the Bank's
securities portfolio,  formulates investment strategies, and oversees the timing
and   implementation  of  transactions  to  assure  attainment  of  the  Board's
objectives in the most effective manner.  Notwithstanding First Banking Center's
interest rate risk management  activities,  the potential for changing  interest
rates is an uncertainty that can have an adverse effect on net income.

In adjusting  First Banking  Center's  asset/liability  position,  the Board and
management  attempt to manage First  Banking  Center's  interest rate risk while
maintaining or enhancing net interest margins. At times,  depending on the level
of general  interest rates, the  relationship  between  long-term and short-term
interest  rates,  market  conditions  and  competitive  factors,  the  Board and
management  may decide to increase  First  Banking  Center's  interest rate risk
position  somewhat in order to increase its net interest  margin.  First Banking
Center's  results of operations  and net portfolio  values remain  vulnerable to
increases  in  interest  rates and to  fluctuations  in the  difference  between
long-term and short-term interest rates.

One approach  used to quantify  interest  rate risk is the net  portfolio  value
("NPV") analysis.  In essence,  this analysis  calculates the difference between
the present  value of  liabilities  and the present value of expected cash flows
from assets and off-balance-sheet contracts. The most recent NPV analysis, as of
March  31,  2004,   projects  that  net  portfolio   value  would   decrease  by
approximately  3.49% if  interest  rates  would rise 200 basis  points and would
decrease by  approximately  1.81% if interest  rates would rise 100 basis points
over  the  next  year.  It  projects  an  increase  in net  portfolio  value  of
approximately  3.80% if  interest  rates  would  drop 200  basis  points  and an
increase of  approximately  2.16% if interest rates would drop 100 basis points.
Both simulations are within board-established policy limits. The Company has not
experienced any material  changes to its market risk position since December 31,
2003, as disclosed in the Company's 2003 Form 10K Annual  Report.  First Banking
Center's  policy is to limit the effect of a 200 basis  point rate shock to plus
or minus 20% of  projected  net  interest  income and to minus 20% of the market
value of portfolio equity.

First  Banking  Center does not  currently  engage in trading  activities or use
derivative   instruments  to  control  interest  rate  risk.  Even  though  such
activities may be permitted  with the approval of the Board of Directors,  First
Banking  Center does not intend to engage in such  activities  in the  immediate
future.

Interest rate risk is the most  significant  market risk affecting First Banking
Center.  Other types of market risk, such as foreign currency exchange rate risk
and  commodity  price risk,  do not arise in the normal  course of First Banking
Center's business activities.


                                       18
<PAGE>

Item 4.  Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that
the information the Company must disclose in its filings with the Securities and
Exchange Commission is recorded, processed,  summarized and reported on a timely
basis. The Company's principal executive officer and principal financial officer
have reviewed and evaluated the Company's  disclosure controls and procedures as
defined in Rules  13a-15(e) and 15d-15(e)  under the securities and Exchange Act
of 1934, as amended (the "Exchange  Act") as of the end of the period covered by
this report (the "Evaluation  Date").  Based on such  evaluation,  such officers
have  concluded  that,  as of the  Evaluation  Date,  the  Company's  disclosure
controls  and  procedures  are  effective in bringing to their  attention,  on a
timely  basis,  material  information  relating  to the  Company  required to be
included in the Company's periodic filings under the Exchange Act.

There have not been any changes in the Company's internal control over financial
reporting  (as defined in  Exchange  Act Rules  13a-15(f)  and  15d-15(f))  that
occurred  during the Company's most recent fiscal  quarter that have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


                                       19
<PAGE>

Part II-OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 2.  Changes in  Securities, Use of Proceeds and Issuer  Purchases of Equity
         Securities.

(e)  The following table sets forth  information on the Company's  repurchase of
     shares of its common stock during the quarter ended March 31, 2004:

Issuer Purchases of Equity Securities
<TABLE>
<CAPTION>

                 (a) Total   (b) Average    (c) Total Number of      (d) Maximum Number
                 Number of    Price Paid     Shares (or Units)        (or Approximate
    Period       Shares (or   per Share     Purchased as Part of      Dollar Value) of
                   Units)     (or Unit)      Publicly Announced       Shares (or Units)
                 Purchased                   Plans or Programs        that May Yet Be
                                                                     Purchased Under the
                                                                      Plans or Programs
--------------------------------------------------------------------------------------------
<S>               <C>          <C>                   <C>                     <C>
   Month #1
  January 1 -        600        46.92                 -                       -
  January 31,
     2004

   Month #2
 February 1 -        350        47.48                 -                       -
 February 29,
     2004

   Month #3
   March 1 -       5,272        46.99                 -                       -
   March 31,
     2004
--------------------------------------------------------------------------------------------
     Total         6,222        47.01                 *                       *
--------------------------------------------------------------------------------------------


<FN>

* There  is no  active  trading  market  for the  Company's  common  stock.  All
repurchases  were therefore made in private  transactions.  Although the Company
does not have a formal  repurchase  program,  it regularly  repurchases  shares,
particularly in situations in which it is approached by shareholders  seeking to
sell shares;  it has disclosed the fact that it will from time to time make such
purchases.
</FN>
</TABLE>


Item 3.  Defaults upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None


                                       20
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

         31.1   Certification  of the  Chief Executive  Officer pursuant to Rule
                13a-14(a)/15(d)-14(a) as adopted pursuant to Section 302 of  the
                Sarbanes-Oxley  Act of 2002  (exhibit is being  filed herewith).

         31.2   Certification  of the Chief  Financial  Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)  as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act  of 2002  (exhibit is being  filed herewith).

         32.1   Certification  of  the  Chief  Executive  Officer pursuant to 18
                U.S.C.  Section  1350 as adopted  pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002  (exhibit is being  filed  herewith).

         32.2   Certification  of the  Chief  Executive  Officer  pursuant to 18
                U.S.C.  Section 1350 as adopted  pursuant to Section  906 of the
                Sarbanes-Oxley  Act of 2002 (exhibit is being  filed  herewith).

         (b)  Reports on Form 8-K

              None


                                       21
<PAGE>

                   FIRST BANKING CENTER, INC AND SUBSIDIARIES


                                   SIGNATURES





Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1943,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.










                                            First Banking Center, Inc.





May 17, 2004                                /s/ Brantly Chappell
Date                                        -----------------------
                                            Brantly Chappell
                                            Chief Executive Officer



May 17, 2004                                /s/ James Schuster
Date                                        -----------------------
                                            James Schuster
                                            Chief Financial Officer


                                       22
[{"type": "10-Q", "sequence": "1", "filename": "march10q.txt", "description": "FIRST BANKING CENTER, INC.", "secsgml_size_bytes": 82078}]
{"company-data": {"conformed-name": "FIRST BANKING CENTER INC", "cik": "0000356858", "assigned-sic": "6022", "irs-number": "391391327", "state-of-incorporation": "WI", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-11132", "film-number": "04811048"}, "business-address": {"street1": "400 MILWAUKEE AVE", "street2": "P O BOX 660", "city": "BURLINGTON", "state": "WI", "zip": "53105", "phone": "4147633581"}, "mail-address": {"street1": "567 BROAD ST", "street2": "PO BOX 970", "city": "LAKE GENEVA", "state": "WI", "zip": "53147"}, "former-company": {"former-conformed-name": "FIRST COMMUNITY BANK GROUP INC", "date-changed": "19850312"}}
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 1934

For the quarterly period ended March 31, 2004

OR

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

                         Commission File Number 0-11132

                           FIRST BANKING CENTER, INC.
             (Exact name of registrant as specified in its charter)

               Wisconsin                               39-1391327
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                 Identification No.)

