U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB


    [X]  Quarterly Report under Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the Quarterly Period ended March 31, 2002.

    [ ]  Transition report under Section 13 or 15(d) of the Securities
         Exchange Act For the transition period from ________ to _______ .

         Commission file number 0-28360.


                            IBW FINANCIAL CORPORATION
                 ----------------------------------------------
                 (Name of Small Business Issuer in its Charter)




<TABLE>
<CAPTION>

<S>                                                                     <C>
                    District of Columbia                                           52-1943477
                    --------------------                                           ----------
(State or other jurisdiction of incorporation or organization)          (IRS Employer Identification No.)


</TABLE>


                  4812 Georgia Avenue, NW, Washington, DC 20011
                  ---------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                  (202)722-2000
                                  -------------
                (Issuer's Telephone Number, Including Area Code)

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<CAPTION>

<S>                                    <C>
                                       N/A
                                       ---
(Former Name, Former Address, and Former Fiscal Year, If Changed Since Last Report)

</TABLE>

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file reports), and (2) has
been subject to such filing s requirements for the past 90 days. X Yes    No
                                                                ---    ---

     State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: As of April 30, 2002, there
were 668,360 shares of the common stock $1.00 par value of IBW Financial
Corporation outstanding.

     Transitional Small Business Disclosure Format (check one)     Yes X  No
                                                               ---    ---


<PAGE>


PART  I   FINANCIAL INFORMATION
          ---------------------

ITEM 1.   FINANCIAL STATEMENTS

                    IBW FINANCIAL CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2002 AND DECEMBER 31, 2001
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                                     March 31, 2002    December 31, 2001
                                                                     -----------------------------------
                                                                             (dollars in thousands)

<S>                                                                     <C>                  <C>
ASSETS
     Cash and cash equivalents:
     Cash and due from banks                                            $ 12,962             $ 11,059
     Federal funds sold                                                   19,700               14,100
                                                                        -----------------------------

         Total cash and cash equivalents                                  32,662               25,159

     Interest-bearing deposits in other banks                              2,257                  882
     Investment securities available-for-sale, at fair value             129,107              127,365
     Loans receivable, net of allowance
         for loan losses of $3,348 and $3,283                            131,569              135,514
     Bank premises and equipment, net                                      2,430                2,374
     Accrued interest receivable                                           1,973                1,928
     Other assets                                                          2,302                2,200
                                                                        -----------------------------
         TOTAL ASSETS                                                    302,300              295,422
                                                                        =============================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
     Noninterest-bearing deposits                                       $ 68,465             $ 63,869
     Interest-bearing deposits                                           155,372              153,121
                                                                        -----------------------------
         Total deposits                                                 $223,837             $216,990
     Short term borrowings                                                43,851               43,483
     Long term borrowings                                                 10,000               10,000
     Accrued expenses and other liabilities                                1,525                1,798
                                                                        -----------------------------
         Total liabilities                                               279,213              272,271
                                                                        -----------------------------
SHAREHOLDERS' EQUITY
     Preferred stock - $1 par value; 1,000,000 authorized
         (500,000 voting and 500,000 nonvoting);
         20,000 series A nonvoting issued and outstanding,
         stated at liquidation value                                         500                  500
     Common stock - $1 par value; 1,000,000 authorized;
         668,360 shares issued and outstanding                               668                  668
     Capital surplus                                                       5,051                5,051
     Retained earnings                                                    15,329               14,756
     Accumulated other comprehensive income                                1,539                2,176
                                                                        -----------------------------
         Total shareholders' equity                                       23,087               23,151
                                                                        -----------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                              $302,300             $295,422
                                                                        =============================


</TABLE>


                                      -2-

<PAGE>



                    IBW FINANCIAL CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
               THREE MONTHS ENDED MARCH 31, 2002 AND MARCH 31,2001
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                             Three Months Ended March 31
                                                                            -----------------------------
                                                                              2002                  2001
                                                                            -----------------------------
                                                                               (dollars in thousands)
<S>                                                                         <C>                  <C>
INTEREST INCOME:
     Interest and fees on loans                                             $  2,773             $  2,962
     U.S. treasury securities                                                      4                   16
     Obligations of U.S. government agencies and corporations                    578                  545
     Collateralized mortgage obligations                                         922                1,130
     Obligations of states and political subdivisions                            324                  294
     Bank balances and other securities                                           25                   31
     Federal funds sold                                                           85                  133
                                                                            -----------------------------
         Total interest income                                                 4,711                5,111
                                                                            -----------------------------
INTEREST EXPENSE:
     Interest-bearing deposits                                                   640                  819
     Time certificates over $100,000                                             197                  181
     Short-term borrowings                                                       153                  554
     Long-term borrowings                                                        123                   --
                                                                            -----------------------------
         Total interest expense                                                1,113                1,554
                                                                            -----------------------------
NET INTEREST INCOME                                                            3,598                3,557
PROVISION FOR LOAN LOSSES                                                         --                   --
                                                                            -----------------------------
NET INTEREST INCOME AFTER PROVISION
     FOR LOAN LOSSES                                                           3,598                3,557
                                                                            -----------------------------
NONINTEREST INCOME
     Service charges on deposit accounts                                         747                  722
     Other fee income                                                            223                  212
     Gain on sales of investment securities                                       85                  280
     Other operating income                                                       54                   46
                                                                            -----------------------------
         Total noninterest income                                              1,109                1,260
                                                                            -----------------------------
NONINTEREST EXPENSE
     Salaries and employee benefits                                            2,201                2,078
     Occupancy                                                                   214                  176
     Furniture and equipment                                                     297                  284
     Data processing                                                             233                  216
     Stationary and Supplies                                                     176                  157
     Advertising                                                                  90                   89
     Other expenses                                                              749                  558
                                                                            -----------------------------
         Total noninterest expense                                             3,960                3,558
                                                                            -----------------------------

