Independence Federal Savings Bank posted a profit in the second quarter, thanks to a respite from legal costs that have flattened its bottom line.

The District-based thrift earned $437,000 (28 cents a share) in the three months ended June 30. It was only its second quarterly profit in 21/2 years, a period in which Independence has survived bitter internal squabbles, a failed merger plan and repeated shareholder fights.

The biggest reason for the improvement: Independence spent $284,000 on lawyers during the quarter, compared with $1.9 million during the comparable period a year earlier, when it lost $1.17 million (75 cents).

Last year, the thrift was engaged in a courtroom fight with its largest shareholder, Morton Bender, over his attempts to take control of Independence's board. The thrift also spent money defending itself in a lawsuit involving embezzlement by senior officials of a former Independence client, the Washington Teachers Union. Independence spent more than $4 million on legal fees last year.

"Clearly, with no large amount of litigation going on, it helped us quite a bit," said acting chief executive Thomas L. Batties. He added that the bank "streamlined" its operating expenses in 2004 and early this year, and the benefits are beginning to show.

For the first six months of 2005, Independence earned $365,000 (24 cents), compared with a loss of $1.2 million (79 cents) in the first half of 2004.

Operationally, Independence did better in the second quarter, with its net interest margins widening and its loan origination business growing. The thrift has two main businesses -- making home mortgages and college loans. It sells most of the college loans it makes.

Batties said the bank's operations should improve over time as he expands its offerings. Independence is focusing its marketing on low-rate deposit products, such as savings and checking accounts instead of higher-rate certificates of deposits. Independence is also selling a broader array of consumer loan products, such as home equity loans, that over time may make its loan operations more profitable.

Independence, however, still must satisfy a restive group of shareholders led by Bender. At a meeting scheduled for Sept. 14, Independence's several hundred shareholders, most of them local, will elect a new board.

The company's board has its own slate of directors. But two competing directors have been nominated by Bender, who owns 21 percent of Independence's stock.

A planned vote on the directors in May was postponed at the request of the Office of Thrift Supervision after Bender and an outside group opposing him sent letters to shareholders that the regulatory agency said were misleading.