##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO 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
    
    (IRS Employerincorporation or organization)
    
    Identification No.)
 (Address of principal
executive offices) (Zip Code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




---



##### 



PagePART I. Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations for the three and nine months ended September 30, 2009 and 2008
    
    
    4Consolidated Statement of Changes in Stockholders Equity for the nine months ended September 30, 2009
    
    
    5Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2009 and 2008
    
    
    6Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 4T. Controls and Procedures
    
    
    36PART II. Other InformationItem 6. Exhibits
    
    
    37Signatures
    
    
    38Exhibit 11.1Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



September 30,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCash and cash equivalents
    
    $
    9,400
    
    
    $
    4,177Securities available for sale
    
    
    22,824
    
    
    
    23,550Loans held for sale
    
    
    943
    
    
    
    284Loans, net of allowance of $4,619 and $3,119
    
    
    233,938
    
    
    
    233,922Federal Home Loan Bank stock
    
    
    1,942
    
    
    
    2,109Loan servicing rights
    
    
    91
    
    
    
    112Premises and equipment, net
    
    
    4,926
    
    
    
    5,246Bank owned life insurance
    
    
    3,989
    
    
    
    3,892Deferred tax asset
    
    
    
    
    
    
    1,598Accrued interest receivable and other assets
    
    
    2,373
    
    
    
    2,891$
    280,426
    
    
    $
    277,781LIABILITIES AND STOCKHOLDERS EQUITYDepositsNoninterest bearing
    
    $
    16,458
    
    
    $
    14,557Interest bearing
    
    
    199,439
    
    
    
    193,090Total deposits
    
    
    215,897
    
    
    
    207,647Federal Home Loan Bank advances
    
    
    30,942
    
    
    
    29,050Advances by borrowers for taxes and insurance
    
    
    111
    
    
    
    167Accrued interest payable and other liabilities
    
    
    2,919
    
    
    
    2,687Subordinated debentures
    
    
    5,155
    
    
    
    5,155Total liabilities
    
    
    255,024
    
    
    
    244,706Stockholders equityPreferred stock, Series A, $.01 par value; $7,225 aggregate
liquidation value, 1,000,000 shares authorized; 
7,225 shares issued
    
    
    7,010
    
    
    
    6,989Common stock, $.01 par value; shares authorized; 

12,000,000 in 2009 and 6,000,000 in 2008, shares issued; 

4,658,870 in 2009 and 4,660,070 in 2008
    
    
    47
    
    
    
    47Common stock warrants
    
    
    217
    
    
    
    217Additional paid-in capital
    
    
    27,502
    
    
    
    27,455Retained earnings (accumulated deficit)
    
    
    (6,738
    )
    
    
    1,262Accumulated other comprehensive income
    
    
    609
    
    
    
    350Treasury stock, at cost, 558,533 shares
    
    
    (3,245
    )
    
    
    (3,245
    )Total stockholders equity
    
    
    25,402
    
    
    
    33,075$
    280,426
    
    
    $
    277,781
   3




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Interest and dividend incomeLoans, including fees
    
    $
    3,239
    
    
    $
    3,815
    
    
    $
    9,962
    
    
    $
    11,524Securities
    
    
    278
    
    
    
    324
    
    
    
    863
    
    
    
    1,017Federal Home Loan Bank stock dividends
    
    
    26
    
    
    
    28
    
    
    
    73
    
    
    
    81Federal funds sold and other
    
    
    9
    
    
    
    1
    
    
    
    28
    
    
    
    53,552
    
    
    
    4,168
    
    
    
    10,926
    
    
    
    12,627Interest expenseDeposits
    
    
    1,125
    
    
    
    1,475
    
    
    
    3,706
    
    
    
    4,700Federal Home Loan Bank advances and other debt
    
    
    249
    
    
    
    346
    
    
    
    800
    
    
    
    1,144Subordinated debentures
    
    
    46
    
    
    
    74
    
    
    
    155
    
    
    
    2471,420
    
    
    