        400 Milwaukee Ave., Burlington, WI            53105
     (Address of principal executive offices)       (Zip Code)

                                 (262) 763-3581
              (Registrant's telephone number, including area code)

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 whether the registrant is an accelerated filer (as define
in Rule 12b-2 of the Act).

Yes     [   ]     No [ X ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock,  as of May 17, 2004,  Common  stock,  $1.00 par value,  1,492,083
shares outstanding.
FIRST BANKING CENTER, INC AND SUBSIDIARY
                                TABLE OF CONTENTS
                                 March 31, 2004

                                                                        Page
                                                                        ----
Part I   Financial Information

         Item 1  Consolidated Financial Statements

                 Unaudited Consolidated Balance Sheets,
                 March 31, 2004 and December 31, 2003                     3

                 Unaudited Consolidated Statements of Income,
                 For the three months ended March 31, 2004 and 2003       4

                 Unaudited Consolidated Statements of Cash Flows,
                 For the three months ended March 31, 2004 and 2003       5

                 Notes to Unaudited Consolidated Financial Statements    6-9

         Item 2  Management's Discussion and Analysis of
                 Financial Condition and Results of Operations          10-17

         Item 3  Quantitative and Qualitative Disclosures about Market   18
                 Risk

         Item 4  Controls and Procedures                                 19

Part II  Other Information

         Item 1  Legal Proceedings                                       20

         Item 2  Changes in Securities, Use of Proceeds and Issuer
                 Purchases of Equity Securities                          20

         Item 3  Defaults upon Senior Securities                         20

         Item 4  Submission of Matters to a Vote of Security Holders     20

         Item 5  Other Information                                       20

         Item 6  Exhibits and Reports on Form 8-K                       21-26

         Signatures                                                     22-26

                                       2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements

                                         FIRST BANKING CENTER, INC. AND SUBSIDIARY
                                           UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31,       December 31,
ASSETS                                                                            2004             2003
                                                                                ----------------------------
                                                                                   (Dollars in thousands)
Cash and due from banks                                                       $  14,214       $  19,960
  Federal funds sold                                                                3,512           3,047
  Interest-bearing deposits in banks                                                  280             274
  Available for sale securities                                                    77,532          82,672
  Loans, less allowance for loan losses of $4,629 and
    $4,617 at 2004 and 2003, respectively                                         424,331         403,252
  Office buildings and equipment, net                                              12,451          11,818
  Other real estate owned                                                           1,750           1,899
  Federal Home Loan Bank Stock                                                     11,487          11,755
  Other assets                                                                      9,656           9,240
                                                                                ----------------------------
      TOTAL ASSETS                                                              $ 555,213       $ 543,917
                                                                                ============================

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
  Deposits
    Demand                                                                      $  57,980       $  67,961
    Savings and NOW accounts                                                      191,219         194,419
    Time                                                                          143,977         145,072
                                                                                ----------------------------
      Total Deposits                                                              393,176         407,452
  Short-term borrowings                                                            57,681          34,176
  Other borrowings                                                                 44,653          44,673
  Other liabilities                                                                 4,713           4,076
                                                                                ----------------------------
      TOTAL LIABILITIES                                                         $ 500,223       $ 490,377
                                                                                ----------------------------

STOCKHOLDERS' EQUITY
  Common Stock, $1.00 par value 3,000,000 shares authorized;
    1,502,543 and 1,501,277 shares issued as of March 31, 2004 and
    December 31, 2003, respectively; 1,497,271 and 1,500,760 shares
    outstanding as of March 31, 2004 and December 31, 2003, respectively            1,503           1,501
  Surplus                                                                           4,667           4,612
  Retained Earnings                                                                47,611          46,161
  Accumulated other comprehensive income                                            1,457           1,290
  Common stock in treasury, at cost-5,272 and 517 shares
    as of March 31, 2004 and December 31, 2003, respectively                         (248)            (24)
                                                                                ----------------------------
      TOTAL STOCKHOLDERS' EQUITY                                                $  54,990       $  53,540
                                                                                ----------------------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $ 555,213       $ 543,917
                                                                                ============================

                           See accompanying notes to unaudited consolidated financial statements
3
FIRST BANKING CENTER, INC. AND SUBSIDIARY
                                    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
                                                                                          March 31,
                                                                                     2004           2003
                                                                                -----------------------------
                                                                                (Dollars in thousands, except
                                                                                       per share data)
INTEREST INCOME

  Interest and fees on loans                                                      $   5,767      $   5,404
  Interest and dividends on securities:
    Taxable                                                                             280            325
    Non-taxable                                                                         393            425
  Interest on federal funds sold                                                          4             38
  Interest on interest-bearing deposits in banks                                          1             14
  Other interest                                                                        189            177
                                                                                -----------------------------
      TOTAL INTEREST INCOME                                                           6,634          6,383
                                                                                -----------------------------

INTEREST EXPENSE
  Interest on deposits                                                                1,176          1,462
  Interest on short-term borrowings                                                     158             72
  Interest on other borrowings                                                          431            460
                                                                                -----------------------------
      TOTAL INTEREST EXPENSE                                                          1,765          1,994
                                                                                -----------------------------
      NET INTEREST INCOME                                                             4,869          4,389

  Provision for loan losses                                                              50             90
                                                                                -----------------------------
      NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                             4,819          4,299
                                                                                -----------------------------

NON-INTEREST INCOME
  Trust fees                                                                            150            119
  Service charges on deposit accounts                                                   462            465
  Commissions                                                                            42             41
  Automated banking fees                                                                 86             85
  Securities gains, net                                                                 123              0
  Loan gains, net                                                                       226            514
  Other                                                                                 269            171
                                                                                -----------------------------
      TOTAL NON-INTEREST INCOME                                                       1,358          1,395
                                                                                -----------------------------

NON-INTEREST EXPENSE
  Salary and employee benefits                                                        2,379          2,198
  Occupancy                                                                             330            284
  Equipment                                                                             347            341
  Data Processing services                                                              275            245
  Other                                                                                 830            748
                                                                                -----------------------------
      TOTAL NON-INTEREST EXPENSE                                                      4,161          3,816
                                                                                -----------------------------

      INCOME BEFORE INCOME TAXES                                                      2,016          1,878

  Income taxes                                                                          566            490
                                                                                -----------------------------

      NET INCOME                                                                  $   1,450      $   1,388
                                                                                =============================

Basic earnings per share                                                          $    0.96      $    0.93
Diluted earnings per share                                                        $    0.94      $    0.91

