##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from
 to
 Commission File Number 0-25045
 CENTRAL FEDERAL CORPORATION
  Delaware
    
    34-1877137(State or other jurisdiction of
  incorporation or organization)
    
    (IRS Employer
Identification No.)
 2923
Smith Road, Fairlawn, Ohio 44333
   (Issuers
telephone number)
 
  þ o
 o þ
  Class: 
Common stock, $0.01 par value
    
    Outstanding at October 31, 2007
4,434,787 shares
 o þ




---



##### 



PagePART I. Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Operations for the three and nine months ended
September 30, 2007 and 2006
    
    
    4Consolidated Statement of Changes in Shareholders Equity
for the nine months ended September 30, 2007
    
    
    5Consolidated Statements of Comprehensive Income (Loss) for  the three and nine months ended September 30, 2007 and 2006
    
    
    6Condensed Consolidated Statements of Cash flows for the nine months ended September 30, 2007 and 2006
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis
    
    
    18Item 3. Controls and Procedures
    
    
    26PART II. Other InformationItem 1. Legal Proceedings
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 6. Exhibits
    
    
    27Signatures
    
    
    28EX-11.1EX-31.1EX-31.2EX-32.1




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##### Table of Contents



September 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCash and cash equivalents
    
    $
    3,559
    
    
    $
    5,403Securities available for sale
    
    
    28,927
    
    
    
    29,326Loans held for sale
    
    
    721
    
    
    
    2,000Loans, net of allowance of $2,584 and $2,109
    
    
    221,659
    
    
    
    184,695Federal Home Loan Bank stock
    
    
    1,963
    
    
    
    2,813Loan servicing rights
    
    
    172
    
    
    
    201Foreclosed assets, net
    
    
    109
    
    
    
    Premises and equipment, net
    
    
    5,834
    
    
    
    4,105Bank owned life insurance
    
    
    3,742
    
    
    
    3,646Deferred tax asset
    
    
    2,181
    
    
    
    2,044Accrued interest receivable and other assets
    
    
    2,391
    
    
    
    1,795$
    271,258
    
    
    
    236,028LIABILITIES AND SHAREHOLDERS EQUITYDepositsNon-interest bearing
    
    $
    12,040
    
    
    $
    11,114Interest bearing
    
    
    174,450
    
    
    
    156,477Total deposits
    
    
    186,490
    
    
    
    167,591Federal Home Loan Bank advances
    
    
    50,175
    
    
    
    32,520Advances by borrowers for taxes and insurance
    
    
    85
    
    
    
    137Accrued interest payable and other liabilities
    
    
    2,274
    
    
    
    1,540Subordinated debentures
    
    
    5,155
    
    
    
    5,155Total liabilities
    
    
    244,179
    
    
    
    206,943Shareholders equityPreferred stock, 1,000,000 shares authorized;
none issued
    
    
    
    
    
    
    Common stock, $.01 par value; 6,000,000 shares
authorized; 2007 - 4,628,320 shares issued,
2006 - 4,612,195 shares issued
    
    
    46
    
    
    
    46Additional paid-in capital
    
    
    27,311
    
    
    
    27,204Retained earnings
    
    
    1,336
    
    
    
    2,643Accumulated other comprehensive income (loss)
    
    
    (1
    )
    
    
    (25
    )Treasury stock, at cost (2007 - 193,533 shares,
2006 - 68,533 shares)
    
    
    (1,613
    )
    
    
    (783
    )Total shareholders equity
    
    
    27,079
    
    
    
    29,085$
    271,258
    
    
    $
    236,028
  3.




