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, 2004.
                                                             --------------

         ___ 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


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 such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No


<PAGE>


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

ITEM 1.  FINANCIAL STATEMENTS


                                     IBW FINANCIAL CORPORATION AND SUBSIDIARY
                                           CONSOLIDATED BALANCE SHEETS
                                MARCH 31, 2004 (UNAUDITED) AND DECEMBER 31, 2003
<TABLE>
<CAPTION>
                                                                  March 31, 2004            December 31, 2003
                                                            -------------------------------------------------------
                                                                            (dollars in thousands)
<S>                                                                  <C>                         <C>
ASSETS
     Cash and cash equivalents:
     Cash and due from banks                                         $          10,847           $           9,194
     Federal funds sold
                                                                                10,900                           -
                                                            -------------------------------------------------------

         Total cash and cash equivalents                                        21,747                       9,194

     Interest-bearing deposits in other banks                                    2,409                       1,337
     Securities available-for-sale, at fair value                              115,863                     114,756
     Loans receivable, net of allowance
         for loan losses of $2,980 (2004) and $2,974 (2003)                    161,396                     164,816
     Bank premises and equipment, net                                            3,150                       3,362
     Accrued interest receivable                                                 1,585                       1,690
     Bank owned life insurance                                                   5,640                       5,573
     Other assets                                                                1,897                       1,909
                                                            -------------------------------------------------------
         TOTAL ASSETS                                                          313,687           $         302,637
                                                            =======================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
     Demand deposits                                                            70,649                      66,243
     Time and savings deposits                                                 180,648                     175,681
                                                            -------------------------------------------------------
         Total deposits                                                        251,297                     241,924
     Short term borrowings                                                      28,689                      28,313
     Long term borrowings                                                        4,000                       4,000
     Accrued expenses and other liabilities                                      2,505                       2,042
                                                            -------------------------------------------------------
         Total liabilities                                                     286,491                     276,279
                                                            -------------------------------------------------------
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                                                          18,088                      17,787
     Accumulated other comprehensive income                                      2,889                       2,352
                                                            -------------------------------------------------------
         Total shareholders' equity                                             27,196                      26,358
                                                            -------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $         313,687           $         302,637
                                                            =======================================================
</TABLE>

See notes to consolidated financial statements.


                                       2

<PAGE>


                                  IBW FINANCIAL CORPORATION AND SUBSIDIARY
                                     CONSOLIDATED STATEMENTS OF INCOME
                            THREE MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003
                                                (UNAUDITED)
<TABLE>
<CAPTION>
                                                                            Three Months Ended March 31
                                                              ---------------------------------------------------------
                                                                          2004                        2003
                                                              ---------------------------------------------------------
                                                                               (dollars in thousands)
<S>                                                                       <C>                         <C>
INTEREST INCOME:
       Interest and fees on loans                                         $          2,962            $          2,687
       U.S. treasury securities                                                          1                           3
       Obligations of U.S. government agencies
        and corporations                                                               481                         590
       Collateralized mortgage obligations                                             289                         697
       Obligations of states and political subdivisions                                312                         408
       Bank balances and other securities                                               22                          19
       Federal funds sold                                                               12                          19
                                                              ---------------------------------------------------------
         Total interest income                                                       4,079                       4,423
                                                              ---------------------------------------------------------
INTEREST EXPENSE:
     Interest-bearing deposits                                                         346                         553
     Time certificates over $100,000                                                   131                         149
     Short-term borrowings                                                              51                          67
     Long-term borrowings                                                               48                          44
                                                              ---------------------------------------------------------
         Total interest expense                                                        576                         813
                                                              ---------------------------------------------------------
NET INTEREST INCOME                                                                  3,503                       3,610
PROVISION FOR LOAN LOSSES                                                               --                          --
                                                              ---------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION
       FOR LOAN LOSSES                                                               3,503                       3,610
                                                              ---------------------------------------------------------
NONINTEREST INCOME
       Service charges on deposit accounts                                             613                         742
       Other fee income                                                                278                         256
       Gain on sales of investment securities                                          213                         235
       Other operating income                                                          127                          52
                                                              ---------------------------------------------------------
         Total noninterest income                                                    1,231                       1,285
                                                              ---------------------------------------------------------
NONINTEREST EXPENSE
       Salaries and employee benefits                                                2,418                       2,453
       Occupancy                                                                       253                         242
       Furniture and equipment                                                         324                         346
       Data processing                                                                 203                         197
       Stationary and Supplies                                                         171                         242
       Advertising                                                                      25                          51
       Other expenses                                                                1,067                         673
                                                              ---------------------------------------------------------
         Total noninterest expense                                                   4,461                       4,204
                                                              ---------------------------------------------------------

INCOME BEFORE INCOME TAXES                                                             273                         691

PROVISION FOR INCOME TAXES (BENEFIT)                                                   (34)                        105
                                                              ---------------------------------------------------------
NET INCOME                                                                $            307            $            586
                                                              =========================================================
EARNINGS PER COMMON SHARE - Basic and diluted                                        $0.45                       $0.87
                                                              =========================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                         668,360                     668,360
                                                              =========================================================
</TABLE>

See notes to consolidated financial statements.


