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, 2003.

           [ ] 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)


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

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

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

                                       N/A
             (Former Name, Former Address, and Former Fiscal Year,
                         If Changed Since Last Report)


         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, 2003, 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
          ---------------------

 FINANCIAL STATEMENTS

                    IBW FINANCIAL CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002

<table>
<caption>


                                                                          March 31, 2003     December 31, 2002
                                                                          -------------------------------------

                                                                           <c>                  <c>
                                                                                 (dollars in thousands)
ASSETS
     Cash and cash equivalents:
     Cash and due from banks                                                  $  9,453             $  8,890
     Federal funds sold                                                             --                5,900
                                                                              -----------------------------

         Total cash and cash equivalents                                         9,453               14,790

     Interest-bearing deposits in other banks                                      879                  887
     Investment securities available-for-sale, at fair value                   143,950              137,235
     Loans receivable, net of allowance
         for loan losses of $3,018 and $3,059                                  139,265              134,859
     Bank premises and equipment, net                                            3,481                3,455
     Accrued interest receivable                                                 2,053                1,909
     Other assets                                                                2,048                2,201
                                                                              -----------------------------
         TOTAL ASSETS                                                         $301,129             $295,336
                                                                              =============================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
     Noninterest-bearing deposits                                             $ 68,750             $ 68,432
     Interest-bearing deposits                                                 173,596              168,754
                                                                              -----------------------------
         Total deposits                                                        242,346              237,186
     Short term borrowings                                                      25,708               25,084
     Long term borrowings                                                        4,000                4,000
     Deferred income taxes                                                       1,409                1,728
     Accrued expenses and other liabilities                                      1,731                1,097
                                                                              -----------------------------
         Total liabilities                                                     275,194              269,095
                                                                              -----------------------------
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
     Additional paid in capital                                                  5,051                5,051
     Retained earnings                                                          16,623               16,310
     Accumulated other comprehensive income                                      3,093                3,712
                                                                              -----------------------------
         Total shareholders' equity                                             25,935               26,241
                                                                              -----------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                    $301,129             $295,336
                                                                              =============================

</table>


                                       2
<page>


                    IBW FINANCIAL CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
              THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002
                                   (UNAUDITED)

<table>
<caption>

                                                                                 Three Months Ended March 31
                                                                                -----------------------------
                                                                                  2003                  2002
                                                                                -----------------------------

                                                                             <c>                  <c>
                                                                                   (dollars in thousands)

INTEREST INCOME:
       Interest and fees on loans                                               $  2,687             $  2,773
       U.S. treasury securities                                                        3                    4
       Obligations of U.S. government agencies and corporations                      590                  578
       Collateralized mortgage obligations                                           697                  922
       Obligations of states and political subdivisions                              408                  324
       Bank balances and other securities                                             19                   25
       Federal funds sold                                                             19                   85
                                                                                -----------------------------
         Total interest income                                                     4,423                4,711
                                                                                -----------------------------
INTEREST EXPENSE:
     Interest-bearing deposits                                                       553                  640
     Time certificates over $100,000                                                 149                  197
     Short-term borrowings                                                            67                  153
     Long-term borrowings                                                             44                  123
                                                                                -----------------------------
         Total interest expense                                                      813                1,113
                                                                                -----------------------------
NET INTEREST INCOME                                                                3,610                3,598
PROVISION FOR LOAN LOSSES                                                             --                   --
                                                                                -----------------------------
NET INTEREST INCOME AFTER PROVISION
       FOR LOAN LOSSES                                                             3,610                3,598
                                                                                -----------------------------
NONINTEREST INCOME
       Service charges on deposit accounts                                           742                  747
       Other fee income                                                              256                  223
       Gain on sales of investment securities                                        235                   85
       Other operating income                                                         52                   54
                                                                                -----------------------------
         Total noninterest income                                                  1,285                1,109
                                                                                -----------------------------
NONINTEREST EXPENSE
       Salaries and employee benefits                                              2,453                2,201
       Occupancy                                                                     242                  214
       Furniture and equipment                                                       346                  297
       Data processing                                                               197                  233
       Stationary and Supplies                                                       242                  176
       Advertising                                                                    51                   90
       Other expenses                                                                673                  749
                                                                                -----------------------------
         Total noninterest expense                                                 4,204                3,960
                                                                                -----------------------------
INCOME BEFORE INCOME TAXES                                                           691                  747