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest and dividend incomeLoans, including fees
    
    $
    4,221
    
    
    $
    3,226
    
    
    $
    11,535
    
    
    $
    8,394Securities
    
    
    384
    
    
    
    386
    
    
    
    1,160
    
    
    
    1,231Federal Home Loan Bank stock dividends
    
    
    32
    
    
    
    40
    
    
    
    104
    
    
    
    116Federal funds sold and other
    
    
    8
    
    
    
    7
    
    
    
    14
    
    
    
    324,645
    
    
    
    3,659
    
    
    
    12,813
    
    
    
    9,773Interest
expenseDeposits
    
    
    1,923
    
    
    
    1,425
    
    
    
    5,310
    
    
    
    3,609Federal Home Loan Bank advances and other debt
    
    
    633
    
    
    
    365
    
    
    
    1,555
    
    
    
    850Subordinated debentures
    
    
    108
    
    
    
    110
    
    
    
    320
    
    
    
    3092,664
    
    
    
    1,900
    
    
    
    7,185
    
    
    
    4,768Net interest income
    
    
    1,981
    
    
    
    1,759
    
    
    
    5,628
    
    
    
    5,005Provision for loan losses
    
    
    293
    
    
    
    120
    
    
    
    435
    
    
    
    702Net interest income after provision for loan losses
    
    
    1,688
    
    
    
    1,639
    
    
    
    5,193
    
    
    
    4,303Noninterest incomeService charges on deposit accounts
    
    
    78
    
    
    
    59
    
    
    
    203
    
    
    
    164Net gains on sales of loans
    
    
    35
    
    
    
    112
    
    
    
    207
    
    
    
    239Loan servicing fees, net
    
    
    11
    
    
    
    
    
    
    
    41
    
    
    
    45Net gains (losses) on sales of securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )Earnings on bank owned life insurance
    
    
    32
    
    
    
    32
    
    
    
    96
    
    
    
    95Other
    
    
    8
    
    
    
    11
    
    
    
    32
    
    
    
    73164
    
    
    
    214
    
    
    
    579
    
    
    
    611Noninterest
expenseSalaries and employee benefits
    
    
    1,617
    
    
    
    967
    
    
    
    3,631
    
    
    
    2,802Occupancy and equipment
    
    
    200
    
    
    
    123
    
    
    
    442
    
    
    
    352Data processing
    
    
    135
    
    
    
    119
    
    
    
    418
    
    
    
    353Franchise taxes
    
    
    73
    
    
    
    35
    
    
    
    211
    
    
    
    127Professional fees
    
    
    101
    
    
    
    113
    
    
    
    294
    
    
    
    354Director fees
    
    
    37
    
    
    
    34
    
    
    
    112
    
    
    
    115Postage, printing and supplies
    
    
    39
    
    
    
    24
    
    
    
    132
    
    
    
    119Advertising and promotion
    
    
    80
    
    
    
    18
    
    
    
    176
    
    
    
    67Telephone
    
    
    24
    
    
    
    29
    
    
    
    77
    
    
    
    82Loan expenses
    
    
    3
    
    
    
    16
    
    
    
    10
    
    
    
    77Foreclosed assets, net
    
    
    (48
    )
    
    
    
    
    
    
    (38
    )
    
    
    3Depreciation
    
    
    168
    
    
    
    142
    
    
    
    465
    
    
    
    366Other
    
    
    159
    
    
    
    105
    
    
    
    346
    
    
    
    2972,588
    
    
    
    1,725
    
    
    
    6,276
    
    
    
    5,114Income (loss) before income taxes
    
    
    (736
    )
    
    
    128
    
    
    
    (504
    )
    
    
    (200
    )Income tax expense (benefit)
    
    
    (253
    )
    
    
    34
    
    
    
    (190
    )
    
    
    (76
    )Net income (loss)
    
    $
    (483
    )
    
    $
    94
    
    
    $
    (314
    )
    
    $
    (124
    )Earnings (loss) per share:Basic
    
    $
    (0.11
    )
    
    $
    0.02
    
    
    $
    (0.07
    )
    
    $
    (0.03
    )Diluted
    
    $
    (0.11
    )
    
    $
    0.02
    
    
    $
    (0.07
    )
    
    $
    (0.03
    )
  4.




