President's Message

To Our Valued Customers:

INDEPENDENCE FEDERAL SAVINGS BANK TO DELIST FROM NASDAQ STOCK MARKET AND DEREGISTER ITS COMMON STOCK - CLARIFICATION

Washington, D.C. B July 14, 2010 - Independence Federal Savings Bank (the “Bank”) (NASDAQ: IFSB) previously announced today that it had submitted written notice to the NASDAQ Stock Market LLC (“NASDAQ”) of its intention to voluntarily delist its common stock from the NASDAQ Capital Market. In that announcement, the Bank stated that it intended to file a Form 25 with the Office of Thrift Supervision (the “OTS”) and NASDAQ on or about July 26, 2010 to effect the delisting of its common stock from the NASDAQ Capital Market, and that the Bank expected that the last day of trading of its common stock on the NASDAQ Capital Market would be on or about August 4, 2010.  The Bank has been notified by NASDAQ that as a result of the expiration yesterday of the grace period for the Bank to return to compliance with NASDAQ Listing Rule 5550(a)(5), NASDAQ itself is taking action to delist the Bank’s common stock.  The Bank was not in compliance with Listing Rule 5550(a)(5) because the market value of its “publicly held shares” (i.e., shares held by persons other than directors, offers or ten percent or greater beneficial owners) was less than $1.0 million.  NASDAQ has informed the Bank that unless the Bank requests an appeal of NASDAQ’s decision, trading in the Bank’s common stock will be suspended at the opening of business on July 23, 2010.  The Bank currently does not intend to request such an appeal. Accordingly, the last day of trading of the Bank’s common stock on the NASDAQ Stock Market is now expected to be July 22, 2010, not August 4, 2010 as originally announced by the Bank.

NASDAQ also informed the Bank that NASDAQ intends to file a Form 25 with the OTS.  As with the Form 25 which the Bank had intended to file, the Form 25 filed by NASDAQ will be effective ten days after filing, at which time the Bank’s common stock will be removed from listing and registration on the NASDAQ Capital Market.       

The Bank’s common stock may become eligible for quotation on the OTC Bulletin Board, provided that the Bank provides the OTC Bulletin Board with copies of its Thrift Financial Reports filed with the OTS and one or more market makers receive clearance from the Financial Industry Regulatory Authority to quote the Bank’s common stock on the OTC Bulletin Board.  Alternatively, the Bank’s common stock may become eligible for quotation in the Pink Sheets.  No assurance can be given, however, that a market maker will seek to provide quotations for the Bank’s common stock on the OTC Bulletin Board or in the Pink Sheets, or that any required clearances or other approvals will be obtained. 

As originally announced by the Bank, on the same day that the Form 25 becomes effective, the Bank intends to file a Form 15 with the OTS to voluntarily terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended (“Exchange Act”). The Bank anticipates the termination of registration will become effective 90 days following the filing of the Form 15 with the OTS. However, the Bank’s obligation to file current and periodic reports with the OTS, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, will immediately be suspended upon the filing of the Form 15.

The Bank’s decision to deregister its common stock was made based primarily on the costs and demands on management time arising from compliance with Exchange Act reporting requirements and the Sarbanes-Oxley Act of 2002. The Bank is eligible to deregister its common stock under the Exchange Act because there are fewer than 300 holders of record of the common stock. The Bank believes that while the liquidity for the Bank’s common stock may be reduced and the price of the stock could decrease, the accounting, legal and administrative savings associated with deregistration, both in terms of cost and in time, are in the long-term best interests of the Bank and its stockholders.  In light of the Bank’s size, small market capitalization and the thinly-traded market for its common stock, the Bank believes the financial burden of reporting is disproportionate to any benefits of maintaining its registered status.  

About Independence Federal Savings Bank

Independence Federal Savings Bank was chartered in 1968.  A minority-run institution, Independence Federal is committed to serving all segments of the population.  Headquartered in Washington, D.C., Independence Federal currently has two office locations in the District of Columbia and one in Maryland (Silver Spring).  As of March 31, 2010, Independence Federal had total assets of approximately $133.7 million. 

Forward-Looking Statements

When used in this press release and in documents filed or furnished by the Bank with the OTS, in other press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “could,” “would,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made.  These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information.  By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.  

Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (i) the requirements and restrictions that have been placed on the Bank under the cease and desist order imposed on the Bank by the OTS on August 3, 2009, as described in the Bank’s 2009 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, and the possibility that the Bank will be unable to fully comply with the order, which could result in the taking of additional actions against the Bank by the OTS and the imposition of further restrictions on the Bank’s operations; (ii) the additional restrictions the Bank will operate under so long as it remains “undercapitalized” under regulatory capital guidelines, as described in the Bank’s 2009 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2010; (iii) the credit risks of lending activities, including changes in the level of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; (iv) changes in the quality or composition of the Bank’s loan and investment portfolios; (v) competitive pressures among depository institutions; (vi) interest rate movements and their impact on customer behavior and net interest margin; (vii) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (viii) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the market place; (ix) the ability to access cost-effective funding; (x) changes in financial markets; (xi) changes in economic conditions in general and in the District of Columbia and the state of Maryland in particular; (xii) the costs, effects and outcomes of litigation; (xiii) new legislation or regulatory changes and other governmental initiatives affecting the financial services industry; and (xiv) changes in accounting principles, policies or guidelines.

The Bank does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Source:  Independence Federal Savings Bank

Contact: Independence Federal Savings Bank
Robert B. Isard, 202-628-5500

Sincerely,

Robert B. Isard
Acting President & Chief Executive Officer