                                       3
<PAGE>

IBW FINANCIAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                             ADDITIONAL              ACCUMULATED        TOTAL
                                                        PREFERRED    COMMON   PAID IN   RETAINED  OTHER COMPREHENSIVE SHAREHOLDER'S
                                                          STOCK      STOCK    CAPITAL   EARNINGS  INCOME, NET OF TAX    EQUITY
<S>                                                     <C>        <C>       <C>        <C>           <C>              <C>
BALANCES, JANUARY  1,  2004                             $    500   $   668   $   5,051  $  17,787     $  2,352         $ 26,358
                                                                                                                       --------
   Net income                                                 --        --          --        307           --              307
   Other comprehensive income, net of tax:
     unrealized gains on securities available for sale        --        --          --         --          537              537
                                                                                                                       --------

          Total comprehensive income (loss)                   --        --          --         --           --              844

Cash dividends paid:
    Preferred stock $0.31 per share                           =-        --          --         (6)          --               (6)
                                                        --------   -------   ---------  ---------     --------         --------
BALANCES,  MARCH 31, 2004                               $    500   $   668   $   5,051  $  18,088     $  2,889         $ 27,196
                                                        ========   =======   =========  =========     ========         ========
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 income                          --        --          --         --           --              (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
                                                        ========   ========  =========  =========     ========         ========
</TABLE>





                                    4
<PAGE>

                                  IBW FINANCIAL CORPORATION AND SUBSIDIARY
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                            THREE MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003
                                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                Three Months Ended March 31
                                                                     ---------------------------------------------------
                                                                               2004                     2003
                                                                     ---------------------------------------------------
                                                                                   (dollars in thousands)
<S>                                                                           <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                                          $307                      $586
     Adjustments to reconcile net income to net cash
         provided by operating activities:
     Depreciation                                                                         164                       153
     Amortization of intangible assets                                                     14                         8
     Accretion/amortization of premiums                                                    41                       184
     Gain on sale of investment securities                                               (213)                     (235)
     Loss on disposal of fixed assets                                                     167                        --
     Decrease (Increase) in accrued interest receivable                                   105                      (144)
     (Increase) Decrease in other assets                                                  (69)                      153
     Increase in accrued expenses and other liabilities                                   318                       315
                                                                     ---------------------------------------------------
         Net cash provided by operating activities                                        834                     1,020
                                                                     ---------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from principal payments on securities
        available-for-sale                                                              2,654                     5,434
     Proceeds from maturities of investment securities
         available-for-sale                                                            46,000                    10,000
     Proceeds from sales of investment securities
         available-for-sale                                                             2,103                     2,409
     Purchase of investment securities available-for-sale                             (51,010)                  (25,134)
     Net (increase) decrease in interest-bearing deposits in banks                     (1,072)                        8
     Net decrease (increase) in loans                                                   3,420                    (4,406)
     Additions to bank premises and equipment, net                                       (119)                     (179)
                                                                     ---------------------------------------------------
         Net cash provided (used) by  investing activities                              1,976                   (11,868)
                                                                     ---------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Net increase in deposits                                                           9,373                     5,160
     Net increase in short-term borrowings                                                376                       624
     Dividends paid                                                                        (6)                     (273)
                                                                     ---------------------------------------------------
         Net cash provided by financing activities                                      9,743                     5,511
                                                                     ---------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                       12,553                    (5,337)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                          9,194                    14,790
                                                                     ---------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                      $        21,747           $         9,453
                                                                     ===================================================
     Supplemental disclosures of cash flow information
         Income taxes                                                         $            --           $            --
         Interest                                                             $           504           $           775
</TABLE>

See notes to consolidated financial statements.


                                       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 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, 2004 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2004. These
unaudited consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes for the year ended December
31, 2003.

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 April 21, 2003, Industrial Bank, N.A., the Company's subsidiary
bank, entered into a new Formal Agreement (the "Agreement") with the Office of
the Comptroller of the Currency (the "OCC").