INCOME BEFORE INCOME TAXES                                                       747                1,259

PROVISION FOR INCOME TAXES                                                       168                  388
                                                                            -----------------------------

NET INCOME                                                                  $    579             $    871
                                                                            =============================

EARNINGS PER COMMON SHARE - Basic and diluted                               $   0.86             $   1.29
                                                                            =============================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                   668,360              668,360
                                                                            =============================

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                                      -3-
<PAGE>



IBW FINANCIAL CORPORATION AND SUBSIDIARY
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(dollars in thousands, Except per share data)
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                  ACCUMULATED          TOTAL
                                                      PREFERRED  COMMON              RETAINED  OTHER COMPREHENSIVE  STOCKHOLDERS
                                                        STOCK    STOCK    SURPLUS    EARNINGS  INCOME, NET OF TAX      EQUITY
<S>                                                     <C>      <C>     <C>         <C>           <C>               <C>
BALANCES, JANUARY 1, 2002                               $ 500    $ 668   $  5,051    $ 14,756      $  2,176          $ 23,151
                                                                                                                     --------
   Net income                                              --                  --         579            --               579
   Other comprehensive income, net of tax:
     unrealized loss on securities available for sale      --                  --          --          (637)             (637)
                                                                                                                     --------
          Total comprehensive income (loss)                --                  --          --            --               (58)

Cash dividends paid:
    Preferred stock $0.31 per share                        --       --         --         (6)            --                (6)
                                                        -----    -----   --------   --------       --------          --------
BALANCES,  MARCH 31, 2002                               $ 500    $ 668   $  5,051   $ 15,329       $  1,539          $ 23,087
                                                        =====    =====   ========   ========       ========          ========

BALANCES, JANUARY 1, 2001 (previously reported)         $ 500    $ 668   $  5,051   $ 13,034       $ (1,762)         $ 17,491
                                                                                                                     --------
Restatement for correction of error                        --       --         --     (2,343)            --            (2,343)

BALANCES, JANUARY 1, 2001 (restated)                    $ 500    $ 668   $  5,051   $ 10,691       $ (1,762)         $ 15,148
                                                                                                                     --------
   Net income                                              --                  --        871             --               871
   Other comprehensive income, net of tax:
     unrealized gain on securities available for sale      --                  --         --          1,092             1,092
                                                                                                                     --------
          Total comprehensive income                       --                  --         --             --             1,963

Cash dividends paid:
    Preferred stock $0.31 per share                        --       --         --         (6)            --                (6)
    Common stock $0.35 per share                           --       --         --       (235)            --              (235)
                                                        -----    -----   --------   --------       --------          --------
BALANCES, MARCH 31, 2001                                $ 500    $ 668   $  5,051   $ 15,400       $  2,239          $ 21,515
                                                        =====    =====   ========   ========       ========          ========
</TABLE>

See notes to consolidated financial statements.


                                      -4-
<PAGE>


                    IBW FINANCIAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              THREE MONTHS ENDED MARCH 31, 2002 AND MARCH 31, 2001
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                        Three Months Ended March 31
                                                                        ---------------------------
                                                                            2002           2001
                                                                          --------       --------
                                                                          (dollars in thousands)
<S>                                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                           $    579       $    871
     Adjustments to reconcile net income to net cash
         provided by operating activities:
      Depreciation                                                             130            101
     Amortization of intangible assets                                          40             40
     Accretion/amortization of premiums                                         49             98
       Gain on sale of investment securities                                   (85)          (280)
       (Increase) Decrease in accrued interest receivable                      (45)            11
       (Decrease) Increase in other assets                                     136         (2,627)
       Decrease (Increase) in accrued expenses and other liabilities          (273)           509
                                                                          --------       --------
            Net cash used (provided) by operating activities
                                                                               531         (1,277)
                                                                          --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from principal payments on securities
        available-for-sale                                                   4,790          4,620
     Proceeds from maturities of investment securities
         available-for-sale                                                  3,494          1,500
     Proceeds from sales of investment securities
         available-for-sale                                                  1,024         16,287
     Purchase of investment securities available-for-sale                  (11,929)       (20,339)
     Net (increase) decrease in interest-bearing deposits in banks          (1,375)           597
     Net decrease (increase) in loans                                        3,945         (3,790)
     Additions to bank premises and equipment, net                            (186)           (10)
                                                                          --------       --------
     Net cash used by  investing activities                                   (237)        (1,135)
                                                                          --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES
     Net increase in deposits                                                6,847          5,682
     Net decrease in short-term borrowings                                     368          5,644
     Dividends paid                                                             (6)          (241)
                                                                          --------       --------
       Net cash provided by financing activities                             7,209         11,085
                                                                          --------       --------
INCREASE IN CASH AND CASH EQUIVALENTS                                        7,503          8,673
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              25,159          8,553
                                                                          --------       --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                  $ 32,662       $ 17,226
                                                                          ========       ========
     Supplemental disclosures of cash flow information
         Income taxes                                                     $    250       $    300
         Interest                                                         $  1,068       $  1,500
NONCASH TRANSACTIONS:
         Transfers of loans to loans held-for-sale                        $     --       $ 13,487
</TABLE>