PROVISION FOR INCOME TAXES                                                           105                  168
                                                                                -----------------------------
NET INCOME                                                                      $    586             $    579
                                                                                =============================

EARNINGS PER COMMON SHARE - Basic and diluted                                   $   0.87             $   0.86
                                                                                =============================

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

</table>


                                       3
<page>


IBW FINANCIAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<table>
<caption>

------------------------------------------------------------------------------------------------------------------------------------
                                                                          ADDITIONAL                 ACCUMULATED           TOTAL
                                                 PREFERRED     COMMON      PAID IN      RETAINED  OTHER COMPREHENSIVE   SHAREHOLDERS
                                                   STOCK       STOCK       CAPITAL      EARNINGS  INCOME, NET OF TAX      EQUITY

                                              <c>          <c>          <c>          <c>          <c>                 <c>

BALANCES, JANUARY 1, 2003                        $    500     $    668     $  5,051     $ 16,310     $  3,712            $ 26,241
                                                                                                                         --------
   Net income                                          --                        --          586           --                 586
   Other comprehensive income, net of tax:
     unrealized loss on securities available
     for sale                                          --                        --           --         (619)               (619)
                                                                                                                         --------

          Total comprehensive (loss)                   --                        --           --           --                 (33)

Cash dividends paid:
    Preferred stock $0.31 per share                    --           --           --           (6)          --                  (6)
    Common stock $0.40 per share                       --           --           --         (267)          --                (267)
                                                 --------     --------     --------     --------     --------            --------
BALANCES,  MARCH 31, 2003                        $    500     $    668     $  5,051     $ 16,623     $  3,093            $ 25,935
                                                 ========     ========     ========     ========     ========            ========

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 (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
                                                 ========     ========     ========     ========     ========            ========
</table>



                                       4

<page>


                    IBW FINANCIAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002
                                   (UNAUDITED)

<table>
<caption>
                                                                       Three Months Ended March 31
                                                                       ---------------------------
                                                                           2003          2002
                                                                         --------      --------
                                                                         (dollars in thousands)

                                                                      <c>           <c>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                          $    586      $    579
     Adjustments to reconcile net income to net cash
         provided by operating activities:
      Depreciation                                                            153           130
     Amortization of intangible assets                                          8            40
     Accretion/amortization of premiums                                       184            49
       Gain on sale of investment securities                                 (235)          (85)
       Increase in accrued interest receivable                               (144)          (45)
       Decrease in other assets
                                                                              153           136
       Increase (Decrease) in accrued expenses and other liabilities          315          (273)
                                                                         --------      --------
            Net cash provided by operating activities                       1,020           531
                                                                         --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from principal payments on securities
        available-for-sale                                                  5,434         4,790
     Proceeds from maturities of investment securities
         available-for-sale                                                10,000         3,494
     Proceeds from sales of investment securities
         available-for-sale                                                 2,409         1,024
     Purchase of investment securities available-for-sale                 (25,134)      (11,929)
     Net (increase) decrease in interest-bearing deposits in banks              8        (1,375)
     Net (increase) decrease in loans                                      (4,406)        3,945
     Additions to bank premises and equipment, net                           (179)         (186)
                                                                         --------      --------
     Net cash used by  investing activities                               (11,868)         (237)
                                                                         --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES
     Net increase in deposits                                               5,160         6,847
     Net increase in short-term borrowings                                    624           368
     Dividends paid                                                          (273)           (6)
                                                                         --------      --------
       Net cash provided by financing activities                            5,511         7,209
                                                                         --------      --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                           (5,337)        7,503
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             14,790        25,159
                                                                         --------      --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $  9,453      $ 32,662
                                                                         ========      ========
     Supplemental disclosures of cash flow information
         Income taxes                                                    $     --      $    250
         Interest                                                        $    775      $  1,068
</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 of America 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 consisting 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, 2003 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2003. These
unaudited consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes for the year-ended December
31, 2002 included on Form 10-KSB.