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Additional
    
    
    
    
    
    
    Accumulated Other
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    EquityBalance at January 1, 2007
    
    $
    46
    
    
    $
    27,204
    
    
    $
    2,643
    
    
    $
    (25
    )
    
    $
    (783
    )
    
    $
    29,085Comprehensive income:Net income (loss)
    
    
    
    
    
    
    
    
    
    
    (314
    )
    
    
    
    
    
    
    
    
    
    
    (314
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    24Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (290
    )Release of 13,433 stock based incentive plan shares
    
    
    
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117Tax benefits from dividends on unvested stock based
incentive plan shares
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Tax effect from vesting of stock based incentive
plan shares
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )Stock option expense
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Purchase 125,000 treasury shares @ $6.64 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (830
    )
    
    
    (830
    )Cash dividends declared ($.23 per share)
    
    
    
    
    
    
    
    
    
    
    (993
    )
    
    
    
    
    
    
    
    
    
    
    (993
    )Balance at September 30, 2007
    
    $
    46
    
    
    $
    27,311
    
    
    $
    1,336
    
    
    $
    (1
    )
    
    $
    (1,613
    )
    
    $
    27,079
  5.




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    (483
    )
    
    $
    94
    
    
    $
    (314
    )
    
    $
    (124
    )Change in net unrealized gain (loss) on
securities available for sale
    
    
    319
    
    
    
    380
    
    
    
    37
    
    
    
    (170
    )Less: Reclassification adjustment for gains
and (losses) later recognized in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )Net unrealized gain (loss)
    
    
    319
    
    
    
    380
    
    
    
    37
    
    
    
    (165
    )Tax effect
    
    
    (109
    )
    
    
    (129
    )
    
    
    (13
    )
    
    
    56Other comprehensive income (loss)
    
    
    210
    
    
    
    251
    
    
    
    24
    
    
    
    (109
    )Comprehensive income (loss)
    
    $
    (273
    )
    
    $
    345
    
    
    $
    (290
    )
    
    $
    (233
    )
  6.




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##### Table of Contents



Nine months endedSeptember 30,2007
    
    
    2006Cash flows from operating activities
    
    $
    1,962
    
    
    $
    602Cash flows from investing activitiesAvailable-for-sale securities:Sales
    
    
    
    
    
    
    4,395Maturities, prepayments and calls
    
    
    5,404
    
    
    
    4,140Purchases
    
    
    (4,873
    )
    
    
    (7,383
    )Loan originations and payments, net
    
    
    (32,499
    )
    
    
    (35,041
    )Loans purchased
    
    
    (5,145
    )
    
    
    (11,616
    )Proceeds from redemption of FHLB stock
    
    
    850
    
    
    
    Additions to premises and equipment
    
    
    (2,241
    )
    
    
    (1,239
    )Proceeds from the sale of premises and equipment
    
    
    9
    
    
    
    39Proceeds from the sale of foreclosed assets
    
    
    231
    
    
    
    158Net cash from investing activities
    
    
    (38,264
    )
    
    
    (46,547
    )Cash flows from financing activitiesNet change in deposits
    
    
    18,865
    
    
    
    34,954Net change in short-term borrowings from the
Federal Home Loan Bank and other debt
    
    
    18,725
    
    
    
    2,275Proceeds from Federal Home Loan Bank
advances and other debt
    
    
    3,200
    
    
    
    5,000Repayments on Federal Home Loan Bank
advances and other debt
    
    
    (4,270
    )
    
    
    (4,000
    )Net change in advances by borrowers for
taxes and insurance
    
    
    (52
    )
    
    
    (19
    )Cash dividends paid
    
    
    (1,180
    )
    
    
    (1,020
    )Proceeds from issuance of common stock in
public offering
    
    
    
    
    
    
    14,558Repurchase of common stock
    
    
    (830
    )
    
    
    Net cash from financing activities
    
    
    34,458
    
    
    
    51,748Net change in cash and cash equivalents
    
    
    (1,844
    )
    
    
    5,803Beginning cash and cash equivalents
    
    
    5,403
    
    
    
    2,972Ending cash and cash equivalents
    
    $
    3,559
    
    
    $
    8,775Supplemental cash flow information:Interest paid
    
    $
    6,951
    
    
    $
    4,547Income taxes paid
    
    
    15
    
    
    
    Supplemental noncash disclosures:Transfers from loans to repossessed assets
    
    $
    277
    
    
    $
    218
  7.