                       See accompanying notes to unaudited consolidated financial statements
4
FIRST BANKING CENTER, INC. AND SUBSIDIARY
                             UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
                                                                                        March 31,
                                                                                   2004           2003
                                                                                --------------------------
                                                                                  (Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                    $   1,450      $   1,388
  Adjustments to reconcile net income to net cash
   provided by (used in) operating activities:
    Depreciation                                                                      267            223
    Provision for loan losses                                                          50             90
    Loan gains, net                                                                  (226)          (514)
    Amortization of premiums and accretion of discounts
     on securities, net                                                                72             70
    Amortization                                                                       45             26
    Securities (gains), net                                                          (123)             -
    Tax benefit of nonqualified stock options exercised                                15              -
    (Increase) decrease in other assets                                              (129)             4
    Increase in other liabilities                                                     638          3,084
                                                                                --------------------------
     Net cash provided by operations before loan originations and sales             2,059          4,371
    Loans originated for sale                                                     (13,010)       (11,447)
    Proceeds from sale of loans                                                    12,606         14,620
                                                                                --------------------------
        NET CASH PROVIDED BY OPERATING ACTIVITIES                                   1,655          7,544
                                                                                --------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net (increase) decrease in interest-bearing deposits in banks                        (6)           229
  Net (increase) decrease in federal funds sold                                      (465)         4,965
  Proceeds from sales of available-for-sale securities                              6,297              -
  Proceeds from maturities and calls of available-for-sale securities              33,414         34,707
  Purchase of available-for-sale securities                                       (34,268)       (33,000)
  Net (increase) decrease in loans                                                (20,499)         1,101
  Purchase of office buildings and equipment                                         (900)          (580)
                                                                                --------------------------
        NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                       (16,427)         7,422
                                                                                --------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net decrease in deposits                                                        (14,276)       (17,553)
  Payments on other borrowings                                                        (20)          (418)
  Net increase (decrease) in short-term borrowings                                 23,505         (2,390)
  Sale of common stock for the exercise of stock options                               41             40
  Purchase of treasury stock                                                         (293)           (32)
  Sale of treasury stock for the exercise of stock options                             69             19
                                                                                --------------------------
        NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                         9,026        (20,334)
                                                                                --------------------------
    NET DECREASE IN CASH AND DUE FROM BANKS                                        (5,746)        (5,368)

CASH AND DUE FROM BANKS:
  Beginning                                                                        19,960         22,203
                                                                                --------------------------
  Ending                                                                        $  14,214      $  16,835
                                                                                ==========================

Supplemental Disclosures of Cash Flow Information,
  Cash Paid During the Year for:
    Interest                                                                    $   1,819      $   2,103
    Income taxes                                                                $      15      $     (79)

Supplemental Schedule of Noncash Investing Activities,
  Change in Accumulated Other Comprehensive Income,
    Unrealized gains (losses) on Available-for-Sale Securities, Net             $     167      $     (87)
  Other Real Estate aquired in settlement of loans                              $       -      $       -

                  See accompanying notes to unaudited consolidated financial statements
5
FIRST BANKING CENTER, INC AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

NOTE 1 - Basis of Presentation

The unaudited  consolidated  financial  statements include the accounts of First
Banking Center,  Inc. (the "Company") and First Banking Center, its wholly owned
subsidiary.  In the opinion of management,  all adjustments  (consisting only of
normal recurring adjustments) necessary for a fair presentation of the financial
position,  results of operation and cash flows for the interim periods have been
made.  The results of  operations  for the three months ended March 31, 2004 are
not  necessarily  indicative of the results to be expected for the entire fiscal
year.

The unaudited interim financial statements have been prepared in conformity with
accounting  principles  generally  accepted in the United  States of America and
industry practice.  Certain information in footnote disclosure normally included
in  financial  statements  prepared in  accordance  with  accounting  principles
generally  accepted in the United  States of America and  industry  practice has
been  condensed or omitted  pursuant to rules and  regulations of the Securities
and  Exchange   Commission.   These  financial  statements  should  be  read  in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included in the Company's December 31, 2003 audited financial statements.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  which  affect  the  reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities as of the date
of the  financial  statements,  as well as the  reported  amounts  of income and
expenses  during the reported  periods.  Actual  results could differ from those
estimates.

NOTE 2 - Earnings per Share

The following information  calculates the computation of earnings per share on a
basic and diluted basis.
Three Months Ended
                                                                      March 31,
                                                                  2004         2003
                                                               ----------------------
                                                               (Amounts in thousands,
                                                               except per share data)
Basic
Net income                                                     $  1,450     $  1,388
Weighted average shares outstanding                               1,503        1,495
Basic earnings per share                                       $   0.96     $   0.93

Diluted
Net income                                                     $  1,450     $  1,388
Weighted average shares outstanding                               1,503        1,495
Effect of dilutive stock options outstanding                         38           30
                                                               ----------------------
Diluted weighted average shares outstanding                       1,541        1,525
Diluted earnings per share                                     $   0.94     $   0.91
NOTE 3 - Comprehensive Income

The following table presents our comprehensive income.
Three Months Ended
                                                                      March 31,
                                                                  2004        2003
                                                               ----------------------
                                                               (Dollars in thousands)
Net income                                                     $  1,450     $  1,388
Other comprehensive income
  Net change in unrealized gain (loss) on available for
   sale securities                                                  167          (87)
                                                               ----------------------
Total comprehensive income                                     $  1,617     $  1,301
                                                               ======================
6
NOTE 4 - Stock-based Compensation Plan:

For the three months ended March 31, 2004,  and March 31, 2003,  the Company had
one stock-based  compensation  plan for officers and key employees.  The Company
accounts for this plan under the recognitions and measurement  principles of APB
Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,   and  related
Interpretations.  No stock-based employee  compensation cost is reflected in the
income,  as all options granted under those plans had an exercise price equal to
the  market  value of the  underlying  common  stock on the date of  grant.  The
following  table  illustrates the effect on net income and earnings per share if
the  Company  had applied the fair value  recognition  provisions  of  Financial
Accounting  Standards Board (FASB) Statement No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.
Three Months Ended
                                                                      March 31,
                                                                  2004        2003
                                                             --------------------------
                                                               (Amounts in thousands,
                                                             except for per share data)
Net income, as reported                                        $   1,450   $   1,388
Deduct total stock-based employee compensation expense
 determined under fair value based method for all
 awards, net of related tax effects                                 (170)       (201)
                                                             --------------------------
Pro forma net income                                           $   1,280   $   1,187
                                                             ==========================

Earnings per share:
 Basic:
  As reported                                                  $    0.96   $    0.93
  Pro forma                                                         0.85        0.79
 Diluted:
  As reported                                                  $    0.94   $    0.91
  Pro forma                                                         0.83        0.78
In  determining  compensation  cost using the fair value  method  prescribed  in
Statement  No. 123,  the value of each grant is estimated at the grant date with
the following  weighted-average  assumptions  used for grants on March 31, 2004,
and March 31, 2003, respectively: dividend yield of 1.7 percent and 1.7 percent;
expected price  volatility of 5.2 percent  and  5.2 percent,  blended  risk-free
interest rates of 3.9 percent and  4.3 percent;  and expected lives of 10 years,
respectively.