    1,895
    
    
    
    4,661
    
    
    
    6,091Net interest income
    
    
    2,132
    
    
    
    2,273
    
    
    
    6,265
    
    
    
    6,536Provision for loan losses
    
    
    4,776
    
    
    
    183
    
    
    
    6,683
    
    
    
    667Net interest income after provision for loan losses
    
    
    (2,644
    )
    
    
    2,090
    
    
    
    (418
    )
    
    
    5,869Noninterest incomeService charges on deposit accounts
    
    
    97
    
    
    
    91
    
    
    
    258
    
    
    
    260Net gains on sales of loans
    
    
    170
    
    
    
    33
    
    
    
    501
    
    
    
    130Loan servicing fees, net
    
    
    8
    
    
    
    9
    
    
    
    26
    
    
    
    27Net gain on sales of securities
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    54Earnings on bank owned life insurance
    
    
    33
    
    
    
    31
    
    
    
    97
    
    
    
    94Other
    
    
    5
    
    
    
    2
    
    
    
    18
    
    
    
    19313
    
    
    
    176
    
    
    
    900
    
    
    
    584Noninterest expenseSalaries and employee benefits
    
    
    1,133
    
    
    
    991
    
    
    
    3,276
    
    
    
    3,036Occupancy and equipment
    
    
    128
    
    
    
    105
    
    
    
    412
    
    
    
    323Data processing
    
    
    142
    
    
    
    127
    
    
    
    436
    
    
    
    404Franchise taxes
    
    
    86
    
    
    
    73
    
    
    
    264
    
    
    
    239Professional fees
    
    
    152
    
    
    
    160
    
    
    
    594
    
    
    
    325Director fees
    
    
    29
    
    
    
    34
    
    
    
    80
    
    
    
    102Postage, printing and supplies
    
    
    21
    
    
    
    32
    
    
    
    133
    
    
    
    127Advertising and promotion
    
    
    12
    
    
    
    12
    
    
    
    26
    
    
    
    39Telephone
    
    
    26
    
    
    
    23
    
    
    
    78
    
    
    
    67Loan expenses
    
    
    13
    
    
    
    6
    
    
    
    31
    
    
    
    14Foreclosed assets, net
    
    
    (1
    )
    
    
    (18
    )
    
    
    (1
    )
    
    
    (10
    )Depreciation
    
    
    114
    
    
    
    167
    
    
    
    350
    
    
    
    518FDIC Premiums
    
    
    111
    
    
    
    36
    
    
    
    447
    
    
    
    49Other
    
    
    93
    
    
    
    116
    
    
    
    295
    
    
    
    3432,059
    
    
    
    1,864
    
    
    
    6,421
    
    
    
    5,576Income (loss) before income taxes
    
    
    (4,390
    )
    
    
    402
    
    
    
    (5,939
    )
    
    
    877Income tax expense
    
    
    2,298
    
    
    
    117
    
    
    
    1,757
    
    
    
    244Net income (loss)
    
    
    (6,688
    )
    
    
    285
    
    
    
    (7,696
    )
    
    $
    633Preferred stock dividends and accretion ofdiscount on preferred stock
    
    
    (102
    )
    
    
    
    
    
    
    (305
    )
    
    
    Net income (loss) available to common shareholders
    
    $
    (6,790
    )
    
    $
    285
    
    
    $
    (8,001
    )
    
    $
    633Earnings (loss) per common share:Basic
    
    $
    (1.66
    )
    
    $
    0.07
    
    
    $
    (1.95
    )
    
    $
    0.15Diluted
    
    $
    (1.66
    )
    
    $
    0.07
    
    
    $
    (1.95
    )
    
    $
    0.15
   4




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##### Table of Contents



Retained
    
    
    AccumulatedCommon
    
    
    Additional
    
    
    Earnings
    
    
    Other
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    Stock
    
    
    Paid-In
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersStock
    
    
    Stock
    
    
    Warrants
    
    
    Capital
    
    
    Deficit)
    