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   Earnings Per Share
  8.




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Three months ended September 30,
    
    
    Nine months ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006BasicNet income (loss)
    
    $
    (483
    )
    
    $
    94
    
    
    $
    (314
    )
    
    $
    (124
    )Weighted average common shares outstanding
    
    
    4,417,040
    
    
    
    4,527,194
    
    
    
    4,483,419
    
    
    
    4,425,953Basic earnings (loss) per common share
    
    $
    (0.11
    )
    
    $
    0.02
    
    
    $
    (0.07
    )
    
    $
    (0.03
    )DilutedNet income (loss)
    
    $
    (483
    )
    
    $
    94
    
    
    $
    (314
    )
    
    $
    (124
    )Weighted average common shares
outstanding for basic earnings (loss) per
share
    
    
    4,417,040
    
    
    
    4,527,194
    
    
    
    4,483,419
    
    
    
    4,425,953Add: Dilutive effects of assumed
exercises of stock options and stock
based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average shares and dilutive potential
common shares
    
    
    4,417,040
    
    
    
    4,527,194
    
    
    
    4,483,419
    
    
    
    4,425,953Diluted earnings (loss) per common share
    
    $
    (0.11
    )
    
    $
    0.02
    
    
    $
    (0.07
    )
    
    $
    (0.03
    )
  Three months ended September 30,
    
    Nine months ended September 30,2007
    
    2006
    
    2007
    
    2006Stock options
    
    
    296,289
    
    
    
    276,605
    
    
    
    290,447
    
    
    
    279,116Stock based incentive plan shares
    
    
    16,377
    
    
    
    13,501
    
    
    
    18,901
    
    
    
    16,878
 Reclassifications:
  9.




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Adoption of New Accounting Standards:
 Accounting for Certain Hybrid Financial Instruments-an amendment to FASB Statements No. 133 and
140
 Accounting for Servicing of Financial Assets.
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109
 Accounting for
Purchases of Life Insurance  Determining the Amount That Could Be Realized in Accordance with FASB
Technical Bulletin No. 85-4 (Accounting for Purchases of Life Insurance).
 Effect of Newly Issued But Not Yet Effective Accounting Standards:
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilites, including an amendment of FASB Statement No. 115
 10.




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##### Table of Contents



NOTE 2  LOANS
  September 30,
    
    
    December 31,2007
    
    
    2006Commercial
    
    $
    31,381
    
    
    $
    31,913Real estate:Single-family residential
    
    
    30,704
    
    
    
    30,209Multi-family residential
    
    
    42,807
    
    
    
    47,247Commercial
    
    
    90,860
    
    
    
    47,474Consumer
    
    
    28,885
    
    
    
    30,246Subtotal
    
    
    224,637
    
    
    
    187,089Less: Net deferred loan fees
    
    
    (394
    )
    
    
    (285
    )Allowance for loan losses
    
    
    (2,584
    )
    
    
    (2,109
    )Loans, net
    
    $
    221,659
    
    
    $
    184,695
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Beginning balance
    
    $
    2,272
    
    
    $
    1,988
    
    
    $
    2,109
    
    
    $
    1,495Provision for loan losses
    
    
    293
    
    
    
    120
    
    
    
    435
    
    
    
    702Loans charged-off
    
    
    (28
    )
    
    
    (79
    )
    
    
    (37
    )
    
    
    (229
    )Recoveries
    
    
    47
    
    
    
    3
    
    
    
    77
    
    
    
    64Ending balance
    
    $
    2,584
    
    
    $
    2,032
    
    
    $
    2,584
    
    
    $
    2,032
  September 30,
    
    December 31,2007
    
    2006Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    Nonaccrual loans
    
    
    196
    
    
    
    297
  11.