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

Note B: 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, which was terminated and replaced by a new Formal
Agreement on April 21, 2003. The new Agreement requires the Bank to undertake
certain regulatory compliance related 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 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 C: OTHER EXPENSES

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

                           THREE MONTHS ENDED MARCH 31

                                -----------------------
                                2003               2002
                                -----------------------
                                 (dollars in thousands)
Directors fees                  $ 48               $ 44
Professional fees                118                132
Bank security                     75                 75
Other                            432                498
                                ----               ----
Total                           $673               $749
                                ====               ====


                                       6
<page>


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

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2003 (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 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.

CRITICAL ACCOUNTING POLICIES
----------------------------

The Company's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP). The
financial information contained within our statements is, to a significant
extent, financial information that is based on measures of the financial effects
of transactions and events that have already occurred. A variety of factors
could affect the ultimate value that is obtained either when earning income,
recognizing an expense, recovering an asset or relieving a liability. We use
historical loss factors as one factor in determining the inherent loss that may
be present in our loan portfolio. Actual losses could differ significantly from
the historical factors that we use. In addition, GAAP itself may change from one
previously acceptable method to another method. Although the economics of our
transactions would be the same, the timing of events that would impact our
transactions could change.

The Company considers the allowance for loan losses to be a critical accounting
policy. The allowance for loan losses is an estimate of the losses that may be
sustained in our loan portfolio. The allowance is based on two basic principles
of accounting: (i) SFAS No. 5, "Accounting for Contingencies", which requires
that losses be accrued when they are probable of occurring and estimable and
(ii) SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", which
requires that losses be accrued based on the differences between the value of
collateral, present value of future cash flows or values that are observable in
the secondary market and the loan balance.

Management has significant discretion in making the judgments inherent in the
determination of the provision and allowance for loan losses, including in
connection with the valuation of collateral, a borrower's prospects of
repayment, and in establishing allowance factors on the formula allowance and
unallocated allowance components of the allowance. The establishment of
allowance factors is a continuing exercise, based on management's continuing
assessment of the global factors such as delinquencies, loss history, trends in
volume and terms of loans, effects of changes in lending policy, the experience
and depth of management, national and local economic trends, concentrations of
credit, quality of loan review system and the effect of external factors such as
competition and regulatory requirements, and their impact on the portfolio, and
allowance factors may change from period to period, resulting in an increase or
decrease in the amount of the provision or allowance, based upon the same volume
and classification of loans. Changes in allowance factors will have a direct
impact on the amount of the provision, and a corresponding effect on net income.
Errors in management's perception and assessment of the global factors and their
impact on the portfolio could result in the allowance not being adequate to
cover losses in the portfolio, and may result in additional provisions or
charge-offs.

Overview

OPERATIONS

IBW Financial Corporation's net income for the first quarter of 2003 totaled
$586, an increase of $7, or 1% from $579 for March 2002. This was the net result
of an increase in non-interest income of $176, an increase of $12 in
net-interest income, and a decrease of $63 in income taxes, offset by an
increase of $244 in non-interest expense. Return on average assets (ROAA) was


                                       7
<page>


..78% for the quarter ended March 31, 2003, as compared to .76% for the same
quarter in 2002, and return on average shareholder's equity (ROAE) was 8.77% and
9.87% for the same periods.

The increase in net income was attributed primarily to higher realized security
gains, offset by higher salaries and benefits and higher other expenses. During
the first quarter of 2003, $235 in security gains were realized compared to $85
in 2002, a difference of $150 or 176%. Salaries and benefits have increased $252
or 11% due primarily to several key employee additions, as well as increased
health insurance costs.