NOTE 5 - Commitments and Contingencies

Information  in the following  table  provides a summary of the Company's  other
contractual obligations and commercial commitments as of March 31, 2004, as well
as that information for its depository products:
Payments Due by Fiscal Period
                                                                                     (in thousands)
                                                             ---------------------------------------------------------------
Contractual Obligations (a)                                                Remaining in  2005-2006   2007-2008    2009 and
                                                                Total          2004                              thereafter
                                                             ---------------------------------------------------------------
Deposits, Certificates of Deposit                            $ 143,977       $ 81,069     $ 52,802    $  9,928     $    178
  and similar products
Short-term Obligations                       (b)                57,681         57,681
Other Borrowings                             (c)                44,653         19,382       11,060      11,211        3,000
Operating leases                                                   332             95          174          63            -
Other long-term obligations                  (d)                 2,472            194          357         287        1,634
                                                             ---------------------------------------------------------------
    Total contractual cash obligations                       $ 249,115      $ 158,421     $ 64,393    $ 21,489     $  4,812
                                                             ===============================================================
7
Notes

a.   Excluding the "off balance sheet" lending commitments discussed below.

b.   See Note 8 in the Notes to Consolidated  Financial  Statements for the year
     ended  December  31,  2003  for a  description  of  the  Company's  various
     short-term  borrowings.  Many  short-term  borrowings  such  as  fed  funds
     purchased and security  repurchase  agreements  are expected to be reissued
     and, therefore, do not necessarily represent an immediate need for cash.

c.   See Note 9 in the Notes to Consolidated  Financial  Statements for the year
     ended  December 31, 2003 for a description  of the Company's  various other
     borrowings.

d.   Other  long-term  obligations  consisted  primarily of salary  continuation
     agreements and Benefit Plans.  See Exhibits 10.1, 10.2, 10.3 and 10.4 filed
     with Form 10-K as of December  31, 2003 for a detailed  description  of the
     Company's Salary continuation agreements and Benefit Plans.

In the  ordinary  course of business,  the Company is involved in various  legal
proceedings.  In the opinion of  management,  any liability  resulting from such
proceedings  would  not  have a  material  adverse  effect  on the  consolidated
financial statements.

The Company is party to financial instruments with off-balance-sheet risk in the
ordinary  course of its  banking  business  to meet the  financing  needs of its
customers.  These financial  instruments  include  commitments to extend credit,
financial  guarantees,  and standby letters of credit.  They involve, to varying
degrees,  elements  of  credit  risk in  excess  of  amounts  recognized  on the
consolidated balance sheets.

The  Company's  exposure  to credit loss in the event of  nonperformance  by the
other party to the financial  instrument  for  commitments  to extend credit and
standby letters of credit is represented by the  contractual  notional amount of
those  instruments.  The  Company  uses  the  same  credit  policies  in  making
commitments  and  issuing  letters  of  credit  as they do for  on-balance-sheet
instruments.

Information  in the  following  table  provides  a summary  of the  contract  or
notional amount of the Company's exposure to off-balance-sheet  risk as of March
31, 2004 is as follows:
Commitments to extend credit
  Unused revolving home equity, consumer lines of credit         $ 19,759
  Unused commercial lines of credit                                64,262
Standby letters of credit                                           2,817
Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash requirements.

Standby  letters of credit  are  conditional  commitments  issued by the Bank to
guarantee the performance of a customer to a third-party.  Those  guarantees are
primarily  issued to support  public and  private  borrowing  arrangements  and,
generally,  have terms of one year or less.  The credit risk involved in issuing
letters of credit is  essentially  the same as that  involved in extending  loan
facilities to customers.  The Bank holds collateral,  which may include accounts

                                       8
receivable,  inventory,  property,  equipment, and income-producing  properties,
supporting those commitments if deemed necessary. In the event the customer does
not perform in accordance with the terms of the agreement with the  third-party,
the Bank would be required to fund the commitment.  The maximum potential amount
of future  payments  the Bank could be  required to make is  represented  by the
contractual  amount shown in the summary on the previous page. If the commitment
is funded the Bank would be  entitled to seek  recovery  from the  customer.  At
March  31,  2004 and  December  31,  2003,  no  amounts  have been  recorded  as
liabilities for the Bank's potential obligations under these guarantees.

                                       9
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

                    FIRST BANKING CENTER, INC AND SUBSIDIARY
                       MANAGEMENTS DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              As of March 31, 2004

The following discussion provides additional analysis of the financial condition
and results of  operations  of the Company for the three  months ended March 31,
2004.  This  discussion  focuses on the  significant  factors that  affected the
Company's  earnings so far in 2004,  with  comparisons  to 2003. As of March 31,
2004,  First Banking  Center (the "Bank") was the only direct  subsidiary of the
Company and its operations  contributed  nearly all of the revenue for the year.
The Company provides various support functions for the Bank and receives payment
from the Bank for these services. These intercompany payments are eliminated for
the  purpose  of these  consolidated  financial  statements.  The Bank has three
wholly owned  subsidiaries,  FBC  Financial  Services,  Corp.,  a brokerage  and
financial services subsidiary,  FBC-Burlington,  Inc., an investment  subsidiary
located in Nevada and Burco  Holdings,  LLC, a real  estate  subsidiary  for the
purpose of holding and liquidating property acquired as other real estate.

Overview

As of March 31, 2004,  total Company assets were $555.2 million  increasing 2.1%
from $543.9 million as of December 31, 2003. Total income,  for the three months
ended March 31, 2004,  was $1.5 million or $0.94 per diluted  share,  increasing
$62,000  or 4.5%  from $1.4  million  or $0.91  per  diluted  share in the first
quarter of 2003. The significant items resulting in the above-mentioned  results
are discussed below.

Financial Condition

Loans

Loans  outstanding  were $429.0 million and $407.9 million on March 31, 2004 and
December 31, 2003 respectively.  This represents an increase of $21.1 million or
5.2%.  The  increase is  primarily  the result of  continued  strong  demand for
commercial  loans in the Bank's market area. The following table  summarizes the
changes to date in the major loan classifications.
As a % of Total Loans
                                             March 31,      December 31,    Change in           March 31,      December 31,
                                               2004             2003         Balance              2004             2003
                                          ---------------------------------------------      --------------------------------
                                                     (Dollars in millions)
Residential Real Estate                       $171.7           $178.5         ($6.8)              40.0%            43.8%
Commercial Real Estate                        $113.7           $101.1         $12.6               26.5%            24.8%
Construction and Land Development              $50.6            $43.0          $7.6               11.8%            10.5%
Commercial                                     $33.8            $27.6          $6.2                7.9%             6.8%
Agricultural Real Estate                       $29.6            $25.9          $3.7                6.9%             6.4%
Allowance for Loan Losses

The  allowance for loan losses was $4.6 million or 1.08% of gross loans on March
31,  2004,  compared  with $4.6  million or 1.13% of gross loans on December 31,
2003.  Net  charge-offs  were $38,000 or .01% of gross loans and $40,000 or .01%
for the three months ended March 31, 2004 and 2003 respectively.

The allowance for loan losses is established through a provision for loan losses
charged to expense. See "Provision for Loan Losses" below for information on the
provision  during the periods.  Loans are charged against the allowance for loan
losses when  management  believes  that the  collectibility  of the principal is
unlikely.  The  allowance for loan losses is adequate to cover  probable  credit
losses  relating to  specifically  identified  loans, as well as probable credit
losses  inherent in the balance of the loan  portfolio.  In accordance with FASB
Statements  5 and 114,  the  allowance  is  provided  for losses  that have been
incurred as of the balance sheet date. The allowance is based on past events and

                                       10
current economic conditions, and does not include the effects of expected losses
on  specific  loans or  groups of loans  that are  related  to future  events or
expected changes in economic conditions. Management reviews a calculation of the
allowance for loan losses on a quarterly  basis.  While management uses the best
information  available  to  make  its  evaluation,  future  adjustments  to  the
allowance  may be  necessary  if  there  are  significant  changes  in  economic
conditions.  Impaired  loans are measured based on the present value of expected
future cash flows  discounted  at the loan's  effective  interest  rate or, as a
practical expedient,  at the loan's observable market price or the fair value of
the collateral if the loan is collateral  dependent.  A loan is impaired when it
is probable the company will be unable to collect all contractual  principal and
interest payments due in accordance with the terms of the loan agreement.