                                      -5-
<PAGE>


                    IBW FINANCIAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE A  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of IBW Financial
Corporation and Subsidiary (the Company) have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all the information and footnotes required for complete
financial statements. In the opinion of management, all adjustments and
reclassifications consistently, of a normal and recurring nature, considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 2002 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2002. These
unaudited consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes for the year-ended December
31, 2001.

Reclassifications - Certain reclassifications have been made to the prior year's
reported balances to conform to the current year presentation.

NOTE B: NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 141 requires that the purchase method of accounting be used
for all business combinations initiated after June 30, 2001, as well as all
purchase method business combinations completed after June 30, 2001. SFAS No.
141 also specifies criteria that intangible assets acquired in a purchase method
business combination must be recognized and reported apart from goodwill. SFAS
No. 142 requires that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead be tested for impairment at least
annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also
requires that intangible assets with definite useful lives be amortized over
their respective estimated useful lives to their estimated residual values and
reviewed for impairment in accordance with SFAS No. 144. "Accounting for the
Impairment or Disposal of Long-Lived Assets".

The provisions of SFAS Nos. 141 and 142 were adopted by the Company as required
effective July 1, 2001, and January 1, 2002, respectively. The adoption of SFAS
Nos. 141 and 142 had no affect on the financial position or results of
operations of the Company.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", which
supersedes both SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of" and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions", for the disposal of a segment of a business
(as previously defined in that Opinion). SFAS No. 144 retains the fundamental
provisions in SFAS No. 121 for recognizing and measuring impairment losses in
long-lived assets held for use and long-lived assets to be disposed of by sale,
while also resolving significant implementation issues associated with SFAS No.
121. The provisions of SFAS No. 144 are effective for years beginning after
December 15, 2001. The adoption of SFAS No. 144 did not affect the financial
position or results of operations of the Company.

NOTE C: FORMAL AGREEMENT WITH THE OFFICE OF THE COMPTROLLER OF THE CURRENCY
        (OCC)

On August 25, 1998, the Bank, Industrial Bank, N.A., entered into a Formal
Agreement with the OCC. The Agreement requires the Bank to undertake certain
actions within designated time frames from the date the agreement was entered
into, and to operate in compliance with the provisions thereof during its term.
The Agreement does not contain any capital directive or other requirement that
the Bank increase its capital, or maintain

                                      -6-
<PAGE>


a minimum level of capital in excess of generally applicable capital
requirements. See also the section referred to as "Formal Agreement" in the
latter part of Management's Discussion and Analysis.

NOTE D: CORRECTION OF AN ERROR

In December 2001, Management became aware of a possible error in the
reconciliation process for one of the Bank's correspondent bank accounts. In
January 2002, following investigation, Management confirmed the presence of an
error in the reconciliation process as a result of which an inappropriate
reconciling item had been perpetuated for several years. The item in question is
more than three years old. While efforts to determine the origin of the
reconciling item continue, Management concluded that it is not appropriate to
continue to record this item as an asset of the Bank and the Company.
Accordingly, the opening retained earnings balances of the Bank as of January 1,
1999 and of the Company on a consolidated basis have been reduced by $2.343
million.

NOTE E:  OTHER EXPENSES

 OTHER EXPENSES IN THE CONSOLIDATED STATEMENTS OF INCOME INCLUDE THE FOLLOWING:

                           Three Months Ended March 31
                           ---------------------------
                                2002            2001
                                ----            ----
                               (dollars in thousands)

Directors fees                  $ 44            $ 42
Professional fees                132              86
Bank security                     75              68
Other                            498             362
                                ----            ----
TOTAL OTHER EXPENSES            $749            $558
                                ====            ====

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2002 (DOLLARS IN THOUSANDS,
EXCEPT AS OTHERWISE INDICATED AND PER SHARE AMOUNTS)

Forward looking statements. This discussion contains forward looking statements
within the meaning of the Securities Exchange Act of 1934, as amended, including
statements of goals, intentions, and expectations as to future trends, plans,
events or results of Company operations and policies and regarding general
economic conditions. These statements are based upon current and anticipated
economic conditions, nationally and in the Company's market, interest rates and
interest rate policy, competitive factors, government agencies and other third
parties, which by their nature are not susceptible to accurate forecast, and are
subject to significant uncertainty. Because of these uncertainties and the
assumptions on which this discussion and the forward looking statements are
based, actual future operations and results in the future may differ materially
from those indicated herein. Readers are cautioned against placing undue
reliance on any such forward looking statement. The Company does not undertake
to update any forward looking statement to reflect occurrences or events which
may not have been anticipated as of the date of such statements.