    
    Income
    
    
    Stock
    
    
    EquityBalance at January 1, 2009
    
    $
    6,989
    
    
    $
    47
    
    
    $
    217
    
    
    $
    27,455
    
    
    $
    1,262
    
    
    $
    350
    
    
    $
    (3,245
    )
    
    $
    33,075Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,696
    )
    
    
    
    
    
    
    
    
    
    
    (7,696
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    
    
    
    
    259Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,437
    )Preferred stock offering costs
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Accretion of discount on preferred stock
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34
    )
    
    
    
    
    
    
    
    
    
    
    Release of 9,709 stock based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43Forfeiture of 1,200 stock based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Tax benefits from dividends on unvested stock based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Tax effect from vesting of stock based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (271
    )
    
    
    
    
    
    
    
    
    
    
    (271
    )Balance at September 30, 2009
    
    $
    7,010
    
    
    $
    47
    
    
    $
    217
    
    
    $
    27,502
    
    
    $
    (6,738
    )
    
    $
    609
    
    
    $
    (3,245
    )
    
    $
    25,402
   5




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    (6,688
    )
    
    $
    285
    
    
    $
    (7,696
    )
    
    $
    633Change in net unrealized gain on securities
available for sale
    
    
    164
    
    
    
    149
    
    
    
    393
    
    
    
    77Less: Reclassification adjustment for gains
later recognized in net income
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    (54
    )Net unrealized gain
    
    
    164
    
    
    
    139
    
    
    
    393
    
    
    
    23Tax effect
    
    
    (56
    )
    
    
    (47
    )
    
    
    (134
    )
    
    
    (7
    )Other comprehensive income
    
    
    108
    
    
    
    92
    
    
    
    259
    
    
    
    16Comprehensive income (loss)
    
    $
    (6,580
    )
    
    $
    377
    
    
    $
    (7,437
    )
    
    $
    649
   6




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##### Table of Contents



Nine months endedSeptember 30,2009
    
    
    2008Cash flows from operating activities
    
    $
    (955
    )
    
    $
    1,022Cash flows from investing activitiesAvailable-for-sale securities:Sales
    
    
    
    
    
    
    2,064Maturities, prepayments and calls
    
    
    4,872
    
    
    
    8,087Purchases
    
    
    (3,698
    )
    
    
    (6,917
    )Loan originations and payments, net
    
    
    (2,518
    )
    
    
    (2,038
    )Loans purchased
    
    
    (2,231
    )
    
    
    Proceeds from redemption of FHLB stock
    
    
    167
    
    
    
    Purchase of FHLB stock
    
    
    
    
    
    
    (65
    )Additions to premises and equipment
    
    
    (30
    )
    
    
    (105
    )Proceeds from the sale of premises and equipment
    
    
    1
    
    
    
    1Proceeds from the sale of foreclosed assets
    
    
    28
    
    
    
    231Net cash from investing activities
    
    
    (3,409
    )
    
    
    1,258Cash flows from financing activitiesNet change in deposits
    
    
    8,220
    
    
    
    15,039Net change in short-term borrowings from the FHLB and other debt
    
    
    (5,850
    )
    
    
    (23,250
    )Proceeds from FHLB advances and other debt
    
    
    17,942
    
    
    
    14,000Repayments on FHLB advances and other debt
    
    
    (10,200
    )
    
    
    (2,000
    )Net change in advances by borrowers for taxes and insurance
    
    
    (56
    )
    
    
    (75
    )Cash dividends paid on common stock
    
    
    (205
    )
    
    
    (655
    )Cash dividends paid on preferred stock
    
    
    (251
    )
    
    
    Costs associated with issuance of preferred stock
    
    
    (13
    )
    
    
    Repurchase of common stock
    
    
    
    
    
    
    (1,632
    )Net cash from financing activities
    
    
    9,587
    
    
    
    1,427Net change in cash and cash equivalents
    
    
    5,223
    
    
    
    3,707Beginning cash and cash equivalents
    
    
    4,177
    
    
    