In addition,  various regulatory agencies  periodically review the allowance for
loan  losses.  These  agencies  may  require the bank to make  additions  to the
allowance for loan losses based on their  judgments of  collectibility  based on
information available to them at the time of their examination.

The  following  table  provides a detailed  analysis of changes in the indicated
periods in the allowance for estimated loan losses:
Three Months Ended March 31,
                                                                       2004                2003
                                                                   --------------------------------
                                                                        (Dollars in thousands)
Balance, beginning of fiscal year                                  $   4,617           $   4,988

Charge-offs:
     Commercial                                                            0                   0
     Agricultural production                                               0                   0
     Real Estate:
     Construction                                                          0                   0
     Commercial                                                            0                   0
     Agriculture                                                           0                  42
     Other Mortgages                                                      46                   0
     Consumer (including installmment loans)                               2                   0
                                                                   --------------------------------
       Total Charge-offs                                                  48                  42
                                                                   --------------------------------

Recoveries:
     Commercial                                                            0                   1
     Agricultural production                                               0                   0
     Real Estate:
     Construction                                                          0                   0
     Commercial                                                            0                   0
     Agriculture                                                           0                   0
     Other Mortgages                                                       8                   0
     Consumer (including installment loans)                                2                   1
                                                                   --------------------------------
       Total Recoveries                                                   10                   2
                                                                   --------------------------------
Net Charge-offs                                                           38                  40

Provision charged to operations                                           50                  90
                                                                   --------------------------------
Balance, end of period                                             $   4,629           $   5,038
                                                                   ================================

Average amount of loans outstanding before allowance
 for estimated losses on loans                                     $ 392,209           $ 367,724
                                                                   ================================

Ratio of net charge-offs during the period to average
 loans outstanding during the period                                   0.010%              0.011%
                                                                   ================================
11
Non-accrual, Past Due and Renegotiated Loans
March 31,       December 31,
                                                                         2004             2003
                                                                   ----------------------------------
                                                                         (Dollars in thousands)
Non-accrual Loans (a)                                                   $2,500           $2,041
Past Due 90 days + (b)                                                       0                0
Restructured Loans                                                           0                0
The policy of the Company is to place a loan on non-accrual status if:
(a)  payment in full of interest and principal is not expected, or
(b)  principal  or interest  has been in default for a period of 90 days or more
     unless  the  obligation  is both in the  process  of  collection  and  well
     secured. Well secured is defined as collateral with sufficient market value
     to repay  principal and all accrued  interest.  A debt is in the process of
     collection  if  collection  of the debt is  proceeding in due course either
     through legal action,  including  judgment  enforcement  procedures,  or in
     appropriate  circumstances,  through collection efforts not involving legal
     action which are reasonably  expected to result in repayment of the debt or
     in its restoration to current status.

The non-accrual loans consisted  primarily of $314,000 of commercial real estate
loans,   $1.8  million  of  residential   real  estate  loans  and  $159,000  of
agricultural  real estate.  On March 31, 2004, the ratio of non-accrual loans to
the allowance for loan losses was 54.0%  compared to 44.2% on December 31, 2003.
The increase  during the quarter was due primarily to an increase in non-accrual
residential  real estate  loans,  in which the Company  believes it has adequate
collateral  and  anticipates  minimal  losses.  The  Company  believes it has an
adequate allowance for any anticipated losses for these loans.

As of March 31, 2004,  the Company had loans totaling $25.5 million (in addition
to those listed as non-accrual,  past due or restructured)  that were identified
by the Bank's internal asset rating systems as classified assets and loans which
management has determined  require  additional  monitoring.  This  represents an
increase  of $7.1  million or 38.6% from  December  31,  2003.  The  increase is
primarily the result of continued monitoring of the loan portfolio and the early
identification  of loans the Company  believes  should be monitored more closely
than non-classified loans. A portion of the increase, $1.2 million, represents a
change in the way the Company treats the guaranteed portion of a loan. Beginning
with the first quarter of 2004, the Company included the guaranteed portion of a
classified  loan in the  classified  loan  total.  The  Company  believes it has
adequate reserves for anticipated  losses that could result from the increase in
classified  assets.  Management is not aware of any significant  loans, group of
loans  or  segments  of the  loan  portfolio  not  included  above,  where  full
collectibility cannot reasonably be expected. Management has committed resources
and is focusing on efforts designed to control the amount of classified  assets.
The Company does not have a substantial portion of its loans concentrated in one
or a few industries  nor does it have any foreign loans  outstanding as of March
31, 2004. The Company's loans are concentrated  geographically  in the Wisconsin
counties of Racine, Walworth, Kenosha, Lafayette and Green.

Investments securities - Available for Sale

The fair value of the securities available-for-sale portfolio at March 31, 2004,
decreased  $5.1 million or 6.2% from December 31, 2003. For the purposes of this
discussion,  changes in  investment  security  balances  are based on  amortized
costs.  The  decrease  came  from  three  areas of the  portfolio.  The  Company
purchased $32.0 million of U.S.  Government Agency and $2.3 million of municipal
securities.  The Company sold $4.6 million of U.S.  Government  Agency Notes and
$1.7 million of municipal  securities.  There were maturities and calls of $32.3
million  of  U.S.   Government   Agency   Notes  and  U.S.   Government   Agency
mortgage-backed securities and $1.2 million of municipal securities.

                                       12
Deposits

Total  deposits were $393.2 million on March 31, 2004 compared to $407.5 million
on December 31, 2003.  This is a decrease of $14.3 million or 3.6%.  Most of the
decrease  was  in  demand  deposits  and  is  primarily  a  result  of  seasonal
fluctuations in municipal deposits.
March 31,        December 31,             Change in
                                                              2004              2003                   Balance
                                                        -----------------------------------         -------------
                                                               (Amount in millions)
Money Market and Savings                                  $    146.3        $    149.2                $   (2.9)
NOW Accounts                                                    44.9              45.2                    (0.3)
Demand  Deposits                                                58.0              68.0                   (10.0)
Time Deposits less than $100,000                                86.3              87.1                    (0.8)
Time Deposits equal or greater than $100,000                    57.7              57.9                    (0.2)
Borrowed Funds

Total borrowed  funds were $102.3  million on March 31, 2004,  compared to $78.8
million on December 31, 2003. This is an increase of $23.5 million or 29.8%. The
Company  increased  its  borrowings  because  demand for loans has been  growing
faster than deposits.  The following table summarizes changes during 2004 in the
major classifications of borrowed funds.
March 31,        December 31,             Change in
                                                              2004              2003                   Balance
                                                        -----------------------------------         -------------
                                                               (Amounts in millions)
Securities sold under agreement to repurchase             $     27.1        $     27.4               $    (0.3)
Federal Home Loan Borrowings                                    44.2              44.2                      -
Federal Funds Borrowed                                          30.5               6.7                    23.8
Further  information  regarding  our FHLB  borrowings as of December 31, 2003 is
included in the Note 9 of our  Consolidated  Financial  Statements in our annual
report on Form 10-K for the year ended December 31, 2003.