NET INTEREST INCOME

Net interest income (tax equivalent) for the three months ended March 31, 2003
increased $66, or 2% compared to the same period last year. The average balance
of interest-earning assets for the three-month period ending March 31, 2003
increased $2 million or 1% to $284 million compared to $282 million for the
three-month period ended March 31, 2002. While the volume of earnings assets
grew, the yield on average interest-earning assets decreased by 37 basis points
to 6.62% for the three-months ended March 31, 2003 compared to 6.99% for the
same period last year. The volume of interest-bearing liabilities also decreased
during the first quarter of 2003, decreasing $6 million from March 31, 2002 to
$203 million. However, the rate paid on interest-bearing liabilities declined 53
basis points to 1.63% for the three months ended March 31, 2003 from 2.16% for
the same period last year. Interest bearing liabilities at March 31, 2003
decreased by $5.4 million from December 31, 2002, while the average rate paid on
interest bearing during the first quarter of 2003 declined by 36 basis points
from the average rate in 2002.

Net loans averaged $136 million during the first quarter of 2003 compared to
$132 million for the first quarter of 2002, and for the year ended December 31,
2002, reflecting an increase of $4 million. Interest and fees on loans decreased
$86 or 3% to $2.7 million for the three months ended March 31, 2003 compared to
$2.8 million for the same period last year. Additionally, the average yield on
net loans decreased 52 basis points to 8.03% for the three months ended March
31, 2003 compared to 8.55% for the same period last year, and declined 30 basis
points from the average rate for 2002. The increase in loans largely reflects
growth in the residential real estate sector, which increased from $52 million
at March 31, 2002 to $68 million at March 31, 2003, coupled with declines in
both commercial real estate and commercial loans of $5 million and $3 million
respectively over the same period.

Taxable securities averaged $109 million during the first quarter of 2003
compared to $104 million for the first quarter of 2002, reflecting an increase
of $5 million. Interest income from taxable securities decreased $237 or 15% to
$1.3 million for the three months ended March 31, 2003 compared to $1.5 million
for the same period last year. While the average balance increased, the average
yield on taxable securities decreased 114 basis points to 4.84% for the three
months ended March 31, 2003 compared to 5.98% for the same period last year, and
declined 47 basis points from the average rate for 2002.

Non-taxable securities averaged $31 million during the first quarter of 2003
compared to $24 million for the first quarter of 2002, reflecting an increase of
$7 million. Interest income from non-taxable securities increased $157 or 34% to
$618 thousand for the three months ended March 31, 2003 compared to $461 for the
same period last year. The tax equivalent yield on non-taxable securities
increase to 7.96% for the three months ended March 31, 2003 compared to 7.69%
for the same period last year.

Federal funds sold averaged $6 million during the first quarter of 2003 compared
to $21 million for the first quarter of 2002, reflecting a decrease of $15
million. Interest income from federal funds sold decreased $66 to $19 for the
three months ended March 31, 2003 compared to $85 for the same period last year.
The yield on federal funds sold decreased 47 basis points to 1.18% for the three
months ended March 31, 2003 compared to 1.65% for the same period last year and
for the year ended December 31, 2002.

Average interest-bearing liabilities decreased $6 million or 3% to $203 million
for the three months ended March 31, 2003 compared to $209 million for the same
period last year. The average cost on interest-bearing liabilities decreased 53
basis points to 1.63% for the three months ended March 31, 2003 compared to
2.16% for the same period last year. The decrease in average interest-bearing
liabilities was centered primarily in decreases of 17 million in short-term
borrowings, $6 million in long-term borrowings offset by an increase of $14
million in interest bearing demand accounts, and an increase of $4 million in
savings accounts. The total cost of interest-bearing liabilities decreased $300,


                                       8
<page>


centered primarily in time deposits decreasing $148, and short-term borrowings
decreasing $86 and long-term borrowings of $79.

The interest rate spread increased 16 basis points to 4.99% at March 2003 from
4.83% at March 2002, and is primarily attributable to a lesser decrease in
yields on earning assets of 37 basis points compared to the decrease in
interest-bearing liabilities of 53 basis points. The decline in average rates on
interest earning assets and liabilities reflects general declines in market
interest rates as a result of a low interest rate environment during the past
year.