    3,894Ending cash and cash equivalents
    
    $
    9,400
    
    
    $
    7,601Supplemental cash flow information:Interest paid
    
    $
    4,691
    
    
    $
    5,423Income taxes paid
    
    
    
    
    
    
    42Supplemental noncash disclosures:Transfers from loans to repossessed assets
    
    $
    174
    
    
    $
    123Loans issued to finance the sale of repossessed assets
    
    
    162
    
    
    
    Loans transferred from held for sale to portfolio
    
    
    1,852
    
    
    
    
   7




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##### Table of Contents



NOTE
1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   Reclassifications
 Earnings (Loss) Per Common Share
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008BasicNet income (loss)
    
    $
    (6,688
    )
    
    $
    285
    
    
    $
    (7,696
    )
    
    $
    633Less: Preferred stock dividends and accretion of discount on preferred stock
    
    
    (102
    )
    
    
    
    
    
    
    (305
    )
    
    
    Net income (loss) available to common stockholders
    
    $
    (6,790
    )
    
    $
    285
    
    
    $
    (8,001
    )
    
    $
    633Weighted average common shares outstanding
    
    
    4,099,429
    
    
    
    4,110,326
    
    
    
    4,099,710
    
    
    
    4,268,964Basic earnings (loss) per common share
    
    $
    (1.66
    )
    
    $
    0.07
    
    
    $
    (1.95
    )
    
    $
    0.15DilutedNet income (loss) available to common stockholders
    
    $
    (6,790
    )
    
    $
    285
    
    
    $
    (8,001
    )
    
    $
    633Weighted average common shares outstanding for basic earnings per common
share
    
    
    4,099,429
    
    
    
    4,110,326
    
    
    
    4,099,710
    
    
    
    4,268,964Add: Dilutive effects of assumed exercises of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,527Average shares and dilutive potential common shares
    
    
    4,099,429
    
    
    
    4,110,326
    
    
    
    4,099,710
    
    
    
    4,270,491Diluted earnings (loss) per common share
    
    $
    (1.66
    )
    
    $
    0.07
    
    
    $
    (1.95
    )
    
    $
    0.15
  8




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock options
    
    
    314,011
    
    
    
    334,702
    
    
    
    347,505
    
    
    
    308,575Stock warrants
    
    
    336,568
    
    
    
    
    
    
    
    336,568
    
    
    
    
 Adoption of New Accounting Standards:
 Accounting Standards Codification
      9




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##### Table of Contents



NOTE
1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
       10




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Effect of Newly Issued But Not Yet Effective Accounting Standards:
   NOTE 2  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSeptember 30, 2009Issued by U.S. government-sponsored agencies:Mortgage-backed securities  residential
    
    $
    5,496
    
    
    $
    392
    
    
    $
    
    
    
    $
    5,888Collateralized mortgage obligations
    
    
    14,662
    
    
    
    519
    
    
    
    
    
    
    
    15,181Collateralized mortgage obligations issued
by private issuers
    
    
    1,744
    
    
    
    11
    
    
    
    
    
    
    
    1,755Total
    
    $
    21,902
    
    
    $
    922
    
    
    $
    
    
    
    $
    22,824
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2008Issued by U.S. government-sponsored agencies:Mortgage-backed securities  residential
    
    $
    6,671
    
    
    $
    254
    
    
    $
    (3
    )
    
    $
    6,922Collateralized mortgage obligations
    
    
    16,349
    
    
    
    289
    
    
    
    (10
    )
    
    
    16,628Total
    
    $
    23,020
    
    
    $
    543
    
    
    $
    (13
    )
    
    $
    23,550
  11




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##### Table of Contents



NOTE 2  SECURITIES (continued)
   September 30,
    
    
    December 31,2009
    
    
    2008Pledged as collateral for:FHLB advances
    
    $
    11,731
    
    
    $
    13,508Public deposits
    
    
    3,611
    
    
    
    3,058Customer repurchase agreements
    
    
    2,112
    
    
    