Capital resources

As of March 31, 2004, the Company's  stockholders' equity increased $1.5 million
or 2.7% from  December  31,  2003.  Net income of $1.5  million  was the primary
reason for the  increase.  In addition,  other  comprehensive  income  increased
$167,000  from $1.3 million to $1.5  million.  These  increases  were  partially
offset by net  repurchases  of stock;  the Company  purchased  $293,000 and sold
$69,000 of treasury stock during the first three months of 2004.

Under the Federal Reserve  Board's  risk-based  guidelines,  capital is measured
against the Company's subsidiary bank's risk-weighted assets. The Company's tier
1 capital (common  stockholders'  equity less goodwill) to risk-weighted  assets
was 12.1% at March 31, 2004, well above the 4% minimum  required.  Total capital
to risk-adjusted  assets was 13.2%; also well above the 8% minimum  requirement.
The leverage ratio was at 9.6% compared to the 4% minimum requirement. According
to FDIC capital guidelines, the Bank is considered to be "well capitalized."

Asset/liability management

The principal  function of  asset/liability  management is to manage the balance
sheet mix,  maturities,  repricing  characteristics  and pricing  components  to
provide an adequate and stable net interest  margin with an acceptable  level of
risk over time and through interest rate cycles.

Interest-sensitive  assets  and  liabilities  are  those  that  are  subject  to
repricing   within  a  specific   relevant  time  horizon.   The  Bank  measures
interest-sensitive  assets and  liabilities,  and their  relationship  with each
other at terms of immediate, quarterly intervals up to 1 year, and over 1 year.

                                       13
Changes in net interest income,  other than volume related,  arise when interest
rates on assets  reprice in a time frame or interest  rate  environment  that is
different  from the repricing  period for  liabilities.  Changes in net interest
income  also  arise  from  changes  in the mix of  interest  earning  assets and
interest-bearing liabilities.

The Bank's  strategy with respect to  asset/liability  management is to maximize
net  interest  income  while  limiting  its  exposure  to a  potential  downward
movement.  Strategy is implemented by the Bank's management,  which takes action
based upon its analysis of the Bank's  present  positioning,  its desired future
positioning,  economic  forecasts,  and its goals.  It is the  Bank's  desire to
maintain a cumulative GAP of positive or negative 15% of rate  sensitive  assets
at the 1-year  time frame.  The  current  percentage  is a positive  19%,  which
compares to a positive 20% as of December 31,  2003.  Although  these ratios are
outside the Bank's target range,  and the Bank is therefore  somewhat exposed to
declining  rates,  the Company's  management feels the ratios are appropriate at
this time due to management's projection for future interest rates.

Liquidity

Liquidity  measures our ability to meet  maturing  obligations  and its existing
commitments,   to  withstand   fluctuations  in  deposit  levels,  to  fund  its
operations,  and to provide for customers' credit needs. One source of liquidity
is cash and short-term assets, such as interest-bearing  deposits in other banks
and federal funds sold, which totaled $18.0 million at March 31, 2004,  compared
with $23.3  million at December 31,  2003.  The Bank has a variety of sources of
short-term  liquidity  available to it,  including  federal funds purchased from
correspondent  banks,  sales of securities  available for sale,  FHLB  advances,
lines of credit and loan  participations  or sales.  During the first quarter of
2004, the Bank became  increasingly  dependent upon borrowed funds, as its loans
outstanding increased while deposits modestly decreased. While the Bank believes
that these types of borrowings are available on reasonable  terms,  there can be
no  assurance  they will  continue to be. We also  generate  liquidity  from the
regular  principal  payments and prepayments  made on its portfolio of loans and
mortgage-backed securities.  Although changes in interest rates could negatively
impact  liquidity,  the Bank feels it has adequate sources to meet its liquidity
needs.  Any effects  changes in interest rates have on income would have minimal
effect on liquidity.

The cash  position  of the  Bank is  determined  by  activity  in three  primary
classifications: cash flows from operating activities, cash flows from investing
activities,  and cash flows from financing activities.  As a net result of these
activities,  the Bank's cash  decreased  slightly  in the first three  months of
2004.  Net cash  provided by operating  activities  was $1.7  million.  This was
primarily a result of normal increases and decreases in operations offset by net
originating secondary market loans over secondary market loan proceeds. Net cash
used in  investing  activities,  consisting  primarily  of loan  funding and the
purchase of  securities,  was $16.4  million.  Net cash  provided  by  financing
activities,  consisting  primarily  of a $23.5  million  increase  in short term
borrowings offset by the decrease in deposits,  was $9.0 million,  for the three
months ended March 31, 2004.

For the three  months  ending  March 31,  2003,  net cash  provided by operating
activities was $7.5 million. This was primarily a result of net secondary market
loan  proceeds over  originating  secondary  market loans.  Net cash provided by
investing  activities,  consisting primarily of loan funding and the purchase of
securities was $7.4 million. Net cash used in financing  activities,  consisting
primarily of deposit growth and short term borrowings, was $20.3 million.

Impact of Inflation and Changing Prices

The  consolidated  financial  statements  and the  accompanying  notes have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America,  which require the  measurement of financial  position
and operating results in terms of historical dollar amounts without  considering
the  changes  in the  relative  purchasing  power  of  money  over  time  due to
inflation.  The impact of inflation is  reflected in the  increased  cost of our
operations.   Unlike  industrial  companies,   nearly  all  of  our  assets  and
liabilities are monetary in nature.  As a result,  interest rates have a greater
impact on our  performance  than do the effects of general  levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or to the same
extent as the price of goods and services.

                                       14
Forward Looking  Statements- Safe Harbor Statement under the Private  Securities
Litigation Reform Act of 1995

This report contains certain  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.  We intend such  forward-looking
statements  to be  covered by the safe  harbor  provisions  for  forward-looking
statements  contained  in the  Private  Securities  Reform  Act of 1995,  and is
including  this  statement  for  purposes  of  these  safe  harbor   provisions.
Forward-looking statements,  which are based on certain assumptions and describe
Our future plans,  strategies and expectations are generally identifiable by use
of the words "believe," "expect," "intend," "anticipate,"  "estimate," "project"
or similar expressions. First Banking Center's ability to predict results or the
actual effect of future plans or strategies  is  inherently  uncertain.  Factors
which  could  have a  material  adverse  affect  on our  operations  and  future
prospects include,  but are not limited to, changes in: interest rates,  general
economic  conditions,   legislative/regulatory   changes,  monetary  and  fiscal
policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal  Reserve  Board,  the quality or  composition  of the loan or investment
portfolios,  demand for loan products,  deposit flows,  competition,  demand for
financial  services in our market area, our  implementation of new technologies,
Our ability to develop and maintain secure and reliable  electronic  systems and
accounting  principles,  policies and guidelines.  These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.

Results of operations

Net Interest Income

Net interest income is the difference  between interest income and fees on loans
and interest expense,  and is the largest  contributing factor to net income for
the Company. All discussions of rate are on an annualized  tax-equivalent basis,
which accounts for income earned on nontaxable loans and securities that are not
fully subject to federal  taxes.  Net interest  income was $5.1 million and $4.6
million  for  the  three  months  ended  March  31,  2004  and  March  31,  2003
respectively.  Net interest  margin as a percentage  of average  earning  assets
(includes  loans placed on nonaccrual  status) was 3.99% and 3.84% for the three
months ended March 31, 2004 and March 31, 2003.