PROVISION FOR LOAN LOSSES

The Company maintains an allowance for loan losses to absorb losses on existing
loans and commitments. No provision for loan losses was made during the three
months ended March 31, 2003 or for the three month period ended March 31, 2002.
Management believes that the allowance for loan losses is adequate to absorb
potential losses inherent in the loan portfolio. As loans are not statistically
predictable and are dependent upon economic conditions in the Bank's
marketplace, future provisions or reversals for loan losses may decrease or
increase from the levels deemed appropriate for 2003. There can be no assurance,
however, that future provisions for loan losses will not be required.

Non-performing assets increased to $3.9 million at March 31, 2003 from $3.4
million at year- end 2002. Loans with potential credit problems increased $2
million or 40% to $7 million at March 31, 2003 from $5 million at year-end 2002
and was centered primarily in one commercial real estate loan totaling $2.4
million. See the "Non-Performing Assets" section for additional information
related to the Company's allowance for loan losses.

NON-INTEREST INCOME

Non-interest income increased $176, or 16%, to $1,285 for the three months ended
March 31, 2003 compared to $1,109 for March 31, 2002. The increase is attributed
primarily to higher security gains of $235 for the period ending March 31, 2003
compared to a security gains of $85 for the same period last year, a difference
of $150.

NON-INTEREST EXPENSE

Non-interest expenses increased $244 to $4.2 million for the three months ended
March 31, 2003 compared to $4.0 million for the same period last year. The
composition of the increase consists of an increase of $252 in salary and
employee benefits, an increase of $49 in furniture and equipment, an increase of
$28 in occupancy expenses, and an increase in stationary and supplies of $66,
offset by decreases of $76 in other expenses, $39 in advertising and $36 in data
processing expenses.

PROVISION FOR INCOME TAXES

The provision for income taxes for the first quarter of 2003 was $105, compared
to $168 a year ago due primarily to higher income from tax -exempt income
increasing $157 from a year ago. The effective tax rate was 15% and 22% for the
quarters ending March 31, 2003 and 2002, respectively.

BALANCE SHEET OVERVIEW

Total assets, at $301 million for March 31, 2003 increased $6 million compared
to $295 million at December 31, 2002. The change in the composition of the
balance sheet primarily reflects an increase of $7 million in securities and an
increase of $4 million in loans offset primarily by a decrease of $6 million in
federal funds sold. Total deposits increased $5 million to $242 million, up from
$237 million at December 31, 2002. Total shareholders' equity decreased $306 due
primarily to a decrease in the unrealized gains on available-for-sale securities
of $619, offsetting an increase in retained earnings of $313. Preferred stock
dividends of $6 and common stock dividends of $267 were declared during the
first quarter of 2003.

The carrying value of the Company's securities portfolio was $144 million, as of
March 31, 2003 an increase of $7 million from December 31, 2002. The increase is
attributed primarily to a $7 million increase in mortgage-backed securities, a
$1 million increase in U. S. Government Agency securities coupled with a decline
in the unrealized available for sale gain of $1 million. The mortgage-backed


                                       9
<page>


securities portfolio had a weighted-average remaining maturity of 3.27 years at
March 31, 2003, changing from 2.22 years at December 31, 2002. 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 $3.0 million at each of March 31, 2003 and
December 31, 2002, or 2.1% of total loans at March 31, 2003, compared to 2.2% at
December 31, 2002. No provision for loan losses was made for either first
quarters of 2003 and 2002. Non-performing assets increased $515 or 15% to $3.9
million from $3.4 million at year-end 2002. Loans with potential credit problems
(excluding non-performing assets) increased to $7,053 at March 31, 2003 from
$5,027 at year-end 2002, representing an increase of $2,026 or 40%. At March 31,
2003 and year-end 2002, non-performing assets represented 1.29% and 1.14%
respectively of total assets

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, 2003,
total deposits were $242 million. Core deposits, considered to be stable funding
sources and defined as all deposits except certificates of deposit of $100,000
or more, totaled $210 million or 70% 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, 2003, the Company had no federal funds sold,
investments available-for-sale totaled $144 million or 48% of total assets and
the fair value of investment securities due in one year or less (excluding
mortgage-backed securities) was $12 million or 4% of total assets. Additionally,
the company experienced $5.5 million in prepayment on mortgage-backed securities
during the first quarter of 2003, providing an annualized prepayment speed of an
additional $22 million or $16.5 million by year-end 2003.