Overview

OPERATIONS

IBW Financial Corporation's net income for the first quarter of 2002 totaled
$579, a decrease of $292, or 34% from $871 for March 2001. This was the net
result of an increase in non-interest expenses of $402, a decrease of $151 in
non-interest income, offset by a decrease of $220 in income taxes and an
increase in net interest income of $41. Return on average


                                      -7-
<PAGE>


assets (ROAA) was .76% for the quarter ended March 31, 2002, as compared to
1.26% for the same quarter in 2001, and return on average shareholder's equity
(ROAE) was 9.87% and 17.51% for the same periods.

The decrease in net income was attributed primarily to lower realized security
gains, higher salaries and benefits and higher other expenses. During the first
quarter of 2001, $280 in security gains were realized compared to $85 in 2002, a
difference of $195 or 70%. Salaries and benefits have increased $123 or 5% due
primarily to increased personnel costs associated with the two new Walmart
branches that opened in the second quarter of 2001.

NET INTEREST INCOME

Net interest income (tax equivalent) for the three months ended March 31, 2002
increased $69, or 2% compared to the same period last year. The average balance
of interest-earning assets for the three-month period ending March 31, 2002
increased $23 million or 9% to $282 million compared to $259 million for the
three-month period ended March 31, 2001. While the volume of earnings assets
grew, the yield on average interest-earning assets decreased by 120 basis points
to 6.99% for the three-months ended March 31, 2002 compared to 8.19% for the
same period last year. The volume of interest-bearing liabilities also increased
during the first quarter of 2002, increasing $18 million from December 31, 2001
to $209 million. However, the rate paid on interest-bearing liabilities declined
113 basis points to 2.16% for the three months ended March 31, 2002 from 3.29%
for the same period last year.

Net loans averaged $132 million during the first quarter of 2002 compared to
$127 million of the first quarter of 2001, reflecting an increase of $5 million.
Interest and fees on loans decreased $189 or 6% to $2.8 million for the three
months ended March 31, 2002 compared to $3.0 million for the same period last
year. Additionally, the average yield on net loans decreased 89 basis points to
8.55% for the three months ended March 31, 2002 compared to 9.44% for the same
period last year. The increase in loans largely reflects growth in the
commercial real estate sector, which increased from $61 million at March 31,
2001 to $67 at March 31, 2002.

Taxable securities averaged $105 million during the first quarter of 2002
compared to $103 million for the first quarter of 2001, reflecting an increase
of $2 million. Interest income from taxable securities decreased $218 or 10% to
$1.5 million for the three months ended March 31, 2002 compared to $1.8 million
for the same period last year. While the average balance increased, the average
yield on taxable securities decreased 95 basis points to 5.98% for the three
months ended March 31, 2002 compared to 6.93% for the same period last year.

Non-taxable securities averaged $24 million during the first quarter of 2001
compared to $19 million for the first quarter of 2000, reflecting an increase of
$5 million. Interest income from non-taxable securities increased $84 thousand
or 22% to $461 thousand for the three months ended March 31, 2002 compared to
$377 thousand for the same period last year. The tax equivalent yield on
non-taxable securities decreased to 7.69% for the three months ended March 31,
2002 compared to 8.16% for the same period last year.

Federal funds sold averaged $21 million during the first quarter of 2002
compared to $10 million for the first quarter of 2001, reflecting an increase of
$11 million. Interest income from federal funds sold increased $73 to $133 for
the three months ended March 31, 2002 compared to $60 for the same period last
year. The yield on federal funds sold decreased 376 basis points to 1.65% for
the three months ended March 31, 2002 compared to 5.41% for the same period last
year.

Average interest-bearing liabilities increased $18 million or 9% to $209 million
for the three months ended March 31, 2002 compared to $191 million for the same
period last year. The average cost on interest-bearing liabilities decreased 113
basis points to 2.16% for the three months ended March 31, 2002 compared to
3.29% for the same period last year. The increase in average interest-bearing
liabilities are centered primarily in time deposits increasing by $10 million,
and an increase in long term borrowings of $10 million, offset by a decrease in
short-term borrowings by $5 million. The total cost of interest-bearing
liabilities decreased $441 thousand, centered primarily in short-term borrowings
decreasing $401 to $153 or 73% from $554 a year ago, as the average rate decline
from 4.59% to 1.40%.

The interest rate spread decreased 6 basis points to 4.83% at March 2002 from
4.89% at March 2009, and is primarily attributable to a larger decrease in
yields on earning assets of 120 basis points compared to the decrease in
interest-bearing liabilities of 113 basis points. The decline in average rates
on interest earning assets and liabilities reflects general declines in market
interest rates as a result of Federal Reserve actions in 2001.