The major component of interest income and fees on loans is the income generated
by loans. Although average yield declined slightly,  from 5.89% to 5.54% for the
three  months  ending  March 31, 2003 to March 31, 2004  respectively,  interest
income  and fees on  loans  increased  as a result  of  increased  average  loan
balances.

The major  components of interest  expense are interest paid on  Certificates of
Deposit (Time Deposits) and on Money Market  Deposits.  Interest expense on Time
Deposits  decreased due to decreased rates paid on increased  average  balances.
The rates paid decreased  from 2.42% to 1.72%,  for the three months ended March
31,  2003 and 2004  respectively.  Interest  expense  on Money  Market  Deposits
decreased as a result of  decreased  rates on decreased  average  balances.  The
rates paid  decreased  from .78% to .74%,  for the three  months ended March 31,
2004 and 2003 respectively.

                                       15
The  following  table  summarizes  the  changes  and  reasons for the changes in
interest earned and paid during the three months ended March 31, 2004 and 2003.
Three months ended
                                                                                 March 31,
                                                                2004                                2003
                                                   -----------------------------------------------------------------------
                                                              Interest   Average                    Interest    Average
                                                    Average    Earned     Yield         Average      Earned      Yield
                                                    Balance   or Paid    or Cost        Balance     or Paid     or Cost
                                                   -----------------------------------------------------------------------
                                                                            (Dollars in thousands)
Interest Income:
  Interest and fees on loans (a) (b)               $ 416,902    5,777     5.54%          367,724      5,415      5.89%
  Interest and dividends on securities:
    Taxable                                           52,073      469     3.60%           58,858        502      3.41%
    Nontaxable (a)                                    37,064      595     6.42%           36,531        644      7.05%
  Interest on Fed funds sold                           2,419        4     0.66%           13,368         38      1.14%
  Interest on interest-bearing deposits in banks         278        1     1.44%            4,706         14      1.19%
                                                   -----------------------------------------------------------------------
    Total Interest Income                          $ 508,736    6,846     5.38%          481,187      6,613      5.50%
                                                   =======================================================================

Interest Expense
  Interest on deposits                             $ 335,170    1,176     1.40%          316,691      1,462      1.85%
  Interest on short-term borrowings                   46,685      165     1.41%           26,052         72      1.11%
  Interest on other borrowings                        44,250      424     3.83%           45,985        460      4.00%
                                                   -----------------------------------------------------------------------
       Total Interest Expense                      $ 426,105    1,765     1.66%          388,728      1,994      2.05%
                                                   =======================================================================
Net interest margin                                            $5,081     3.99%                      $4,619      3.84%
                                                               ===================                   =====================
(a)  The interest and average yield for  nontaxable  loans and  investments  are
     presented on an annualized  federal taxable equivalent basis assuming a 34%
     tax rate.
(b)  Interest and fees on loans decreased  $514,000 for the Quarter Ending March
     31, 2003 due to a reclassification of gains on the sales of loans.

Provision for loan losses

For the three  months  ending  March 31,  2004,  $50,000  was charged to current
earnings and added to the allowance for loan losses  compared to $90,000  during
the first three months of 2003. Net  charge-offs  decreased  slightly to $38,000
from $40,000 for the period ended March 31, 2004 as compared to the period ended
March 31, 2003;  however,  non-accrual loans  increased  $500,000 and classified
loans increased $7.0 million during the first quarter of 2004. Even though total
loans and non-performing and classified assets increased,  the Bank charged less
to earnings  during the three  months  ending March 31, 2004 versus 2003 because
management believes the Bank's exposure to loss on the increased  non-performing
and  classified  loans is  minimal  and,  in our  judgment,  there  is  adequate
collateral to cover the loan balances.

See "Allowance  for Loan Losses" below for a description of the processes  which
the Company uses in  determining  the amount of the  provision and the allowance
for loan losses.

Non-interest income

Non-interest  income decreased  $37,000 or 2.7% for the three months ended March
31, 2004. The decrease was primarily the result of $288,000,  in decreased gains
from  the  sales  of  loans  offset  with  $123,000  of  gains  from the sale of
securities,  $53,000 of income from other real  estate  owned and an increase of
$31,000 from trust fees.

Non-interest expense

Non-interest expense increased $345,000 or 9.0% for the three months ended March
31, 2004 compared to the three months ended March 31, 2003. Salaries and benefit
costs  accounted for $181,000 for the three months ended March 31, 2004 compared
to the three months  ended March 31, 2003.  The increase in salaries and benefit
costs can be attributed to normal wage increases and increased  health insurance
benefit costs.  Occupancy  expense  increased $46,000 for the three months ended
March  31,  2004  compared  to the three  months  ended  March  31,  2003 due to
increases  in real estate  taxes,  depreciation  and  utilities.  Other  expense
increased  $118,000 for the three  months  ended March 31, 2004  compared to the
three months ended March 31, 2003.

                                       16
Income Taxes

Income tax  expense for the three  months  ending  March 31,  2004 was  $566,000
compared to $490,000 for the three months  ending March 31, 2003.  The effective
tax  increased to 28.1% for the three months  ending March 31, 2004  compared to
26.1% for the three months ending March 31, 2003. The increase is primarily as a
result of an increase in taxable interest income net with a decrease in interest
expense.

Like  many  Wisconsin  financial  institutions,  the  Bank  has a  non-Wisconsin
subsidiary which holds and manages investments assets, the income from which has
not yet been subject to Wisconsin  tax. The Wisconsin  Department of Revenue has
instituted an audit program,  including an audit of the Bank, specifically aimed
at out of  state  bank  subsidiaries  and has  indicated  that  it may  withdraw
favorable rulings previously issued in connection with such  subsidiaries.  As a
result of these developments,  the Department may take the position that some or
all of the income of the out of state subsidiary is taxable in Wisconsin,  which
will likely be challenged by financial  institutions in state. If the Department
is successful in its efforts,  it could result in a substantial  negative impact
on the earnings of the Bank.

Critical Accounting Policies

Allowance for Loan Losses

Management  believes the allowance for loan losses accounting policy is critical
to the portrayal  and  understanding  of our financial  condition and results of
operations.  As such,  selection and  application of this  "critical  accounting
policy" involves judgments, estimates, and uncertainties that are susceptible to
change.  In the event that different  assumptions or conditions were to prevail,
and depending upon the severity of such changes,  the  possibility of materially
different   financial  condition  or  results  or  operations  is  a  reasonable
likelihood.   For  further  detail,   see  the  explanations   under  "Financial
Condition-Loans" above.

Income Taxes

See Note 1 of the notes to our audited consolidated financial statements for the
year ended  December 31, 2003 for our income tax accounting  policy.  Income tax
expense recorded in the consolidated  income statement  involves  interpretation
and application of certain  accounting  pronouncements and federal and state tax
codes, and is, therefore,  considered a critical  accounting  policy. We undergo
examinations by various regulatory taxing authorities. Such agencies may require
that changes in the amount of tax expense or valuation  allowance be  recognized
when  their  interpretations  differ  from those of  management,  based on their
judgments about information available to them at the time of their examinations.
In addition,  as noted above,  the Bank is undergoing a state tax audit relating
to  the  activities  and  holdings  of one of its  subsidiaries;  we  must  make
judgments   as  to  the  expected   effect  of  that  audit.   See  "Results  of
Operations-Income  Taxes" and Note 12 of the notes to our  audited  consolidated
financial  statements  for the year ended  December 31, 2003 for more income tax
information.