    3,098Interest-rate swaps
    
    
    1,128
    
    
    
    1,235Total
    
    $
    18,582
    
    
    $
    20,899
  Less than 12 Months
    
    
    12 Months or More
    
    
    TotalDecember 31, 2008
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    LossIssued by U.S. governmentsponsored agencies:Mortgage-backed securities  residential
    
    $
    568
    
    
    $
    (3
    )
    
    $
    
    
    
    $
    
    
    
    $
    568
    
    
    $
    (3
    )Collateralized mortgage obligations
    
    
    165
    
    
    
    
    
    
    
    1,013
    
    
    
    (10
    )
    
    
    1,178
    
    
    
    (10
    )Total temporarily impaired
    
    $
    733
    
    
    $
    (3
    )
    
    $
    1,013
    
    
    $
    (10
    )
    
    $
    1,746
    
    
    $
    (13
    )
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Proceeds
    
    $
    
    
    
    $
    1,011
    
    
    $
    
    
    
    $
    2,064Gross gains
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    54Gross losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  12




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NOTE 2  SECURITIES (continued)
  Investments  Debt and Equity
Securities.
     13




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##### Table of Contents



NOTE 3  LOANS
 September 30,
    
    
    December 31,2009
    
    
    2008Commercial
    
    $
    39,335
    
    
    $
    40,945Real estate:Single-family residential
    
    
    30,502
    
    
    
    28,884Multi-family residential
    
    
    38,229
    
    
    
    41,495Commercial
    
    
    103,392
    
    
    
    99,652Consumer
    
    
    27,405
    
    
    
    26,429Subtotal
    
    
    238,863
    
    
    
    237,405Less: Net deferred loan fees
    
    
    (306
    )
    
    
    (364
    )Allowance for loan losses
    
    
    (4,619
    )
    
    
    (3,119
    )Loans, net
    
    $
    233,938
    
    
    $
    233,922
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Beginning balance
    
    $
    3,996
    
    
    $
    2,947
    
    
    $
    3,119
    
    
    $
    2,684Provision for loan losses
    
    
    4,776
    
    
    
    183
    
    
    
    6,683
    
    
    
    667Reclassification of
allowance for losses on
loan-related commitments
(1)
    
    
    (51
    )
    
    
    
    
    
    
    (51
    )
    
    
    Loans charged-off
    
    
    (4,144
    )
    
    
    (89
    )
    
    
    (5,180
    )
    
    
    (315
    )Recoveries
    
    
    42
    
    
    
    4
    
    
    
    48
    
    
    
    9Ending balance
    
    $
    4,619
    
    
    $
    3,045
    
    
    $
    4,619
    
    
    $
    3,045
 (1)
    
    Reclassified to accrued interest payable and other liabilities in the consolidated balance
sheet.  September 30,
    
    
    December 31,2009
    
    
    2008Period-end loans with no allocated allowance for loan losses
    
    $
    6,822
    
    
    $
    Period-end loans with allocated allowance for loan losses
    
    
    4,375
    
    
    
    2,257Total
    
    $
    11,197
    
    
    $
    2,257Amount of the allowance for loan losses allocated
    
    $
    1,333
    
    
    $
    514
  14




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##### Table of Contents



NOTE 3  LOANS (continued)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Average of individually impaired loans during the period
    
    $
    7,785
    
    
    $
    1,910
    
    
    $
    5,195
    
    
    $
    1,482Interest income recognized during impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash-basis interest income recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  September 30,
    
    
    December 31,2009
    
    
    2008Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    348Nonaccrual loans:Commercial
    
    $
    570
    
    
    $
    646Single-family residential real estate
    
    
    296
    
    
    
    63Multi-family residential real estate
    
    
    1,958
    
    
    
    1,264Commercial real estate
    
    
    8,025
    
    
    
    Home equity lines of credit
    
    
    1,390
    
    
    
    60Other consumer
    
    
    26
    
    
    