         The Agreement 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 a 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
Mrs. Fleming, Chairman, Dr. Williams and Mr. Chapman, 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.

         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.




                                       6
<PAGE>


Note C:  OTHER EXPENSES

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

                        THREE MONTHS ENDED MARCH 31


                                -----------------------------------------
                                             2004                   2003
                                -----------------------------------------
                                         (dollars in thousands)

Directors fees                      $          55           $         48
Professional fees                             173                    118
Bank Security                                  74                     75
Retirement costs - Directors                  270                     --
Operating losses                              147                     40
Other                                         348                    392
                                -----------------------------------------
Total                                      $1,067                   $673
                                =========================================



















                                       7


<PAGE>


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

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2004 (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.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The Company's consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America and
follow general practices within the industry in which it operates. Application
of these principles requires management to make estimates, assumptions, and
judgments that affect the amounts reported in the financial statements and
accompanying notes. These estimates, assumptions, and judgments are based on
information available as of the date of the financial statements; accordingly,
as this information changes, the financial statements could reflect different
estimates, assumptions, and judgments. Certain policies inherently have a
greater reliance on the use of estimates, assumptions, and judgments and as such
have a greater possibility of producing results that could be materially
different than originally reported. Estimates, assumptions, and judgments are
necessary when assets and liabilities are required to be recorded at fair value,
when a decline in the value of an asset not carried on the financial statements
at fair value warrants an impairment write-down or valuation reserve to be
established, or when an asset or liability needs to be recorded contingent upon
a future event. Carrying assets and liabilities at fair value inherently results
in more financial statement volatility. The fair values and the information used
to record valuation adjustments for certain assets and liabilities are based
either on quoted market prices or are provided by other third-party sources,
when available.

The most significant accounting policies followed by the Company are presented
in Note 1 to the consolidated financial statements for the year ended December
31, 2003, appearing in our Annual Report on Form 10-KSB for the year ended
December 31, 2003. These policies, along with the disclosures presented in the
other financial statement notes and in this financial review, provide
information on how significant assets and liabilities are valued in the
financial statements and how those values are determined. Based on the valuation
techniques used and the sensitivity of financial statement amounts to the
methods, assumptions, and estimates underlying those amounts, management has
identified the determination of the allowance for loan losses, to be the
accounting area that requires the most subjective or complex judgments, and as
such could be most subject to revision as new information becomes available.

The allowance for loan losses represents management's estimate of probable
credit losses inherent in the loan portfolio. Determining the amount of the
allowance for loan losses is considered a critical accounting estimate because
it requires significant judgment and the use of estimates related to the amount
and timing of expected future cash flows on impaired loans, estimated losses on
pools of homogeneous loans based on historical loss experience, and
consideration of current economic trends and conditions, all of which may be
susceptible to significant change. The loan portfolio also represents the
largest asset type on the Company's consolidated balance sheet. Note 1 to the
consolidated financial statements for the year ended December 31, 2003 describes
the methodology used to determine the allowance for loan losses and a discussion
of the factors driving changes in the amount of the allowance for loan losses is
included in the discussion below.




                                       8
<PAGE>


Overview

OPERATIONS

IBW Financial Corporation's net income for the first quarter of 2004 totaled
$307, a decrease of $279, or 48% from $586 for March 2003. This decrease was the
net result of a increase in non-interest expenses of $257, a decrease of $107 in
net-interest income, and a decrease in non-interest income of $54, offset by a
decrease of $139 in taxes. Return on average assets (ROAA) was .40% for the
quarter ended March 31, 2004, as compared to .78% for the same quarter in 2003,
and return on average shareholder's equity (ROAE) was 4.70% and 8.77% for the
same periods.

The decrease in net income was attributed primarily to the accrual of retirement
benefits for Directors of $270, $106 in accelerated write-off associated with
the closing of two in-store Wal Mart branches, a decrease in net-interest income
of $107 and lower realized security gains, offset by lower salaries and
benefits.

NET INTEREST INCOME

Net interest income (tax equivalent) for the three months ended March 31, 2004
decreased $147, or 4% compared to the same period last year. The average balance
of interest-earning assets for the three-month period ending March 31, 2004 and
March 31, 2003 stood at $284 million. While the volume of earnings assets was
flat, the yield on average interest-earning assets decreased by 61 basis points
to 6.01% for the three-months ended March 31, 2004 compared to 6.62% for the
same period last year. The volume of interest-bearing liabilities increased
during the first quarter of 2004, increasing $5 million from March 31, 2003 to
$208 million. However, the rate paid on interest-bearing liabilities declined 51
basis points to 1.12% for the three months ended March 31, 2004 from 1.63% for
the same period last year. Interest bearing liabilities at March 31, 2004
increased to $208 million compared to $207 million at December 31, 2003, while
the average rate paid on interest bearing liabilities during the first quarter
of 2004 declined by 26 basis points from the average rate in 2003.