                                       17
Item 3.  Quantitative and Qualitative Disclosures about Market Risk

First Banking Center,  like other financial  institutions,  is subject to direct
and  indirect  market risk.  Direct  market risk exists from changes in interest
rates.  First  Banking  Center's  net income is  dependent  on its net  interest
income.  Net interest  income is susceptible to interest rate risk to the degree
that  interest-bearing  liabilities  mature or reprice on a different basis than
interest-earning  assets.  When  interest-bearing  liabilities mature or reprice
more quickly  than  interest-earning  assets in a given  period,  a  significant
increase in market rates of interest could adversely affect net interest income.

Similarly,  when  interest-earning  assets  mature or reprice  more quickly than
interest-bearing liabilities,  falling interest rates could result in a decrease
in net income.

In an attempt to manage its  exposure to changes in interest  rates,  management
monitors  First  Banking  Center's  interest  rate  risk.  The   Asset/Liability
Committee  meets quarterly to review First Banking  Center's  interest rate risk
position  and   profitability,   and  to  make  or  recommend   adjustments  for
consideration  by the Board of  Directors.  Management  also  reviews the Bank's
securities portfolio,  formulates investment strategies, and oversees the timing
and   implementation  of  transactions  to  assure  attainment  of  the  Board's
objectives in the most effective manner.  Notwithstanding First Banking Center's
interest rate risk management  activities,  the potential for changing  interest
rates is an uncertainty that can have an adverse effect on net income.

In adjusting  First Banking  Center's  asset/liability  position,  the Board and
management  attempt to manage First  Banking  Center's  interest rate risk while
maintaining or enhancing net interest margins. At times,  depending on the level
of general  interest rates, the  relationship  between  long-term and short-term
interest  rates,  market  conditions  and  competitive  factors,  the  Board and
management  may decide to increase  First  Banking  Center's  interest rate risk
position  somewhat in order to increase its net interest  margin.  First Banking
Center's  results of operations  and net portfolio  values remain  vulnerable to
increases  in  interest  rates and to  fluctuations  in the  difference  between
long-term and short-term interest rates.

One approach  used to quantify  interest  rate risk is the net  portfolio  value
("NPV") analysis.  In essence,  this analysis  calculates the difference between
the present  value of  liabilities  and the present value of expected cash flows
from assets and off-balance-sheet contracts. The most recent NPV analysis, as of
March  31,  2004,   projects  that  net  portfolio   value  would   decrease  by
approximately  3.49% if  interest  rates  would rise 200 basis  points and would
decrease by  approximately  1.81% if interest  rates would rise 100 basis points
over  the  next  year.  It  projects  an  increase  in net  portfolio  value  of
approximately  3.80% if  interest  rates  would  drop 200  basis  points  and an
increase of  approximately  2.16% if interest rates would drop 100 basis points.
Both simulations are within board-established policy limits. The Company has not
experienced any material  changes to its market risk position since December 31,
2003, as disclosed in the Company's 2003 Form 10K Annual  Report.  First Banking
Center's  policy is to limit the effect of a 200 basis  point rate shock to plus
or minus 20% of  projected  net  interest  income and to minus 20% of the market
value of portfolio equity.

First  Banking  Center does not  currently  engage in trading  activities or use
derivative   instruments  to  control  interest  rate  risk.  Even  though  such
activities may be permitted  with the approval of the Board of Directors,  First
Banking  Center does not intend to engage in such  activities  in the  immediate
future.

Interest rate risk is the most  significant  market risk affecting First Banking
Center.  Other types of market risk, such as foreign currency exchange rate risk
and  commodity  price risk,  do not arise in the normal  course of First Banking
Center's business activities.

                                       18
Item 4.  Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that
the information the Company must disclose in its filings with the Securities and
Exchange Commission is recorded, processed,  summarized and reported on a timely
basis. The Company's principal executive officer and principal financial officer
have reviewed and evaluated the Company's  disclosure controls and procedures as
defined in Rules  13a-15(e) and 15d-15(e)  under the securities and Exchange Act
of 1934, as amended (the "Exchange  Act") as of the end of the period covered by
this report (the "Evaluation  Date").  Based on such  evaluation,  such officers
have  concluded  that,  as of the  Evaluation  Date,  the  Company's  disclosure
controls  and  procedures  are  effective in bringing to their  attention,  on a
timely  basis,  material  information  relating  to the  Company  required to be
included in the Company's periodic filings under the Exchange Act.

There have not been any changes in the Company's internal control over financial
reporting  (as defined in  Exchange  Act Rules  13a-15(f)  and  15d-15(f))  that
occurred  during the Company's most recent fiscal  quarter that have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

                                       19
Part II-OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 2.  Changes in  Securities, Use of Proceeds and Issuer  Purchases of Equity
         Securities.

(e)  The following table sets forth  information on the Company's  repurchase of
     shares of its common stock during the quarter ended March 31, 2004:

Issuer Purchases of Equity Securities
(a) Total   (b) Average    (c) Total Number of      (d) Maximum Number
                 Number of    Price Paid     Shares (or Units)        (or Approximate
    Period       Shares (or   per Share     Purchased as Part of      Dollar Value) of
                   Units)     (or Unit)      Publicly Announced       Shares (or Units)
                 Purchased                   Plans or Programs        that May Yet Be
                                                                     Purchased Under the
                                                                      Plans or Programs
--------------------------------------------------------------------------------------------
Month #1
  January 1 -        600        46.92                 -                       -
  January 31,
     2004

   Month #2
 February 1 -        350        47.48                 -                       -
 February 29,
     2004

   Month #3
   March 1 -       5,272        46.99                 -                       -
   March 31,
     2004
--------------------------------------------------------------------------------------------
     Total         6,222        47.01                 *                       *
--------------------------------------------------------------------------------------------
* There  is no  active  trading  market  for the  Company's  common  stock.  All
repurchases  were therefore made in private  transactions.  Although the Company
does not have a formal  repurchase  program,  it regularly  repurchases  shares,
particularly in situations in which it is approached by shareholders  seeking to
sell shares;  it has disclosed the fact that it will from time to time make such
purchases.
Item 3.  Defaults upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

                                       20
Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

         31.1   Certification  of the  Chief Executive  Officer pursuant to Rule
                13a-14(a)/15(d)-14(a) as adopted pursuant to Section 302 of  the
                Sarbanes-Oxley  Act of 2002  (exhibit is being  filed herewith).

         31.2   Certification  of the Chief  Financial  Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)  as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act  of 2002  (exhibit is being  filed herewith).

         32.1   Certification  of  the  Chief  Executive  Officer pursuant to 18
                U.S.C.  Section  1350 as adopted  pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002  (exhibit is being  filed  herewith).

         32.2   Certification  of the  Chief  Executive  Officer  pursuant to 18
                U.S.C.  Section 1350 as adopted  pursuant to Section  906 of the
                Sarbanes-Oxley  Act of 2002 (exhibit is being  filed  herewith).

         (b)  Reports on Form 8-K

              None

                                       21
FIRST BANKING CENTER, INC AND SUBSIDIARIES

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1943,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                            First Banking Center, Inc.

May 17, 2004                                /s/ Brantly Chappell
Date                                        -----------------------
                                            Brantly Chappell
                                            Chief Executive Officer

May 17, 2004                                /s/ James Schuster
Date                                        -----------------------
                                            James Schuster
                                            Chief Financial Officer

                                       22