STATEFED FINANCIAL CORPORATION
                                519 Sixth Avenue
                             Des Moines, Iowa 50309
                                 (515) 282-0236

STATEFED FINANCIAL CORPORATION INCREASES CASH DIVIDEND BY 33 PER CENT, DECLARES
A SPECIAL DIVIDEND, AND ANNOUNCES STOCK REPURCHASE

DES MOINES, IOWA -- October 3, 2000 -- StateFed Financial Corporation, parent
corporation of State Federal Savings and Loan Association of Des Moines, (SFFC)
announced today that the Corporation will pay a cash dividend of $.10 (10 Cents)
per share for the 2nd Quarter of fiscal 2001. The dividend will be payable on
January 5, 2001 to shareholders of record on December 29, 2000. This is an
increase of $.025 (2 1/2 Cents) per share from previous dividends paid.

Also declared was a special dividend of $.025 (2 1/2 Cents) to shareholders of
record on December 29, 2000, payable on January 5, 2001. It is anticipated that
this will increase the total dividends for fiscal 2001 to $.40 (40 Cents) per
share, compared to $.30 (30 Cents) per share for fiscal 2000. Chairman of the
Board, John F. Golden stated that "the Board of StateFed is absolutely delighted
to announce this dividend increase and special dividend following the most
profitable year in our Company's history".

StateFed Financial Corporation also announced its intention to repurchase
approximately 5% of its outstanding shares in the open market over the next six
months. The shares will be purchased at prevailing market prices from time to
time depending upon market conditions.

Mr. Golden also stated that "we believe that the repurchase of our shares
continues to represent an attractive investment opportunity which will benefit
the Corporation and all our stockholders". This repurchase is the seventh in a
series of repurchases that StateFed Financial Corporation has undertaken. The
repurchased shares will become treasury shares and will be used for general
corporate purposes.

As of October 3, 2000, the Corporation has 1,510,600 shares outstanding.