Net loans averaged $163 million during the first quarter of 2004 compared to
$136 million for the first quarter of 2003, and $149 million for the year ended
December 31, 2003. Interest and fees on loans increased $275 or 10% to $3.0
million for the three months ended March 31, 2004 compared to $2.7 million for
the same period last year. Additionally, the average yield on net loans
decreased 72 basis points to 7.31% for the three months ended March 31, 2004
compared to 8.03% for the same period last year, and declined 42 basis points
from the average rate for 2003. The increase in loans largely reflects growth in
the residential real estate sector, which increased from $68 million at March
31, 2003 to $81 million at March 31, 2004, coupled with an increase in both
commercial real estate and commercial loans of $2 million over the same period.

Taxable securities averaged $91 million during the first quarter of 2004
compared to $109 million for the first quarter of 2003, reflecting a decrease of
$18 million. Interest income from taxable securities decreased $506 or 38% to
$797 for the three months ended March 31, 2004 compared to $1.3 million for the
same period last year. While the average balance decreased, the average yield on
taxable securities also decreased 132 basis points to 3.52% for the three months
ended March 31, 2004 compared to 4.84% for the same period last year, and
declined 60 basis points from the average rate for 2003.

Non-taxable securities averaged $24 million during the first quarter of 2004
compared to $31 million for the first quarter of 2003, reflecting an decrease of
$7 million. Interest income from non-taxable securities decreased $148 or 24% to
$470 for the three months ended March 31, 2004 compared to $618 for the same
period last year. The tax equivalent yield on non-taxable securities decrease
slightly to 7.95% for the three months ended March 31, 2004 compared to 7.96%
for the same period last year.

Federal funds sold averaged $5 million during the first quarter of 2004 compared
to $6 million for the first quarter of 2003, reflecting a decrease of $1
million. Interest income from federal funds sold decreased $7 to $12 for the
three months ended March 31, 2004 compared to $19 for the same period last year.
The yield on federal funds sold decreased 27 basis points to .91% for the three
months ended March 31, 2004 compared to 1.18% for the same period last year and
from 1.03% for the year ended December 31, 2003.



                                       9
<PAGE>

Average interest-bearing liabilities increased $5 million to $208 million for
the three months ended March 31, 2004 compared to $203 million for the same
period last year. The average cost on interest-bearing liabilities decreased 51
basis points to 1.12% for the three months ended March 31, 2004 compared to
1.63% for the same period last year. The increase in average interest-bearing
liabilities was centered primarily in an increase of $ $6 million in savings
deposits and an increase of $2 million in time deposits, offset by a decrease of
$2 million in short-term borrowings and a decrease of $1 million in interest
bearing demand accounts. The total cost of interest-bearing liabilities
decreased $237, centered primarily in savings deposits decreasing $132 and time
deposits of $87.

The interest rate spread decreased 10 basis points to 4.89% at March 2004 from
4.99% at March 2003, and is primarily attributable to a greater decrease in
yields on earning assets of 61 basis points compared to the decrease in
interest-bearing liabilities of 51 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 that may become uncollectible. No provision for loan losses was made
during the three months ended March 31, 2004 or for the three month period ended
March 31, 2003. Management believes that the allowance for loan losses is
adequate to absorb potential losses inherent in the loan portfolio. As losses
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 decreased to $3.3 million at March 31, 2004 from $3.9
million at year- end 2003. Loans with potential credit problems decreased $1.8
million or 17% to $8.6 million at March 31, 2004 from $10.3 million at year-end
2003. 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 $54, or 4%, to $1,231 for the three months ended
March 31, 2004 compared to $1,285 for March 31, 2003. The decrease is attributed
primarily to lower income derived from service charges on deposit accounts, down
$129, and lower security gains, down $22, offset by higher other operating
income, up $75.

The decrease in service charges and fees is due primarily to a loss of
approximately 4,300 deposit accounts from March 31, 2003, which were, in the
aggregate costly high maintenance low balance accounts. These accounts began
leaving the bank as a result of the updated fee structure implemented in January
2003. The increase in other operating income of $75 was due primarily to the
acqusition of bank owned life insurance which contributed $67 in income during
the first quarter of 2004 compared to none in the first quarter of 2003.

