Independence Federal Savings Bank Unaudited Financial Information for the Three Months and Twelve Months Ended December 31, 2003.

Business Editors

WASHINGTON--(BUSINESS WIRE)--April 30, 2004

Independence Federal Savings Bank (Nasdaq:IFSB) reported a net loss of $1,536,000, or $(0.99) per share, for the three months ended December 31, 2003, down from net income of $106,000, or $0.08 per share for the three months ended December 31, 2002. The primary factors contributing to the loss in the quarter ending December 31, 2003, were an increase of $1,191,000 in non-interest expense and a decrease of $386,000 in non-interest income, coupled with a slight increase of $77,000 in net interest income due to the low interest rate environment. The increase in non-interest expense for the quarter ended December 31, 2003, was primarily due to the following factors: (1)the accrual of $406,000 for possible reimbursement for expenses related to the 2003 successful proxy contest waged by Mr. Morton Bender, (2)legal fees of $319,000 with approximately $245,000 of the legal expenses related to lawsuits brought by Mr. Morton Bender, et al; (3)setting up deferred accounts payable for Director Emeritus fees totaling $254,100, (4)$150,000 to set up a deferred tax asset valuation allowance, (5)accrual of $90,000 for outside audit and accounting fees for the 2003 audit, and (6)a payment of $60,000 to the acting President pursuant his contract.

For the quarter ended December 31, 2003, net interest income totaled $1,237,000, up from $1,160,000 for the same quarter in 2002. As a result, the average net interest margin increased to 2.37% for the quarter, up from 1.76% during the same quarter in 2002. The increase in the average net interest margin was also positively affected by a reduction in cost of funds, decreasing from 2.84% during the quarter ended December 31, 2002, to 2.12% during the same quarter in 2003. Borrowings from the Federal Home Loan bank increased $2,500,000 for the quarter.

For the quarter ended December 31, 2003, total interest income amounted to $2,234,000, versus $2,766,000 in the 2002 comparable quarter as the average yield on financial assets declined from 4.60% to 4.48% and the average balance of financial assets fell from $240,772,000 to $203,411,000. Moreover, the yield on the student loan portfolio averaged 2.87%, down from 3.77% in the prior year quarter. For the quarter, student loans comprised 27.3% of total assets. Interest rates on student loans are set by the federal government. The rate that lenders receive on student loans is equal to the higher of the borrower rate, or either the average bond equivalent yield on the 91-day treasury bill auctioned during a calendar quarter plus a spread of 220 basis points or the average rate on 90-day commercial paper for a calendar quarter, plus 174 basis points. The borrower rate resets annually on July 1st to the bond equivalent yield of the 91-day Treasury bill plus 170 basis points. On July 1, 2003, the borrower's rate on student loans reset from 3.46% to 2.82%. (In the current low interest rate environment, it is probable that the Bank will earn interest at the borrower's rate for the foreseeable future.) In the quarter ended December 31, 2003, the Bank sold $8.1 million of student loans at a gain of $149,000, as compared with sales of $19.0 million at a gain of $383,000 in the quarter ended December 31, 2002.

For the quarter ended December 31, 2003, total interest expense declined by $609,000 from the same period one year earlier as the average cost of funds dropped from 2.84% to 2.12% and average financial liabilities declined by $35,030,000 from $225,816,000 to $190,786,000. For the quarter ended December 31, 2003, noninterest income amounted to $676,000, down $386,000 from the prior year quarter, due to a decrease of $234,000 in gains on sales of loans coupled with a decline of $10,000 in income from lockbox operations and reduction of $78,000 in gains on sale of securities. For the quarter ended December 31, 2003, noninterest expense totaled $3,316,000 or 1.63% of average assets versus $2,125,000 or .88% of average assets for the same period in 2002.

Independence Federal Savings Bank reported a net loss of $2,502,000, $(1.61) per share, for the twelve months ended December 31, 2003, as compared to a net loss of $278,000, $(0.20) per share, for the same period the prior year. The primary factors contributing to the year end 2003 loss were an increase of $2,467,000 in non-interest expense, a decrease of $1,093,000 in non-interest income, and a decline of $669,000 in net interest income due to the low interest rate environment.

For the twelve month period ending December 31, 2003, non-interest income amounted to $2,855,000, down $1,093,000 from the prior year period, because of the decline in income from lockbox operations, lower net gains on student loans and lower net realized gains on trading securities. For year end 2003, non-interest expense amounted to $10,715,000, up $2,467,000 from $8,248,000 for the same period in 2002. The increase can be attributed to the following factors: termination of the pension plan ($600,000); severance package for the former President/CEO ($265,000), legal fees ($846,000); accrual for the possible reimbursement of Mr. Bender's successful 2003 proxy contest ($406,000); deferred fees for Directors Emeriti ($254,100); outside audit and accountings fees($90,000); and a deferred tax asset valuation allowance ($150,000). For the year end 2003, non-interest expense amounted to 4.82% of average assets, up from 3.35% for the same period the prior year.

For the twelve month period ended December 31, 2003, net interest income totaled $4,737,000, down from $5,406,000 in the prior year period. Although average assets contracted and their yields declined for the period, the net interest margin increased from 1.98% to 2.00%. For the twelve month period ended December 31, 2003, total interest income amounted to $9,797,000, versus $12,859,000 in the same period in 2002 as the average yield on financial assets declined from 5.19% to 4.43% and the average balance of financial assets fell from $246,222,000 to $222,424,000. Furthermore, total interest expense for year end 2003 declined by $2,393,000 from the period one year earlier as a result of a reduction in the average cost of funds from 3.20% to 2.43% as well as average financial liabilities declined by $23,464,000 from $232,075,000 to $208,611,000.