                                      -8-
<PAGE>


PROVISION FOR LOAN LOSSES

The Company maintains an allowance for loan losses to absorb losses on existing
loans and commitments that may become uncollectible. No provision for loan
losses was made during the three months ended March 31, 2002 or for the three
month period ended March 31, 2001. Non-performing assets increased to $3.3
million at March 31, 2002 from $3.1 million at year end 2001. Loans with
potential credit problems decreased $308 or 3% to $9.2 million at March 31, 2002
from $9.5 million at year-end 2001. See the "Non-Performing Assets" section for
additional information related to the Company's allowance for loan losses.

NON-INTEREST INCOME

Non-interest income decreased $151, or 12%, to $1,109 for the three months ended
March 31, 2002 compared to $1,260 for March 31, 2001. The decrease is attributed
primarily to lower security gains of $85 for the period ending March 31, 2002
compared to a security gains of $280 for the same period last year, a difference
of $195.

NON-INTEREST EXPENSE

Non-interest expenses increased $402 to $4.0 million for the three months ended
March 31, 2002 compared to $3.6 million for the same period last year. The
composition of the increase consist of an increase $191 in other expenses, an
increase of $123 thousand in salary and employee benefits, an increase of $13
thousand in furniture and equipment, an increase of $17 thousand in data
processing expenses, and an increase of $38 thousand in occupancy expenses. The
increase in non-interest expenses was due largely to the additional expenses
associated with the two Walmart branches that were open during the second
quarter of 2001.

PROVISION FOR INCOME TAXES

The provision for income taxes for the first quarter of 2002 was $168, compared
to $388 a year ago due to lower income before taxes. The effective tax rate was
22% and 31% for the quarters ending March 31, 2002 and 2001 respectively. The
decrease in the effective tax rate is due primarily to higher tax exempt income
relative to other sources of income.

BALANCE SHEET OVERVIEW

Total assets, at $302 million for March 31, 2002 increased $7 million compared
to $295 million at December 31, 2001. The change in the composition of the
balance sheet primarily reflects an increase of $8 million in total cash and
cash equivalents, an increase of $2 million in securities, an increase of $1
million in interest-bearing deposits offset by a decrease $4 million in loans.
Total deposits increased $7 million to $224 million, up from $217 million at
December 31, 2001.

Total stockholders' equity was $23.1 million at March 32, 2002, representing a
decrease of $64 due primarily to the decrease in unrealized gain on
available-for-sale securities of $637 and an increase in retained earnings of
$573. Preferred stock dividends of $6 were declared during the first quarter of
2002. Subsequent to the first quarter of 2002, common stock dividends totaling
$234 were declared during the second quarter of 2002.

The Company recorded a total risk-based capital ratio of 14.54% at March 31,
2002, compared to 14.77% at December 31, 2001; a tier 1 risk-based capital ratio
of 13.28%, compared to 13.51% ; and a capital leverage ratio of 7.02%, compared
to 6.94%. Capital adequacy, as measured by these ratios, was well above
regulatory requirements. Management believes the level of capital at March 31,
2002 is adequate.

LIQUIDITY
---------

Liquidity describes the ability of the Company to meet financial obligations,
including lending commitments and contingencies, that arise during the normal
course of business. Liquidity is primarily needed to meet the borrowing and
deposit withdrawal requirements of the customers of the Company, as well as to
meet current and planned expenditures.

The Company's major source of liquidity ("financing activities" as used in the
Consolidated Statements of Cash Flows) is its deposit base. At March 31, 2002,
total deposits were $223.8million. Core deposits, considered to be stable
funding


                                      -9-
<PAGE>


sources and defined as all deposits except certificates of deposit of $100,000
or more, totaled $199 million or 88.9% of total deposits. Liquidity is also
provided through the Company's overnight investment in federal funds sold, as
well as securities available-for-sale and investment securities with maturities
less than one year. At March 31, 2002, federal funds sold totaled $19.7 million
or 6.5% of total assets, investments available-for-sale totaled $129.1million or
42.7% of total assets and the fair value of investment securities due in one
year or less (excluding mortgage-backed securities) was $19.4 million or 6.4% of
total assets.

In addition, the Bank has external sources of funds which can be used as needed.
The Federal Home Loan Bank of Atlanta ("FHLB") is the primary source of this
external liquidity. The FHLB has established credit availability for the Bank at
8% of the Bank's total assets. Total assets are based on the most recent
quarterly financial information submitted by the Bank to the appropriate
regulatory agency. The ability to borrow funds is subject to the Bank's
continued creditworthiness, compliance with the terms and conditions of the
Advance Application and the pledging of sufficient eligible collateral to secure
advances. At March 31, 2002 the Company had a $25 million credit limit with the
FHLB with advances outstanding of $10 million. The Company had collateral on
deposit sufficient to borrow up to $25 million limit.