    31Total nonaccrual loans
    
    $
    12,265
    
    
    $
    2,064
    15




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##### Table of Contents



NOTE 4  FAIR VALUE
 Fair Value Measurements and Disclosures
          16




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
 Assets and Liabilities Measured on a Recurring Basis
  Fair ValueMeasurements atSeptember 30, 2009Using SignificantOther ObservableInputs(Level 2)Assets:Securities available for sale:Issued by U.S. government-sponsored agencies:Mortgage-backed securities  residential
    
    $
    5,888Collateralized mortgage obligations
    
    
    15,181Collateralized mortgage obligations issued by private issuers
    
    
    1,755Yield maintenance provisions (embedded derivatives)
    
    
    621Liabilities:Interest-rate swaps
    
    $
    621
 Fair ValueMeasurements atDecember 31, 2008Using Significant OtherObservable Inputs(Level 2)Assets:Securities available for sale:Mortgage-backed securities  residential
    
    $
    6,922Collateralized mortgage obligations
    
    
    16,628Yield maintenance provisions (embedded derivatives)
    
    
    929Liabilities:Interest-rate swaps
    
    $
    929
  17




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
 Assets Measured on a Non-Recurring Basis
  Fair Value Measurements at September 30, 2009 UsingSignificant Other
    
    
    SignificantObservable Inputs
    
    
    Unobservable Inputs(Level 2)
    
    
    (Level 3)Loan servicing rights
    
    $
    24
    
    
    $
    Impaired loans
    
    
    
    
    
    
    3,042
 Fair Value Measurements at December 31, 2008 UsingSignificant Other
    
    
    SignificantObservable Inputs
    
    
    Unobservable Inputs(Level 2)
    
    
    (Level 3)Loan servicing rights
    
    $
    52
    
    
    $
    Impaired loans
    
    
    
    
    
    
    1,743
    18




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
  September 30, 2009
    
    
    December 31, 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assetsCash and cash equivalents
    
    $
    9,400
    
    
    $
    9,400
    
    
    $
    4,177
    
    
    $
    4,177Securities available for sale
    
    
    22,824
    
    
    
    22,824
    
    
    
    23,550
    
    
    
    23,550Loans held for sale
    
    
    943
    
    
    
    968
    
    
    
    284
    
    
    
    287Loans, net
    
    
    233,938
    
    
    
    236,671
    
    
    
    233,922
    
    
    
    239,399FHLB stock
    
    
    1,942
    
    
    
    n/a
    
    
    
    2,109
    
    
    
    n/aAccrued interest receivable
    
    
    956
    
    
    
    956
    
    
    
    1,100
    
    
    
    1,100Yield maintenance provisions (embedded derivatives)
    
    
    621
    
    
    
    621
    
    
    
    929
    
    
    
    929Financial liabilitiesDeposits
    
    
    (215,897
    )
    
    
    (217,475
    )
    
    
    (207,647
    )
    
    
    (210,052
    )FHLB advances
    
    
    (30,942
    )
    
    
    (31,495
    )
    
    
    (29,050
    )
    
    
    (29,531
    )Subordinated debentures
    
    
    (5,155
    )
    
    
    n/a
    
    
    
    (5,155
    )
    
    
    (5,155
    )Accrued interest payable
    
    
    (275
    )
    
    
    (275
    )
    
    
    (301
    )
    
    
    (301
    )Interest-rate swaps
    
    
    (621
    )
    
    
    (621
    )
    
    
    (929
    )
    
    
    (929
    )
    19




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##### Table of Contents



NOTE
5  FEDERAL HOME LOAN BANK (FHLB) ADVANCES
  September 30,
    
    
    December 31,2009
    
    
    2008Maturities October 2009 thru May 2014,
fixed at rates from 1.90% to 4.96%,
averaging 3.03%
    
    $
    30,942
    
    
    $
    Maturity January 2009 at .54% floating rate
    
    
    
    
    
    
    5,850Maturities February 2009 thru July 2011,
fixed at rates from 2.48% to 5.60%,
averaging 3.98%
    