The legal fees comprising $281,000 of the $846,000 noted above are related to litigation concerning the Washington Teachers Union matter discussed in the Bank's Annual Report on Form 10-KSB for the year ended December 31, 2002. The Bank believes that a significant amount of the fees will be recovered under the Bank's insurance policies.

The net loss in the twelve month period ending December 31, 2002, included the charge-off of goodwill, in the amount of $1,030,000 and $(0.75) per share. This charge was required by a change in generally accepted accounting principles. A more detailed discussion of the goodwill charge is contained in the Bank's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2002.

As of December 31, 2003, total assets of Independence Federal Savings Bank and its subsidiary amounted to $211,904,000, as compared to $250,986,000 on December 31, 2002. As of December 31, 2003, loans receivable totaled $72,378,000, down from $74,109,000 on December 31, 2002. Savings deposits amounted to $180,992,000, down from $205,155,000 at December 31, 2002. As of December 31, 2003, stockholders' equity totaled $20,367,000, as compared to $23,098,000 at December 31, 2002. The net loss for the twelve month period reduced equity by $2,505,000. A decline in net unrealized gains (net of tax effect) on available-for-sale securities from $262,000 at December 31, 2002 to $32,000 at December 31, 2003, reduced stockholders' equity by $230,000.

Independence Federal, with offices in Washington, DC at 1229 Connecticut Avenue, NW; 1020 Nineteenth Street, NW; 1006 E Street, NW; and, in Chevy Chase, MD at 5530 Wisconsin Avenue; and in Silver Spring, MD at 7901 Eastern Avenue, is listed on the NASDAQ as IFSB.

Independence Federal Savings Bank
Selected Financial Data
(In thousands, except per share data)

                                  (unaudited)         (unaudited)
                                 Quarter ended       Year to date

Summary of Operations          12/31/03  12/31/02  12/31/03  12/31/02
  Interest income                $2,234    $2,766    $9,797   $12,859
  Interest expense                  997     1,606     5,060     7,453
  Net interest income             1,237     1,160     4,737     5,406
  Provision for loan losses           0         0         0         0
  Non-interest income               676     1,062     2,855     3,948
  Non-interest expense            3,316     2,125    10,715     8,248
  Income before income taxes     (1,403)       97    (3,123)    1,106
  Income tax expense               (133)        9       618      (354)
  Effect of change in
   accounting Principle               0         0         0    (1,030)
  Net income                    $(1,536)     $106   $(2,505)    $(278)
Selected average balances
  Loans                        $140,007  $141,361  $138,175  $151,005
  Investments                   $63,404   $99,411   $84,249   $97,034
  Deposits                     $185,286  $205,116  $195,324  $204,216


                                  (unaudited)         (unaudited)
                                 Quarter ended       Year to date

Common share data              12/31/03  12/31/02  12/31/03  12/31/02
  Outstanding at period end   1,552,448 1,411,365 1,552,448 1,411,365
      Pre FASB 142 basic and
       diluted income (loss):    $(0.99)    $0.08    $(1.61)   $(0.20)
      Post FASB 142 basic and
       diluted income (loss):    $(0.99)    $0.08    ($1.61)   ($0.20)
  Dividends declared                  0         0         0         0
  Book value                     $13.12    $16.37    $13.12    $16.37
  Tangible book value            $13.12    $16.03    $13.12    $16.03
Selected asset quality factors
  Non-accrual loans              $1,637    $1,748    $1,637    $1,748
  Real estate owned               $0.00       $28     $0.00       $28
  Nonperforming assets to
   total Assets                     0.8%      0.7       0.8%      0.7%
Profitability ratios
  Pre FASB 142 return on
   average assets                (0.08)%     0.17%   (1.13)%   (0.11)%
  Post FASB 142 return on
   average assets                (0.08)%     0.17%   (1.13)%   (0.11)%
  Pre FASB 142 return on
   average equity                (7.13)%     1.84%  (11.36)%   (1.20)%
  Post FASB 142 return on
   average equity                (7.13)%     1.84%  (11.36)%   (1.20)%
  Net interest margin              2.37%     1.76%     2.00%     1.98%
  Non-interest expense to
   average Assets                  1.63%      .88%     4.82%     3.35%
Regulatory capital ratios
  Tier 1 risk-based capital
   ratio                           24.8%     26.0%     24.8%     26.0%
  Combined Tier 1 and 2 risk-
   based capital ratio             25.6%     26.5%     25.6%     26.5%
  Leverage ratio                    9.6%      8.9%      9.6%      8.9%


STOCK TRADING PRICE RANGE
QUARTERS ENDED

                          HIGH      LOW
   12/31/03              $23.75    $17.70
    9/30/03              $18.25    $16.52
    6/30/03              $19.80    $12.19
    3/31/03              $16.99    $10.54
   12/31/02              $11.90    $10.50
    9/30/02              $12.25    $11.05
    6/30/02              $13.25    $10.74
    3/31/02              $ 9.91     $8.36

FORWARD-LOOKING STATEMENTS

This earnings release contains forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, rather statements based on Independence Federal Savings Bank's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "it is likely," "expects," "believes," "anticipates," "intends" and similar expressions.

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Bank's actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of the Bank's loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Bank's operations, markets, products, services and prices. For a further list and description of such risks and uncertainties, see the prospectus and reports filed by Independence Federal Savings Bank with the Office of Thrift Supervision.