NON-INTEREST EXPENSE

Non-interest expenses increased $257 to $4.5 million for the three months ended
March 31, 2004 compared to $4.2 million for the same period last year. The
composition of the increase consist primarily of an increase of $394 in other
expenses, an increase in occupancy expenses of $11 and an increase in data
processing of $6, offset by a decrease in stationary and supplies of $71, a
decrease of $35 in salary and employee benefits, a decrease in advertising of
$26, and a decrease of $22 in furniture and equipment. The increase in other
expenses consist primarily of $270 in retirement benefit costs for Directors
that was approved during the first quarter of 2004 compared to no Director
benefit costs in prior periods. Additionally, the Company accelerated the cost
of rents and depreciation associated with the closing of two Wal Mart in-store
branches which was included in the operating losses of $147 for the first
quarter of 2004 compared to $40 in operating losses for the first quarter of
2003. The losses associated with the closing of these two branches in 2004 was
$106.

PROVISION FOR INCOME TAXES

The provision for income taxes for the first quarter of 2004 was a tax benefit
of $34, compared to taxes of $105 a year ago. This benefit is due primarily to
lower income and higher income from tax -exempt income.


                                       10
<PAGE>

BALANCE SHEET OVERVIEW

Total assets, at $314 million for March 31, 2004 increased $11 million compared
to $303 million at December 31, 2003. The change in the composition of the
balance sheet primarily reflects an increase of $11 million in federal funds
sold, an increase of $2 million in cash and an increase in securities and
deposits in other banks of $1 million respectively. These increases were offset
primarily by a decrease of $3 million in loans. Total deposits increased $9
million to $251 million, up from $242 million at December 31, 2003. Total
shareholders' equity increased $838 due primarily to the increase in the
unrealized gain on available-for-sale securities of $537 and an increase in
retained earnings of $301 thousand. Preferred stock dividends of $6 were
declared during the first quarter of 2004.

The carrying value of the Company's securities portfolio was $116 million as of
March 31, 2004, an increase of $1 million from December 31, 2003. The increase
is attributed primarily to a $3 million increase in U. S. Government Agency
securities coupled with a decrease in non-taxable securities of $2 million. The
mortgage-backed securities portfolio had a weighted-average remaining maturity
of 1.56 years at March 31, 2004, changing from 1.92 years at December 31, 2003.
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, 2004 and
December 31, 2003, or 1.8% of total loans for both periods. No provision for
loan losses was made for either first quarters of 2004 and 2003. Non-performing
assets decreased $585 or 15% to $3.3 million from $3.9 million at year-end 2003.
Loans with potential credit problems (excluding non-performing assets) decreased
to $8,555 at March 31, 2004 from $10,326 at year-end 2003, representing a
decrease of $1,771 or 17%. At March 31, 2004 and year-end 2003, non-performing
assets represented 1.05% and 1.28% 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, 2004,
total deposits were $251 million. Core deposits, considered to be stable funding
sources and defined as all deposits except certificates of deposit of $100,000
or more, totaled $223 million or 89% 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, 2004, the Company had $11 million in federal
funds sold, investments available-for-sale totaled $116 million or 37% of total
assets and the fair value of investment securities due in one year or less
(excluding mortgage-backed securities) was $23 million or 7% of total assets.
Additionally, the Company experienced $2.7 million in prepayments on
mortgage-backed securities during the first quarter of 2004, providing an
annualized prepayment speed of an additional $8 million or $11 million by
year-end 2004.

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, 2004 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.