    
    
    
    
    
    23,200Total
    
    $
    30,942
    
    
    $
    29,050
   September 30,
    
    
    December 31,2009
    
    
    2008First mortgage loans under a blanket lien arrangement
    
    
    26,914
    
    
    $
    26,285Second mortgage loans
    
    
    299
    
    
    
    462Multi-family mortgage loans
    
    
    15,671
    
    
    
    17,421Home equity lines of credit
    
    
    13,368
    
    
    
    19,271Commercial real estate loans
    
    
    63,721
    
    
    
    61,818Securities
    
    
    11,731
    
    
    
    13,508Total
    
    $
    131,704
    
    
    $
    138,765
  Payment information
 Required payments over the next five years are:September 30, 2010
    
    $
    7,000September 30, 2011
    
    
    8,200September 30, 2012
    
    
    5,742September 30, 2013
    
    
    September 30, 2014
    
    
    10,000Total
    
    $
    30,942
  20




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##### Table of Contents



NOTE 6  STOCK-BASED COMPENSATION
   Stock Options
    Nine months endedSeptember 30,2009
    
    
    2008Risk-free interest rate
    
    
    1.64
    %
    
    
    2.46
    %Expected term (years)
    
    
    7
    
    
    
    6Expected stock price volatility
    
    
    27
    %
    
    
    23
    %Dividend yield
    
    
    3.63
    %
    
    
    4.87
    %
  21




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##### Table of Contents



NOTE 6  STOCK-BASED COMPENSATION (continued)
  Nine months ended September 30, 2009WeightedAverageWeighted
    
    
    RemainingAverage Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueOptions outstanding, beginning of period
    
    
    416,377
    
    
    $
    8.47Granted
    
    
    800
    
    
    
    2.75Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (103,166
    )
    
    
    10.32Options outstanding, end of period
    
    
    314,011
    
    
    $
    7.85
    
    
    
    6.7
    
    
    $
    Options exercisable, end of period
    
    
    214,406
    
    
    $
    9.78
    
    
    
    5.8
    
    
    $
    
  Nine months endedSeptember 30,2009
    
    
    2008Weighted average fair value of options granted
    
    $
    0.49
    
    
    $
    0.51
  Restricted Stock Awards
   22




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##### Table of Contents



NOTE 6  STOCK-BASED COMPENSATION (continued)
  Nine months endedSeptember 30, 2009Weighted AverageGrant-Date FairShares
    
    
    ValueNonvested shares outstanding at beginning of period
    
    
    49,583
    
    
    $
    5.72Granted
    
    
    
    
    
    
    Vested
    
    
    (18,900
    )
    
    
    6.04Forfeited
    
    
    (1,200
    )
    
    
    10.42Nonvested shares outstanding at end of period
    
    
    29,483
    
    
    $
    5.32
  NOTE 7  DERIVATIVE INSTRUMENTS
    23




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##### Table of Contents



NOTE 7  DERIVATIVE INSTRUMENTS (continued)
  Fair Values of Asset Derivative InstrumentsSeptember 30, 2009
    
    
    December 31, 2008Balance Sheet
    
    
    
    
    
    Balance SheetDerivatives not designated as hedging instruments
    
    Location
    
    Fair Value
    
    
    Location
    
    Fair ValueYield maintenance provisions (embedded derivatives)
    
    Other assets
    
    $
    621
    
    
    Other assets
    
    $
    929Total asset derivatives
    
    
    
    
    
    $
    621
    
    
    
    
    
    
    $
    929
 Fair Values of Liability Derivative InstrumentsSeptember 30, 2009
    
    
    December 31, 2008Balance Sheet
    
    
    
    
    
    Balance SheetDerivatives not designated as hedging instruments
    
    Location
    
    Fair Value
    
    
    Location
    
    Fair ValueInterest-rate swaps
    
    Other liabilities
    
    $
    621
    
    
    Other liabilities
    
    $
    929Total liability derivatives
    
    
    