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##### Table of Contents



NOTE 3  STOCK COMPENSATION PLANS
   Stock Options
    Three months ended
    
    Nine months endedSeptember 30, 2007
    
    September 30, 2007Risk-free interest rate
    
    
    4.31
    %
    
    
    4.61
    %Expected option life (years)
    
    
    6
    
    
    
    6Expected stock price volatility
    
    
    19
    %
    
    
    22
    %Dividend yield
    
    
    3.63
    %
    
    
    4.66
    %
 12.




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##### Table of Contents



NOTE 3  STOCK COMPENSATION PLANS (continued)
  Nine months ended September 30, 2007WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueOptions outstanding, beginning of period
    
    
    273,272
    
    
    $
    11.23
    
    
    
    6.7Granted
    
    
    26,350
    
    
    
    7.93
    
    
    
    9.5Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    
    
    
    
    Options outstanding, end of period
    
    
    299,622
    
    
    $
    10.94
    
    
    
    6.2
    
    
    $
    Options exercisable, end of period
    
    
    278,272
    
    
    $
    11.21
    
    
    
    6.0
    
    
    $
    
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Intrinsic value of options exercised
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash received from option exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Related tax benefit realized from
option exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of
options granted, per share
    
    
    0.12
    
    
    
    
    
    
    
    0.99
    
    
    
    
  13.




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##### Table of Contents



NOTE 3
 STOCK COMPENSATION PLANS (continued)
 Restricted Stock Awards
   Nine months ended September 30, 2007Weighted AverageGrant-DateShares
    
    

Fair ValueNonvested shares outstanding at beginning of period
    
    
    29,552
    
    
    $
    11.36Granted
    
    
    18,250
    
    
    
    7.35Vested
    
    
    (15,277
    )
    
    
    12.05Forfeited
    
    
    
    
    
    
    Nonvested shares outstanding at end of period
    
    
    32,525
    
    
    $
    8.79
  14.




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##### Table of Contents



NOTE 4
 FEDERAL HOME LOAN BANK ADVANCES
  September 30,2007
    
    
    December 31, 2006Maturity October 2007 at 5.08% floating rate
    
    $
    39,975
    
    
    $
    Maturity January 2007 at 5.18% floating rate
    
    
    
    
    
    
    21,250Maturities March 2008 thru March 2010,
fixed at rates from 2.90% to 5.60%,
averaging 4.94% at September 30, 2007, and
maturities March 2007 thru June 2009, fixed
at rates from 2.44% to 5.60%, averaging
4.16% at December 31, 2006
    
    
    10,200
    
    
    
    11,270Total
    
    $
    50,175
    
    
    $
    32,520
   September 30,2007
    
    
    December 31, 2006First mortgage loans under a blanket lien arrangement
    
    $
    26,216
    
    
    $
    30,422Second mortgage loans
    
    
    605
    
    
    
    679Multi-family mortgage loans
    
    
    9,812
    
    
    
    12,580Home equity lines of credit
    
    
    9,163
    
    
    
    10,495Commercial real estate loans
    
    
    57,221
    
    
    
    35,028Securities
    
    
    15,929
    
    
    
    10,748Total
    
    $
    118,946
    
    
    $
    99,952
  Payment information
 Required payments over the next five years are:September 30, 2008
    
    $
    41,975September 30, 2009
    
    
    7,200September 30, 2010
    
    
    1,000Total
    
    $
    50,175
 15.