The carrying value of the Company's securities portfolio was $129 million, as of
March 31, 2002 an increase of $2 million from December 31, 2001. This
composition reflected a change as U. S. Government Agency securities increased
approximately $4 million to $44 million while mortgage-backed securities
decreased $5 million to $56 million, and an increase in non-taxable securities
of $2 million to $26 million. These changes were also impacted by the decline in
the unrealized available for sale gain of $1 million. The mortgage-backed
securities portfolio had a weighted-average remaining maturity of 2.5 years at
March 31, 2002, changing from 3.34 years at December 31, 2001. The collateral
underlying all the mortgage-backed securities is guaranteed by one of the
"Quasi-Governmental" agencies, and therefore maintains a risk weight of 20% for
risk-based capital purposes. Management's analysis of mortgage-related
securities includes, but is not limited to, the average lives, seasonality,
coupon and historic behavior (including prepayment history) of each particular
security over its life, as affected by various interest rate environments. There
are no issuers of securities other than governmental securities, whose
securities held by the Company, have a book value in excess of 10% of
shareholders' equity.

The allowance for loan losses was $3.3 million at each of March 31, 2002 and
December 31, 2001, or 2.5% of total loans at March 31, 2002, compared to 2.4% at
December 31, 2001. No provision for loan losses was made for either first
quarters of 2002 and 2001. Non-performing assets increased $193 or 6% to $3,300
from $3,107 at year-end 2001. Loans with potential credit problems (excluding
non-performing assets) decreased to $9,168 at March 31, 2002 from $9,476 at
year-end 2001, representing a decrease of $308 or 3%. At March 31, 2002 and
year-end 2001, non-performing assets represented 1.09% and 1.05% respectively of
total assets.


                                      -10-
<PAGE>


              AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS (1)
<TABLE>
<CAPTION>
                                          Three Months Ended              Three Months Ended                Year Ended
                                            March 31, 2002                  March 31, 2001              December 31,  2001
                                   --------------------------------------------------------------------------------------------
                                                                                          Amount                       Amount
                                   Average   Average   Amount Paid   Average    Average   Paid or   Average   Average  Paid or
                                   Balance     Rate     or Earned    Balance      Rate    Earned    Balance     Rate   Earned
                                   --------------------------------------------------------------------------------------------
                                                                             (dollars in thousands)
<S>                                <C>         <C>         <C>       <C>          <C>     <C>       <C>         <C>     <C>
ASSETS
Loans, net                         $131,563    8.55%       $2,773    $127,200     9.44%   $2,962    $115,689    9.23%   $10,676
Taxable securities                  104,512    5.98%        1,540     102,853     6.93%    1,758     112,330    6.58%     7,387
Non-taxable securities(2)            24,322    7.69%          461      18,739     8.16%      377      19,359    7.58%      1467
Federal funds sold                   20,871    1.65%           85       9,964     5.41%      133       2,744    6.05%       166
Interest-bearing deposits held
  with other banks                    1,164    2.79%            8         759     4.81%        9         984    5.49%        54
                                   --------                ------    --------             ------    --------            -------
Total interest-earning assets      $282,432    6.99%       $4,867     259,515     8.19%   $5,239     251,106    7.87%   $19,750
Cash and due from banks              12,431                            10,907                         12,919
Bank premises and
  equipment, net                      2,469                             2,046                          2,254
Other assets                          4,127                             3,531                          5,297
                                   --------                          --------                       --------
Total assets                       $301,459                          $275,999                       $271,576
                                   ========                          ========                       ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing demand deposits   $ 33,871    0.69%          $58    $ 33,831     0.91%   $   76    $ 27,233    0.55%   $   151
Savings deposits                     62,978    1.87%          290      60,163     2.25%      334      60,802    2.26%     1,377
Time deposits                        58,036    3.42%          489      48,349     4.95%      590      58,852    4.07%     2,396
                                   --------                ------    --------             ------    --------            -------
Total interest-bearing deposits     154,885    2.19%          837     142,343     2.85%    1,000     146,887    2.67%     3,924
Short-term borrowings                44,219    1.40%          153      48,964     4.59%      554      42,336    5.41%     2,292
Long-term borrowings                 10,000    4.99%          123          --                --           --
                                   --------                ------    --------             ------    --------            -------
Total interest-bearing liabilities  209,104    2.16%       $1,113     191,307     3.29%   $1,554     189,223    3.29%   $ 6,216
Noninterest-bearing liabilities      66,920                            63,574                         62,006
Other liabilities                     1,970                             1,219                          1,807
Total liabilities                   277,994                           256,100                        253,036
                                   --------                          --------                       --------
Shareholders' equity                 23,465                            19,899                         18,540
                                   --------                          --------                       --------
Total liabilities and
  shareholders' equity             $301,459                          $275,999                       $271,576
                                   ========                          ========                       ========
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING ASSETS

Net interest income                                        $3,754                         $3,685                        $13,534
                                                           ======                         ======                        =======
Interest rate spread                           4.83%                              4.89%                         4.58%
Net yield on average interest-
  earning assets                               5.39%                              5.76%                         5.39%
Average interest-earning assets
  to average interest-bearing
  liabilities                                135.07%                            135.65%                       132.70%
</TABLE>
----------
(1) Yields on securities available for sale have been computed based upon the
    historical cost of such securities and do not give effect to changes in the
    fair value of those securities, which are reflected as a component of
    stockholder's equity. Nonaccruing loans are included in average balances.
(2) Yields on non-taxable securities are presented on a tax-equivalent basis
    using a 34% tax rate. Interest income and net interest income reported in
    the Company's consolidated statements of income were $4,711, and $3,598 for
    March 31, 2002, $5,111 and $3,557 for March 31, 2001 and $19,606 and $14,065
    for 2001.