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 8.3% 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, 2003 the Company had a $25 million credit limit with the
FHLB with advances outstanding of $6 million. The Company had collateral on
deposit sufficient to borrow up to the $25 million limit.


                                       10
<page>

<table>
<caption>

                                          AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS

                                         Three Months Ended               Three Months Ended                  Year Ended
                                           March 31, 2003                   March 31, 2002                December 31, 2002
                                   -----------------------------------------------------------------------------------------------
                                   Average   Average  Amount Paid   Average   Average  Amount Paid  Average   Average  Amount Paid
                                   Balance     Rate    or Earned    Balance     Rate    or Earned   Balance     Rate    or Earned
                                   -----------------------------------------------------------------------------------------------
                                                                          (dollars in thousands)

                                <c>        <c>      <c>          <c>        <c>      <c>         <c>        <c>      <c>
ASSETS
Loans, net                         $135,663   8.03%    $  2,687     $131,563   8.55%    $  2,773    $131,722   8.33%    $ 10,976
Taxable securities                  109,224   4.84%       1,303      104,512   5.98%       1,540     108,166   5.31%       5,741
Non-taxable securities(2)            31,478   7.96%         618       24,322   7.69%         461      28,144   7.88%       2,217
Federal funds sold                    6,503   1.18%          19       20,871   1.65%          85      14,211   1.65%         235
Interest-bearing deposits held
  with other banks                    1,136   2.14%           6        1,164   2.79%           8       1,303   2.53%          33
                                   --------            --------     --------            --------    --------            --------
Total interest-earning assets      $284,004   6.62%    $  4,633      282,432   6.99%    $  4,867     283,546   6.77%    $ 19,202
Cash and due from banks               9,607                           12,431                          10,734
Bank premises and
  equipment, net                      3,456                            2,469                           2,430
Other assets                          3,921                            4,127                           4,241
                                   --------                         --------                        --------
Total assets                       $300,988                         $301,459                        $300,951
                                   ========                         ========                        ========
LIABILITIES AND
SHAREHOLDERS' EQUITY

Interest-bearing demand deposits    $47,897   0.87%    $    103     $ 33,871   0.69%    $     58    $ 25,247   0.37%    $     93
Savings deposits                     67,035   1.56%         258       62,978   1.87%         290      65,095   1.77%       1,151
Time deposits                        56,877   2.43%         341       58,036   3.42%         489      72,963   2.69%       1,962
                                   --------            --------                         --------    --------            --------
Total interest-bearing deposits     171,809   1.66%         702      154,885   2.19%         837     163,305   1.96%       3,206
Short-term borrowings                26,977   1.01%          67       44,219   1.40%         153      36,147   1.28%         462
Long-term borrowings                  4,000   4.46%          44       10,000   4.99%         123       7,709   5.86%         453
                                   --------            --------     --------            --------    --------            --------
Total interest-bearing liabilities  202,786   1.63%    $    813      209,104   2.16%    $  1,113     207,161   1.99%    $  4,121
Noninterest-bearing liabilities      68,217                           66,920                          67,749
Other liabilities                     3,272                            1,970                           1,765
Total liabilities                   274,275                          277,994                         276,675
                                   --------                         --------                        --------
Shareholders' equity                 26,713                           23,465                          24,276
                                   --------                         --------                        --------
Total liabilities and
  shareholders' equity             $300,988                         $301,459                        $300,951
                                   ========                         ========                        ========
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING ASSETS

Net interest income                                    $  3,820                         $  3,754                        $ 15,081
                                                       ========                         ========                        ========
Interest rate spread                          4.99%                            4.83%                           4.78%
Net yield on average interest-
  earning assets                              5.45%                            5.39%                           5.32%
Average interest-earning assets
  to average interest-bearing
  liabilities                               140.05%                          135.07%                         136.87%
</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 $4,423, and $3,610 for
     March 31, 2003, $4,711 and $3,598 for March 31, 2002 and $18,448 and
     $14,327 for 2002.