                                       11
<PAGE>

                          AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS

<TABLE>
<CAPTION>
                                       Three Months Ended            Three Months Ended                       Year Ended
                                          March 31, 2004               March 31, 2003                     December 31, 2003
                                --------------------------------------------------------------------------------------------------
                                                                                      Amount                               Amount
                                                                                       Paid                                 Paid
                                 Average  Average  Amount Paid    Average    Average    or        Average    Average         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                      $ 162,982    7.31%   $   2,962   $ 135,663     8.03%  $ 2,687   $ 148,704     7.73%      $  11,489
Taxable securities                 90,986    3.52%         797     109,224     4.84%    1,303     100,046     4.12%          4,126
Non-taxable securities(2)          23,779    7.95%         470      31,478     7.96%      618      29,088     7.86%          2,285
Federal funds sold                  5,293    0.91%          12       6,503     1.18%       19       4,855     1.03%             50
Interest-bearing deposits held
  with other banks                  1,424    2.26%           8       1,136     2.14%        6       1,238     2.26%             28
                                ---------            ---------   ---------            -------   ---------                ---------
Total interest-earning assets   $ 284,464    6.01%   $   4,249   $ 284,004     6.62%  $ 4,633     283,931     6.33%      $  17,978
Cash and due from banks            10,122                            9,607                         10,067
Bank premises and
  equipment, net                    3,318                            3,456                          3,462
Other assets                        8,155                            3,921                          5,624
                                ---------                        ---------                      ---------
Total assets                    $ 306,059                        $ 300,988                      $ 303,084
                                =========                        =========                      =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing demand
  deposits                      $  26,206    0.40%   $      26   $  27,024     0.48%  $    32   $  25,917     0.50%      $    129
Savings deposits                   93,862    0.84%         197      87,908     1.52%      329      92,630     1.20%         1,114
Time deposits                      58,771    1.74%         254      56,877     2.43%      341      57,560     2.06%         1,186
                                ---------            ---------   ---------            -------   ---------                --------
Total interest-bearing
  deposits                        178,839    1.07%         477     171,809     1.66%      702     176,107     1.38%         2,429
Short-term borrowings              24,861    0.87%          54      26,977     1.01%       67      27,130     0.93%           251
Long-term borrowings                4,000    4.52%          45       4,000     4.46%       44       4,000     4.53%           181
                                ---------            ---------   ---------            -------   ---------                --------
Total interest-bearing
  liabilities                   $ 207,700    1.12%   $     576     202,786     1.63%      813     207,237     1.38%      $  2,861
Noninterest-bearing
liabilities                        70,768                           68,217                         68,672
Other liabilities                   1,436                            3,272                            733
                                ---------                        ---------                      ---------
Total liabilities                 279,904                          274,275                        276,642
Shareholders' equity               26,155                           26,713                         26,442
                                ---------                        ---------                      ---------
Total liabilities and
  shareholders' equity          $ 306,059                          300,988                      $ 303,084
                                =========                        =========                      =========
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING ASSETS

Net interest income                                  $   3,673                        $ 3,820                            $ 15,117
                                                     =========                        =======                            ========
Interest rate spread                         4.89%                             4.99%                          4.95%
Net yield on average interest-
  earning assets                             5.19%                             5.45%                          5.32%
Average interest-earning
  assets to average
  interest-bearing liabilities             136.96%                           140.05%                        137.01%
</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 $4,079, and $3,503 for
     March 31, 2004, $4,423 and $3,610 for March 31, 2003 and $17,201 and
     $14,340 for year end 2003.


                                       12
<PAGE>

<TABLE>
<CAPTION>
                       LOAN LOSS AND RECOVERY EXPERIENCE

                                                  -------------------------------------------------
                                                     Three Months Ended           Year Ended
                                                       March 31, 2004          December 31, 2003
                                                  -------------------------------------------------
                                                               (dollars in thousands)
<S>                                                          <C>                      <C>
Total outstanding loans at end of period                     $  165,017               $  168,454
Average amount of net loans outstanding                         162,982                  148,704
Allowance for loan losses
  at beginning of period                                          2,974                    3,059
                                                  ----------------------------------------------
Loans charged off:
  Commercial                                                         --                      886
  Real estate mortgage                                               --                       15
  Installment loans to individuals                                   32                      285
                                                  ----------------------------------------------
Total charge-offs                                                    32                    1,186
                                                  ----------------------------------------------
Recoveries of loans previously charged-off:
  Commercial                                                         12                      159
  Real estate mortgage                                                1                       51
  Installment loans to individuals                                   25                      156
                                                  ----------------------------------------------
Total recoveries                                                     38                      366
                                                  ----------------------------------------------
Net (recoveries) charge-offs                                         (6)                     820
Additions to allowance charged to
  operations                                                         --                      735
Allowance for loan losses at end of period                        2,980                    2,974
Ratio of net charge-offs during period
  to average outstanding loans during period                      (0.00)%                   0.55%
Ratio of allowance for possible loan
  losses at period end to total loans                              1.80%                    1.77%
</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.


<TABLE>
<CAPTION>
                                            ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
                           March 31, 2004             Percent       December 31, 2003      Percent
                                                      (dollars in thousands)
<S>                         <C>                       <C>             <C>                  <C>
Commercial                  $     1,506                45.86%         $     1,700           45.95%
Real estate mortgage              1,033                48.83%                 870           48.58%
Consumer                            306                 5.31%                 273            5.47%
Unallocated                         135                   --                  131              --
                           ------------------------------------------------------------------------
Total                       $     2,980               100.00%         $     2,974          100.00%
                           ========================================================================
</TABLE>

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


                                       13
<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.