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##### Table of Contents



NOTE 5  INCOME TAXES
 Accounting for Uncertainty in Income Taxes,
 NOTE 6  SEGMENT INFORMATION
   ConsolidatedBanking
    
    
    Mortgage Banking
    
    
    Parent and Other
    
    
    TotalFor the three months ended
September 30, 2007:Net interest income (expense)
    
    $
    2,078
    
    
    $
    11
    
    
    $
    (108
    )
    
    $
    1,981Provision for loan losses
    
    
    (293
    )
    
    
    
    
    
    
    
    
    
    
    (293
    )Net gain (loss) on sales of loans
    
    
    (14
    )
    
    
    49
    
    
    
    
    
    
    
    35Other revenue
    
    
    117
    
    
    
    7
    
    
    
    5
    
    
    
    129Depreciation and amortization
    
    
    (162
    )
    
    
    (6
    )
    
    
    
    
    
    
    (168
    )Other expense
    
    
    (1,508
    )
    
    
    (840
    )
    
    
    (72
    )
    
    
    (2,420
    )Income (loss) before income tax
    
    
    218
    
    
    
    (779
    )
    
    
    (175
    )
    
    
    (736
    )Income tax expense (benefit)
    
    
    71
    
    
    
    (265
    )
    
    
    (59
    )
    
    
    (253
    )Net income (loss)
    
    $
    147
    
    
    $
    (514
    )
    
    $
    (116
    )
    
    $
    (483
    )For the three months ended
September 30, 2006:Net interest income (expense)
    
    $
    1,843
    
    
    $
    26
    
    
    $
    (110
    )
    
    $
    1,759Provision for loan losses
    
    
    (120
    )
    
    
    
    
    
    
    
    
    
    
    (120
    )Net gain (loss) on sales of loans
    
    
    (16
    )
    
    
    128
    
    
    
    
    
    
    
    112Other revenue
    
    
    95
    
    
    
    (1
    )
    
    
    8
    
    
    
    102Depreciation and amortization
    
    
    (102
    )
    
    
    (40
    )
    
    
    
    
    
    
    (142
    )Other expense
    
    
    (1,385
    )
    
    
    (148
    )
    
    
    (50
    )
    
    
    (1,583
    )Income (loss) before income tax
    
    
    315
    
    
    
    (35
    )
    
    
    (152
    )
    
    
    128Income tax expense (benefit)
    
    
    98
    
    
    
    (12
    )
    
    
    (52
    )
    
    
    34Net income (loss)
    
    $
    217
    
    
    $
    (23
    )
    
    $
    (100
    )
    
    $
    94
 16.




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##### Table of Contents



NOTE 6  SEGMENT INFORMATION (continued)
 Mortgage
    
    
    Parent and
    
    
    ConsolidatedBanking
    
    
    Banking
    
    
    Other
    
    
    TotalFor the nine months ended
September 30, 2007:Net interest income (expense)
    
    $
    5,896
    
    
    $
    52
    
    
    $
    (320
    )
    
    $
    5,628Provision for loan losses
    
    
    (435
    )
    
    
    
    
    
    
    
    
    
    
    (435
    )Net gain (loss) on sales of loans
    
    
    (62
    )
    
    
    269
    
    
    
    
    
    
    
    207Other revenue
    
    
    352
    
    
    
    
    
    
    
    20
    
    
    
    372Depreciation and amortization
    
    
    (451
    )
    
    
    (14
    )
    
    
    
    
    
    
    (465
    )Other expense
    
    
    (4,509
    )
    
    
    (1,047
    )
    
    
    (255
    )
    
    
    (5,811
    )Income (loss) before income tax
    
    
    791
    
    
    
    (740
    )
    
    
    (555
    )
    
    
    (504
    )Income tax expense (benefit)
    
    
    249
    
    
    
    (251
    )
    
    
    (188
    )
    
    
    (190
    )Net income (loss)
    
    $
    542
    
    
    $
    (489
    )
    
    $
    (367
    )
    
    $
    (314
    )September 30, 2007Segment assets
    
    $
    268,425
    
    
    $
    1,024
    
    
    $
    1,809
    
    
    $
    271,258For the nine months ended
September 30, 2006:Net interest income (expense)
    
    $
    5,240
    
    
    $
    74
    
    
    $
    (309
    )
    
    $
    5,005Provision for loan losses
    
    
    (702
    )
    