                                       11
<page>


                        LOAN LOSS AND RECOVERY EXPERIENCE
<table>
<caption>
                                                 ---------------------------------------
                                                 Three Months Ended        Year Ended
                                                   March 31, 2003      December 31, 2002
                                                 ---------------------------------------
                                                         (dollars in thousands)

                                                   <c>                  <c>
Total outstanding loans at end of period              $ 142,939            $ 138,576
Average amount of net loans outstanding                 135,663              131,722
Allowance for loan losses
  at beginning of period                                  3,059                3,283
Loans charged off:
  Commercial                                                  5                  320
  Real estate mortgage                                       --                  131
  Installment loans to individuals                          106                  270
                                                      ---------            ---------
Total charge-offs                                           111                  721
                                                      ---------            ---------
Recoveries of loans previously charged-off:
  Commercial                                                 20                  266
  Real estate mortgage                                       17                  123
  Installment loans to individuals                           33                  108
                                                      ---------            ---------
Total recoveries                                             70                  497
                                                      ---------            ---------
Net (recoveries) charge-offs                                 41                  224
Additions to allowance charged to
operations                                                   --                   --

Allowance for loan losses at end of period                3,018                3,059
Ratio of net charge-offs during period
  to average outstanding loans during period               0.03%                0.17%
Ratio of allowance for possible loan
  losses at period to total loans                          2.11%                2.21%
</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, 2003   Percent  December 31, 2002    Percent
                                         (dollars in thousands)
Commercial                  $1,924         47.56%       $1,685            49.37%
Real estate mortgage           570         47.83%          589            45.79%
Consumer                       287          4.61%          306             4.84%
Unallocated                    237            --           479               --
                            ------        ------        ------           ------
Total                       $3,018        100.00%       $3,059           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


                                       12
<page>


conditions in the Washington, DC metropolitan area, 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, 2003    December 31, 2002
                                             -----------------------------------
                                                 (dollars in thousands)
     Non-accrual loans(1)                        $1,792              $1,712
     Loans past due 90 days or more
       and still accruing                         2,097               1,662
     Foreclosed properties                           --                  --
                                                 ------              ------
     Total                                       $3,889              $3,374
                                                 ======              ======
     Non-performing assets to gross loans
       and foreclosed properties at period
       end                                         2.72%               2.43%
     Non-performing loans to total loans           2.72%               2.43%
     Non-performing assets to total
       assets at period end                        1.29%               1.14%

     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, 2003 and the year ended
     December 31, 2002 for non-accrual loans had the loans been current in
     accordance with their original terms was $32 and $142, respectively.

Non-performing assets at March 31, 2003 were $3,889, an increase of $515 or 15%
from year-end 2002. The increase was primarily attributable to management's
continued review of the loan portfolio and in light of developments in
individual loans since year-end 2002. Non-accrual loans totaled $1,792 at March
31, 2003 and consisted of $977 in commercial real estate, $706 in residential
mortgages and $109 in consumer loans. This represents an increase of $80 or 5%
from year-end 2002. As of March 31, 2003, loans past due 90 days or more and
still accruing totaled $2,097, an increase of $435 or 26%, and consisted of
$1,390 in residential real estate loans, $412 in commercial real estate loans,
$197 in commercial loans and $98 in consumer loans. The increase in loans past


                                       13
<page>


due 90 days or more centered in residential loans increasing $395 from year-end
2002. At March 31, 2003, non-performing assets in the amount of $3,889
represented 15% of total capital compared to 13% at year-end 2002. Additionally,
non-performing assets in the amount of $3,889 and loan with possible credit
problems in the amount of $7,053 which combined totaled $10,942 or 42% of total
capital, compared to $8,401 or 32% at year-end 2002, reflecting an increase of
$2,541 or 30%. This increase is centered in one commercial real estate loan
totaling $2,364 or 93% of the increase.

At March 31, 2003, there were $7,053 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 an increase of $2,026 or 40% from year-end 2002 and
is primarily centered in one commercial real estate loan totaling $2.4 million.
Included in the total are thirteen loans, totaling $6,283, fully collateralized
by real estate, three of which represent $4,601 or 73% of the total. The
remaining $770 consists of eight commercial loans, two at $600 or 78% of the
remaining amount, secured primarily by accounts receivable and various business
equipment.