The allowance for loan losses is maintained at a level believed adequate by
management to absorb probable losses inherent in the loan portfolio and is based
on the size and current risk characteristics of the loan portfolio, an
assessment of individual problem loans and actual loss experience, current
economic events in specific industries and geographical areas, including
unemployment levels, and other pertinent factors, including regulatory guidance
and general economic conditions. Determination of the allowance is inherently
subjective as it requires significant estimates, including the amounts and
timing of expected future cash flows on impaired loans, estimated losses on
pools of homogenous loans based on historical loss experience, and consideration
of current economic trends, all of which may be susceptible to significant
change. Loan losses are charged off against the allowance, while recoveries of
amounts previously charged off are credited to the allowance. A provision for
loan losses is charged to operations based on management's periodic evaluation
of the factors previously mentioned, as well as other pertinent factors.
Evaluations are conducted at least quarterly and more often if deemed necessary.

The allowance for loan losses consists of a specific component and a nonspecific
component. The components of allowance for loan losses represent an estimation
done pursuant to either Statement of Financial Accounting Standards ("SFAS") No.
5 "Accounting for Contingencies", or SFAS No. 114 "Accounting by Creditors for
Impairment of a Loan". The specific component of the allowance for loan losses
reflects expected losses resulting from analysis developed through credit
allocations for individual loans and historical loss experience for each loan
category. The specific credit allocations are based on a regular analysis of all
loans over a fixed-dollar amount where the internal credit rating is at or below
a predetermined classification. The historical loan loss element is determined
statistically using a loss migration analysis that examines loss experience and
the related internal gradings of loans charged-off. The loss migration analysis
is performed quarterly and loss factors are updated regularly based on actual
experience. The specific component of the allowance for loan losses also
includes management's determination of the amounts necessary for concentrations
and changes in portfolio mix and volume. As of March 31, 2004, the amount of the
allowance that was attributed to specific credits was $1,421 or 47.68% of the
allowance which compares to $1,393 or 46.8% as of December 31, 2003. The primary
reason for the increase was as an increase in new classified loans.

The nonspecific portion of the allowance reflects management's estimate of
probable inherent but undetected losses within the portfolio due to
uncertainties in economic conditions, delays in obtaining information, including
unfavorable information about a borrower's financial condition, the difficulty
in identifying triggering events that correlate perfectly to subsequent loss
rates, and risk factors that have not yet manifested themselves in loss
allocation factors. In addition, the nonspecific allowance includes a component
that explicitly accounts for the inherent imprecision in loan loss migration
models. Historical loss experience data used to establish estimates may not
precisely correspond to the current portfolio. The uncertainty surrounding the
strength and timing of economic cycles, including management's concerns over the
effects of the prolonged economic downturn in the current cycle, also affects
the model's estimates of loss. The historical losses used in the migration
analysis may not be representative of actual losses inherent in the portfolio
that have not yet been realized. The nonspecific portion of the allowance as of
March 31, 2004 was $1,559 or 52.3% of the allowance, which compares to $1,581 or
53.2% of the allowance at December 31, 2003. The primary reason for the decrease
was as a result of the change in classification of several loans and the pay-off
of several larger problem assets.

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

                                       14

<PAGE>

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
<TABLE>
<CAPTION>
                                                  -----------------------------------------------
                                                     March 31, 2004           December 31, 2003
                                                  -----------------------------------------------
                                                              (dollars in thousands)
          <S>                                          <C>                         <C>
          Non-accrual loans(1)                         $      2,544                $      1,631
          Loans past due 90 days or more
            and still accruing                                  745                       2,243
          Foreclosed properties                                  --                          --
                                                  -----------------------------------------------
          Total                                              $3,289                      $3,874
                                                  ===============================================
          Non-performing assets to gross loans
            and foreclosed properties at period
            end                                                1.99%                       2.30%
          Non-performing loans to total loans                  1.99%                       2.30%
          Non-performing assets to total
            assets at period end                               1.05%                       1.28%
</TABLE>

          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, 2004 and the year ended December 31,
          2003 for non-accrual loans had the loans been current in accordance
          with their original terms was $67 and $151, respectively.