    
    
    $
    621
    
    
    
    
    
    
    $
    929
  Location ofgain (loss)recognized in
    
    
    Three months ended
    
    
    Nine months endedDerivatives not designated as
    
    income on
    
    
    September 30,
    
    
    September 30,hedging instruments
    
    derivatives
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Yield maintenance provisions
(embedded derivatives)
    
    Other noninterest income
    
    $
    122
    
    
    $
    137
    
    
    $
    (308
    )
    
    $
    177Interest-rate swaps
    
    Other noninterest income
    
    
    (122
    )
    
    
    (137
    )
    
    
    308
    
    
    
    (177
    )Total
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  24




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##### Table of Contents



NOTE
8  FEDERAL INCOME TAX
      25




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##### Table of Contents



Forward-Looking Statements
  Business Overview
   General
   26




---



##### Table of Contents



Financial Condition
 General.
 Cash and cash equivalents.
 Securities.
  27




---



##### Table of Contents



Loans.
 Allowance
for loan losses
       Deposits ®
  FHLB advances.
 Stockholders equity.
 Comparison of the Results of Operations for the Three Months Ended September 30, 2009 and 2008
 General.
   28




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##### Table of Contents



Net interest income.
 Interest income. .
 Interest expense. .
  29




---



##### Table of Contents



Provision for loan losses
    Noninterest income.
   30




---



##### Table of Contents



Noninterest expense.
   Income taxes.
 Comparison of the Results of Operations for the Nine Months Ended September 30, 2009 and 2008
 General.
  Net interest income.
  31




---



##### Table of Contents



Interest income.
 Interest expense.
 Provision for loan losses.
  32




---



##### Table of Contents



Noninterest income.
 Noninterest expense.
  Income taxes.
 Critical Accounting Policies
   33




---



##### Table of Contents



Allowance for
loan losses
 General
 Liquidity and Capital Resources
   Deposits.
  34




---



##### Table of Contents



35




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##### Table of Contents



Evaluation of disclosure controls and procedures.
 Changes in internal control over financial reporting.
  36




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##### Table of Contents



Item 6.
    
    Exhibits.
   37




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##### Table of Contents



CENTRAL FEDERAL CORPORATIONDated:  November 16, 2009
    By:
    /s/ Mark S. AllioMark S. AllioChairman of the Board, President and
Chief Executive OfficerDated:  November 16, 2009
    By:
    /s/ Therese Ann LiutkusTherese Ann Liutkus, CPATreasurer and Chief Financial Officer  38




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit3.1
    
    
    Certificate of Incorporation of the registrant (incorporated by reference to Exhibit
3.1 to the registrants Registration Statement on Form SB-2 No. 333-64089, filed with
the Commission on September 23, 1998)3.2
    
    
    Amendment to Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3.2 to the registrants Registration Statement on Form S-2 No.
333-129315, filed with the Commission on October 28, 2005)3.3
    
    
    Second Amended and Restated Bylaws of the registrant (incorporated by reference to
Exhibit 3.3 to the registrants Form 10-K for the fiscal year ended December 31,
2007, filed with the Commission on March 27, 2008)3.4
    
    
    Amendment to Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3.4 to the registrants Form 10-Q for the quarter ended June 30,
2009, filed with the Commission on August 14, 2009)4.1
    
    
    Form of Stock Certificate of Central Federal Corporation (incorporated by reference
to Exhibit 4.0 to the registrants Registration Statement on Form SB-2 No. 333-64089,
filed with the Commission on September 23, 1998)4.2
    
    
    Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, of Central Federal Corporation (incorporated by reference to Exhibit 3.1 to
the registrants Current Report on Form 8-K, filed with the Commission on December 5,
2008)4.3
    
    
    Warrant, dated December 5, 2008, to purchase shares of common stock of the Registrant
(incorporated by reference to Exhibit 4.1 to the registrants Current Report on Form
8-K, filed with the Commission on December 5, 2008)11.1
    
    
    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
  39