FORMAL AGREEMENT

On April 21, 2003, the Office of the Comptroller of the Currency (the "OCC")
terminated the Formal Agreement (the "Terminated Agreement") dated August 25,
1998, between the Bank and the OCC. The Terminated Agreement required the Bank
or Board to undertake certain actions including employment of an independent
management consultant to perform a study of the Bank's management structure and
staffing requirements; adoption of a plan to eliminate any deficiencies in
management, staffing, or supervision of management; the taking of steps to
obtain current and satisfactory credit information on loans without such
information, and to insure that proper collateral documentation is maintained;
prohibition on granting, renewing, altering, restructuring or extending a loan
without proper documentation and analysis of credit, purpose and anticipated
source of repayment; adoption of a written program to eliminate the basis of
criticism for assets rated "doubtful", "substandard" or "other assets especially
mentioned;" establishment of a loan review system to assure timely
identification and categorization of problem credits and implementation of a
process to insure the loan review function is independent; revision of the
Bank's loan policy based upon the guidance on Loan Portfolio Management in the
Comptroller's Manual for National Bank Examiners; development of a process to
ensure accountability for lending personnel; development of a written program to
improve and strengthen collection efforts; development of a profit plan to
improve and sustain the Bank's earnings; adoption and implementation of 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 nonperforming
assets, product line development and market segments intended to be developed,
together with strategies to achieve those objectives; taking of all steps
necessary to correct any violation of law, rule or regulation cited in any
report of examination; revision of a written project plan with respect to Year
2000 compliance of the Bank's information and environmental systems, including a
testing plan and a remediation contingency plan in the event any system is not
compliant by the date set forth in the plan.

         The Terminated Agreement was superseded by a Formal Agreement dated
April 21, 2003 between the Bank and the OCC (the "Agreement"), which is focused
largely on adoption and implementation of programs and internal controls to
ensure compliance with the Bank Secrecy Act, with the requirement to file
Suspicious Activity Reports, and with consumer laws and regulations. It also
requires the Board to take all necessary steps to ensure that Bank management
corrects each violation of law, rule or regulation cited in the current Report
of Examination prepared by the OCC and in any subsequent report of examination.
It requires the Bank to adopt, implement and ensure adherence to a performance
management program designed to ensure accountability through an review process
to demonstrate that the Board is discharging its responsibility to properly
supervise management.

         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 Mr.
King (Chairman), Mrs. Fleming, and Mr. Chapman, is required to submit written


                                       14
<page>


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.

         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.

ITEM 3. CONTROLS AND PROCEDURES

Within the ninety days prior to the filing of this report, the Company's
management, under the supervision and with the participation of the Company's
Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the design and operation of the Company's disclosure controls and procedures,
as defined in Rule 13a-14 under the Securities Exchange Act of 1934. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were adequate.
There were no significant changes (including corrective actions with regard to
significant deficiencies or material weaknesses) in the Company's internal
controls or in other factors subsequent to the date of the evaluation that could
significantly affect those controls.

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

        99(a) Certification of President and Chief Executive Officer

        99(b) Certification of Chief Financial Officer

        (b) Reports on Form 8-K None.


                                       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 9, 2003                         /s/ B. Doyle Mitchell, Jr.
                                        B. Doyle Mitchell, Jr., President


May 9, 2003                         /s/ Thomas A. Wilson, Jr.
                                    Thomas A. Wilson, Jr., Senior Vice President
                                    and Chief Financial and Accounting Officer


                                       16
<page>


                                  CERTIFICATION

I, B. Doyle Mitchell, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-QSB of IBW Financial
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 9, 2003                          /s/ B. Doyle Mitchell, Jr.
                                           -------------------------------------
                                           President and Chief Executive Officer


                                       17
<page>


                                  CERTIFICATION

I, Thomas A. Wilson, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-QSB of IBW Financial
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 9, 2003              /s/ Thomas A. Wilson, Jr.
                               -------------------------------------------------
                               Senior Vice President and Chief Financial Officer


                                       18