Non-performing assets at March 31, 2004 were $3,289, a decrease of $585 or 15%
from year-end 2003. The decrease was primarily attributable to management's
continued review of the loan portfolio and in light of developments in
individual loans since year-end 2003. Non-accrual loans totaled $2,544 at March
31, 2004 and consisted of $1,749 in residential mortgages, $629 in commercial
loans, and $166 in consumer loans. This represents an increase of $913 or 56%
from year-end 2003. As of March 31, 2004, loans past due 90 days or more and
still accruing totaled $745, a decrease of $1,498 or 67%, and consisted of $554
in residential real estate loans, $73 in commercial loans, and $118 in consumer
loans. The decrease in loans past due 90 days or more centered in residential
loans decreasing $1,177 from year-end 2003. At March 31, 2004, non-performing
assets in the amount of $3,289 represented 12% of total capital compared to 15%
at year-end 2003. Additionally, non-performing assets in the amount of $3,289
and loan with possible credit problems in the amount of $8,555, which combined
totaled $11,844 or 44% of total capital, compared to $14,200 or 54% at year-end
2003, reflecting a decrease of $2,356 or 17%.

At March 31, 2004, there were $8,555 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 $1,771 or 17% from year-end 2003.
Included in the total are thirty-two


                                       15
<PAGE>


loans, totaling $8,463, fully collateralized by real estate, five of which
represent $4,283 or 51% of the total. The remaining $92 consists of two
commercial loans totaling $61 and one consumer loan totaling $31.

FORMAL AGREEMENT

Please refer to Note B to the consolidated financial statements included herein
for a discussion of the Company's Formal Agreement with the OCC.

ITEM 3. CONTROLS AND PROCEDURES

The Company's management, under the supervision and with the participation of
the Chief Executive Officer and Chief Financial Officer, evaluated, as of the
last day of the period covered by this report, the effectiveness of the design
and operation of the Company's disclosure controls and procedures, as defined in
Rule 13a-15(e) 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 changes in the Company's internal control over financial reporting (as
defined in Rule 13a-15 under the Securities Act of 1934) during the quarter
ended March 31, 2004 that has materially affected, or is reasonably likely to
materially affect, the Bank's internal control over financial reporting.

PART  II OTHER INFORMATION
         -----------------

ITEM 1.  LEGAL PROCEEDINGS       NONE

ITEM 2.  CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
         SECURITIES

     (a) Modification of Rights of Registered Securities. None

     (b) Issuance or Modification of Other Securities Affecting Rights of
         Registered Securities.     None

     (c) Sales of Unregistered Securities.    None

     (d) Use of Proceeds.   Not Applicable.

     (e) Small Business Issuer Purchases of Securities.    None

ITEM 3   DEFAULTS UPON SENIOR SECURITIES      None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Annual Meeting - Results

         On May 4, 2004, the annual meeting of shareholders of the Company was
         held for the purposes of electing six (6) directors to serve until the
         next annual meeting and until their successors are duly elected and
         qualified

         The name of each director elected at the meeting, who constitute the
         entire Board of Directors in office upon completion of the meeting, and
         the votes cast for such persons are set forth below.



                                       16
<PAGE>



<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                           Name      For      Against/Withheld  Abstentions   Broker Non-Votes
------------------------------------------------------------------------------------------------
<S>                                <C>               <C>            <C>              <C>
Clinton W. Chapman, Esquire        339,817           0              --               --
------------------------------------------------------------------------------------------------
Pamela King, CPA                   339,817           0
------------------------------------------------------------------------------------------------
B. Doyle Mitchell, Jr.             339,817           0              --               --
------------------------------------------------------------------------------------------------
Massie S. Fleming                  339,717           0              --               --
------------------------------------------------------------------------------------------------
Robert R. Hagans                   339,717           0              --               --
------------------------------------------------------------------------------------------------
Emerson A. Williams, M.D.          339,817           0              --               --
------------------------------------------------------------------------------------------------
</TABLE>


ITEM 5,  NONE

ITEM 6.  OTHER INFORMATION    NONE

ITEM 7.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)     Exhibits

         (11) Statement Regarding Computation of Per Share Earnings

         31(a)   Section 302 Certification of President and Chief Executive
                 Officer

         31(b)   Section 302 Certification of Chief Financial Officer

         32(a)   Section 906 Certification of President and Chief Executive
                 Officer

         32(b    Section 906 Certification of Chief Financial Officer

         (b)     Reports on Form 8-K None.





                                       17
<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 13, 2003                      /s/ B. Doyle Mitchell, Jr.
                                  B. Doyle Mitchell, Jr., President


May 13, 2003                      /s/ Thomas A. Wilson, Jr.
                                  Thomas A. Wilson, Jr., Senior Vice President
                                  and Chief Financial and Accounting Officer










                                       18