    
    
    
    
    
    
    
    
    
    (702
    )Net gain (loss) on sales of loans
    
    
    (70
    )
    
    
    309
    
    
    
    
    
    
    
    239Other revenue
    
    
    354
    
    
    
    (4
    )
    
    
    22
    
    
    
    372Depreciation and amortization
    
    
    (300
    )
    
    
    (66
    )
    
    
    
    
    
    
    (366
    )Other expense
    
    
    (4,077
    )
    
    
    (443
    )
    
    
    (228
    )
    
    
    (4,748
    )Income (loss) before income tax
    
    
    445
    
    
    
    (130
    )
    
    
    (515
    )
    
    
    (200
    )Income tax expense (benefit)
    
    
    143
    
    
    
    (44
    )
    
    
    (175
    )
    
    
    (76
    )Net income (loss)
    
    $
    302
    
    
    $
    (86
    )
    
    $
    (340
    )
    
    $
    (124
    )September 30, 2006Segment assets
    
    $
    221,389
    
    
    $
    2,517
    
    
    $
    1,207
    
    
    $
    225,113
 NOTE 7  ARBITRATION LOSS
  17.




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Forward-Looking Statements
   Business Overview
   General
  Management Strategy
   18.




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##### Table of Contents



Financial Condition
 General.
 Securities.
 Loans.
 Deposits.
 19.




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##### Table of Contents



FHLB advances.
 Shareholders equity.
 Comparison of the Results of Operations for the Three Months Ended September 30, 2007 and 2006
 General.
 Net interest income.
   20.




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Provision for loan losses.
      Noninterest income.
 21.




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##### Table of Contents



Noninterest expense.
  Income taxes.
 Comparison of the Results of Operations for the Nine months Ended September 30, 2007 and 2006
 General.
 Net interest income.
  22.




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##### Table of Contents



Provision for loan losses.
 Noninterest income.
 Noninterest expense.
 23.




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##### Table of Contents



Income taxes.
 Critical Accounting Policies
    Liquidity and Capital Resources
  24.




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25.




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##### Table of Contents



Evaluation of disclosure controls and procedures.
 Changes in internal control over financial reporting
 26.




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##### Table of Contents



Maximum Number(or ApproximateTotal Number of
    
    Dollar Value) ofShares (or Units)
    
    Shares (or Units)Total Number
    
    Average
    
    Purchased as Part
    
    that May Yet Beof Shares (or
    
    Price Paid
    
    of Publicly
    
    Purchased UnderUnits)
    
    per Share
    
    Announced Plans
    
    the Plans orPeriod
    
    Purchased
    
    (or Unit)
    
    or Programs
    
    ProgramsJuly 1 - 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400,000
    (1)August 1 - 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400,000September 1 - 30,
2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400,000
 
 (1)
    
    On June 22, 2007, the Company announced a 400,000 share repurchase program to begin on June 26, 2007. 
   ExhibitNumber
    
    Exhibit3.1*
    
    Certificate of Incorporation3.2*
    
    Bylaws4.0*
    
    Form of Common Stock Certificate11.1
    
    Statement Re: Computation of Per Share Earnings31.1
    
    Rule 13a-14(a) Certifications of the Chief Executive Officer31.2
    
    Rule 13a-14(a) Certifications of the Chief Financial Officer32.1
    
    Section 1350 Certifications of the Chief Executive Officer and
Chief Financial Officer
 
 *
    
    Incorporated by reference to the Exhibits included with the registrants
Registration Statement on Form
SB-2 No. 333-64089, filed with the Commission on September 23, 1998 27.




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##### Table of Contents



CENTRAL FEDERAL CORPORATIONDated:  November 13, 2007
    By:
    /s/ Mark S. AllioMark S. AllioChairman of the Board, President and
Chief Executive OfficerDated:  November 13, 2007
    By:
    /s/ Therese Ann LiutkusTherese Ann Liutkus, CPATreasurer and Chief Financial Officer 28.