                                      -11-
<PAGE>


                        LOAN LOSS AND RECOVERY EXPERIENCE
<TABLE>
<CAPTION>
                                                    ----------------------------------------
                                                    Three Months Ended         Year Ended
                                                      March 31, 2002       December 31, 2001
                                                    ----------------------------------------
                                                             (dollars in thousands)
<S>                                                     <C>                    <C>
Total outstanding loans at end of period                $ 135,466              $ 139,424
Average amount of net loans outstanding                   131,563                128,631
Allowance for loan losses
  at beginning of period                                    3,283                  3,580
Loans charged off:
  Commercial                                                    7                    349
  Real estate mortgage                                         --                    168
  Installment loans to individuals                            108                    340
                                                        ---------              ---------
Total charge-offs                                             115                    857
                                                        ---------              ---------
Recoveries of loans previously charged-off:
  Commercial                                                   72                    157
  Real estate mortgage                                         93                    239
  Installment loans to individuals                             15                    164
                                                        ---------              ---------
 Total recoveries                                             180                    560
                                                        ---------              ---------
Net (recoveries) charge-offs                                  (65)                   297
Additions to allowance charged to
  operations                                                   --                     --

Allowance for loan losses at end of period                  3,348                  3,283
Ratio of net charge-offs during period
  to average outstanding loans during period                (0.05)%                 0.23%
Ratio of allowance for possible loan
  losses at period to total loans                            2.47%                  2.35%
</TABLE>

The following table sets for the allocation of the allowance for loan losses as
of the dates indicated. The allocation of the allowance to each category is not
necessarily indicative of future losses and does not restrict the use of the
allowance to absorb losses in any category.

                     ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

                          March 31, 2002 Percent    December 31, 2001 Percent
                                        (dollars in thousands)
Commercial                $2,006          56.28%      $1,919          52.46%
Real estate mortgage         416          38.50%         396          42.13%
Consumer                     255           5.22%         252           5.41%
Unallocated                  671          --             716          --
                          ------         ------       ------         ------
Total                     $3,348         100.00%      $3,283         100.00%
                          ======         ======       ======         ======

The level of the allowance for loan losses is determined by management on the
basis of various assumptions and judgments. These include levels and trends of
past due and non-accrual loans, trends in volume and changes in terms, effects
of policy changes, experience and depth of management, anticipated economic
conditions in the Washington, DC metropolitan area,


                                      -12-
<PAGE>


concentrations of credit, the composition of the loan portfolio, prior loan loss
experience, and the ongoing and periodic reviews of the loan portfolio by the
Company's internal and external loan review function. For impaired loans, the
Company establishes reserves in accordance with SFAS 114 as amended by SFAS 118,
and for non-impaired loans uses an allocation approach which relies on
historical loan loss experience, adjusted to reflect current conditions and
trends.

Although management believes that it uses the best information available to make
such determinations that the allowance for loan losses is adequate as of the
dates shown, future adjustments to the allowance may be necessary, and net
income could be significantly affected, if circumstances and/or economic
conditions differ substantially from the assumptions used in making the initial
determinations. Any downturn in the real estate market or general economic
conditions in the Washington, DC metropolitan area could result in the Company
experiencing increased levels of non-performing assets and charge-offs,
significant provisions for loan losses, and significant reductions in net
income. Additionally, various regulatory agencies periodically review the
Company's allowance for loan losses. Such agencies may require the recognition
of additions to the allowance based on their judgments or information available
to them at the time of their examination. In light of the foregoing, there can
be no assurance that management's determinations as to the future adequacy of
the allowance for loan losses will prove accurate, or that additional provisions
or charge-offs will not be required.

  The following table sets forth information concerning non-performing assets.

                              NON-PERFORMING ASSETS

                                             -----------------------------------
                                             March 31, 2002    December 31, 2001
                                             -----------------------------------
                                                   (dollars in thousands)
Non-accrual loans(1)                             $ 1,962            $ 2,462
Loans past due 90 days or more
  and still accruing                               1,338                645
Foreclosed properties                                 --                 --
                                                 ---------          -------
Total                                            $ 3,300            $ 3,107
                                                 =========          =======
Non-performing assets to gross loans
  and foreclosed properties at period
  end                                               2.44%              2.22%
Non-performing loans to total loans                 2.44%              2.22%
Non-performing assets to total
  assets at period end                              1.09%              1.05%

----------
1.  Loans are placed on non-accrual status when in the opinion of management the
    collection of additional interest is unlikely or a specific loan meets the
    criteria for non-accrual status established by regulatory authorities. No
    interest is taken into income on non-accrual loans unless received in cash.
    A loan remains on non-accrual status until the loan is current to both
    principal and interest and the borrower demonstrates the ability to pay and
    remain current, or the loan becomes well secured and is in the process of
    collection. The gross interest income that would have been recorded in the
    three months ended March 31, 2002 and the year ended December 31, 2001 for
    non-accrual loans had the loans been current in accordance with their
    original terms was $41 and $103, respectively.

At March 31, 2002, there were $9,168 of loans not reflected in the table above,
where known information about possible credit problems of borrowers caused
management to have doubts as to the ability of the borrower to comply with
present loan repayment terms and that may result in disclosure of such loans in
the future. This represents a decrease of $308 or 3% from year-end 2001.
Included in the total are seventeen loans, totaling $7,720, fully collateralized
by real estate, five of which represent $5,670 or 62% of the total. The
remaining $1,448 consists of seven commercial loans, one at $750 or 52% of the
remaining amount, secured primarily by accounts receivable and various business
equipment.

Formal Agreement with the OCC. On August 25, 1998, the Bank entered into a
Formal Agreement (the "Agreement") with the Office of the Comptroller of the
Currency (the "OCC"). The Agreement requires the Bank to undertake certain


                                      -13-
<PAGE>


actions within designated timeframes from the date the agreement was entered
into, and to operate in compliance with the provisions thereof during its term.

Among the actions required by the Agreement are the following: (i) Within thirty
days, the Bank shall employ an independent management consultant to perform a
study of the Bank's management structure and staffing requirements, including a
report identifying staffing requirements, job descriptions and evaluations for
senior officers, and evaluating organizational structure. The Board of Directors
(the "Board") is required to adopt within thirty days of the receipt of the
report, a plan to eliminate any deficiencies in management, staffing, or
supervision of management; (ii) The Board is required to take steps to obtain
current and satisfactory credit information on loans without such information,
and to insure that proper collateral documentation is maintained. Management may
not grant, renew, alter, restructure or extend a loan without proper
documentation and analysis of credit, purpose and anticipated source of
repayment. In absence of such information, such loans my be made only upon
certification of a majority of the Board why obtaining such information would be
detrimental to the best interest of the Bank; (iii) Within thirty days the Board
shall adopt a written program to eliminate the basis of criticism for assets
rated "doubtful", "substandard" or "other assets especially mentioned;" (iv)
Within thirty days the Board shall establish a loan review system to assure
timely identification and categorization of problem credits and implement a
process to insure the loan review function is independent; (v) Within sixty days
the Board shall review and revise the Bank's loan policy based upon the guidance
on Loan Portfolio Management in the Comptroller's Manual for National Bank
Examiners. Within thirty days thereafter, the Board shall develop a process to
ensure accountability for lending personnel; (vi) The Board shall notify the
Assistant Deputy Comptroller before all loan sales; (vii) Within sixty days, the
Board shall develop a written program to improve and strengthen collection
efforts; (viii) Within ninety days the Board shall develop a profit plan to
improve and sustain the Bank's earnings; (ix) Within 120 days, the Board shall
adopt and implement a strategic plan for the Bank covering at least three years,
including objectives for earnings performance, balance sheet mix, off-balance
sheet activities, liability structure, capital adequacy, reduction in the volume
of non-performing assets, product line development and market segments intended
to be developed, together with strategies to achieve those objectives; (x) The
Board shall take all steps necessary to correct any violation of law, rule or
regulation cited in any report of examination.

Compliance with the Agreement is to be monitored by a committee (the
"Committee") of at least three directors, none of whom is an employee of the
Bank or a family member of an employee. The Committee, presently composed of
four directors, is required to submit written progress reports on a monthly
basis. The Agreement requires the Bank to make periodic reports and filings with
the OCC.

The Agreement does not contain any capital directive or other requirement that
the Bank increase its capital, or maintain a minimum level of capital in excess
of generally applicable capital requirements. As of April 30, 2002, the Bank has
submitted to the OCC all of the written plans, policies, and other information
required by the Agreement, and all revisions requested by the OCC, although
certain submissions were made outside of the time limits required by the
Agreement. There can be no assurance that its regulators will deem the Bank to
be compliant under the Agreement, or that they will not require additional
compliance efforts. Failure to comply with the provisions of the Formal
Agreement could subject the Bank and its directors to additional enforcement
actions, including but not limited to a cease and desist order, a safety and
soundness order or civil money penalties.


                                      -14-
<PAGE>


Part II Other Information
        -----------------

Item 1. Legal Proceedings

        None.

Item 2. Changes in Securities
        None

Item 3. Defaults Upon Senior Securities
        None

Item 4. Submission of Matters to a Vote of Security Holders
        None

Item 5. Other Information
        None

Item 6. Exhibits and Reports on Form 8-K

         (a)     Exhibits
                 (11) Statement Regarding Computation of  Per Share Earnings

         (b)     Reports on Form 8-K
                 On February 8, 2002, the Company filed a report on Form 8-K,
                 under item 5, reporting the reduction of the opening retained
                 earnings balance as of January 1, 1999 as a result of an error
                 in the reconciliation process.


                                      -15-
<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                    IBW FINANCIAL CORPORATION


May 14, 2002                        /s/ B. Doyle Mitchell, Jr.
                                    B. Doyle Mitchell, Jr., President


May 14, 2002                        /s/ Thomas A. Wilson, Jr.
                                    Thomas A. Wilson, Jr., Senior Vice President
                                    and Chief Financial and Accounting Officer

                                      -16-