##### 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 June 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 
incorporation or organization)
    
    (IRS Employer
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)
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ




---



##### 



PagePART I. Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations for the three and six months ended
June 30, 2009 and 2008
    
    
    4Consolidated Statement of Changes in Stockholders Equity
for the six months ended June 30, 2009
    
    
    5Consolidated Statements of Comprehensive Income (Loss) for the three
and six months ended June 30, 2009 and 2008
    
    
    6Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2009 and 2008
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 4T. Controls and Procedures
    
    
    34PART II. Other InformationItem 4. Submission of Matters to a Vote of Security Holders
    
    
    35Item 6. Exhibits
    
    
    36Signatures
    
    
    37Exhibit 3.4Exhibit 11.1Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



June 30,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCash and cash equivalents
    
    $
    12,510
    
    
    $
    4,177Securities available for sale
    
    
    22,700
    
    
    
    23,550Loans held for sale
    
    
    5,995
    
    
    
    284Loans, net of allowance of $3,996 and $3,119
    
    
    231,707
    
    
    
    233,922Federal Home Loan Bank stock
    
    
    2,109
    
    
    
    2,109Loan servicing rights
    
    
    97
    
    
    
    112Premises and equipment, net
    
    
    5,032
    
    
    
    5,246Bank owned life insurance
    
    
    3,956
    
    
    
    3,892Deferred tax asset
    
    
    2,064
    
    
    
    1,598Accrued interest receivable and other assets
    
    
    2,232
    
    
    
    2,891$
    288,402
    
    
    $
    277,781LIABILITIES AND STOCKHOLDERS EQUITYDepositsNoninterest bearing
    
    $
    14,960
    
    
    $
    14,557Interest bearing
    
    
    199,958
    
    
    
    193,090Total deposits
    
    
    214,918
    
    
    
    207,647Federal Home Loan Bank advances
    
    
    33,942
    
    
    
    29,050Advances by borrowers for taxes and insurance
    
    
    72
    
    
    
    167Accrued interest payable and other liabilities
    
    
    2,265
    
    
    
    2,687Subordinated debentures
    
    
    5,155
    
    
    
    5,155Total liabilities
    
    
    256,352
    
    
    
    244,706Stockholders equityPreferred stock, Series A, $.01 par value; $7,225 aggregate
liquidation value, 1,000,000 shares authorized;
7,225 shares issued, 2009 and 2008
    
    
    6,998
    
    
    
    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
    
    
    27,480
    
    
    
    27,455Retained earnings
    
    
    52
    
    
    
    1,262Accumulated other comprehensive income
    
    
    501
    
    
    
    350Treasury stock, at cost; 558,533 shares,
2009 and 2008
    
    
    (3,245
    )
    
    
    (3,245
    )Total stockholders equity
    
    
    32,050
    
    
    
    33,075$
    288,402
    
    
    $
    277,781
   3




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##### Table of Contents



Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Interest and dividend incomeLoans, including fees
    
    $
    3,326
    
    
    $
    3,732
    
    
    $
    6,723
    
    
    $
    7,709Securities
    
    
    288
    
    
    
    338
    
    
    
    585
    
    
    
    693Federal Home Loan Bank stock dividends
    
    
    23
    
    
    
    27
    
    
    
    47
    
    
    
    53Federal funds sold and other
    
    
    7
    
    
    
    3
    
    
    
    19
    
    
    
    43,644
    
    
    
    4,100
    
    
    
    7,374
    
    
    
    8,459Interest expenseDeposits
    
    
    1,222
    
    
    
    1,450
    
    
    
    2,581
    
    
    
    3,225Federal Home Loan Bank advances and other debt
    
    
    296
    
    
    
    358
    
    
    
    551
    
    
    
    798Subordinated debentures
    
    
    53
    
    
    
    73
    
    
    
    109
    
    
    
    1731,571
    
    
    
    1,881
    
    
    
    3,241
    
    
    
    4,196Net interest income
    
    
    2,073
    
    
    
    2,219
    
    
    
    4,133
    
    
    
    4,263Provision for loan losses
    
    
    1,357
    
    
    
    260
    
    
    
    1,907
    
    
    
    484Net interest income after provision for loan losses
    
    
    716
    
    
    
    1,959
    
    
    
    2,226
    
    
    
    3,779Noninterest incomeService charges on deposit accounts
    
    
    79
    
    
    
    87
    
    
    
    161
    
    
    
    169Net gains on sales of loans
    
    
    179
    
    
    
    61
    
    
    
    331
    
    
    
    97Loan servicing fees, net
    
    
    9
    
    
    
    7
    
    
    
    18
    
    
    
    18Net gain on sales of securities
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    44Earnings on bank owned life insurance
    
    
    32
    
    
    
    34
    
    
    
    64
    
    
    
    63Other
    
    
    2
    
    
    
    7
    
    
    
    13
    
    
    
    17301
    
    
    
    217
    
    
    
    587
    
    
    
    408Noninterest expenseSalaries and employee benefits
    
    
    1,097
    
    
    
    997
    
    
    
    2,143
    
    
    
    2,045Occupancy and equipment
    
    
    139
    
    
    
    112
    
    
    
    284
    
    
    
    218Data processing
    
    
    144
    
    
    
    140
    
    
    
    294
    
    
    
    277Franchise taxes
    
    
    92
    
    
    
    84
    
    
    
    178
    
    
    
    166Professional fees
    
    
    105
    
    
    
    95
    
    
    
    442
    
    
    
    165Director fees
    
    
    17
    
    
    
    34
    
    
    
    51
    
    
    
    68Postage, printing and supplies
    
    
    53
    
    
    
    44
    
    
    
    112
    
    
    
    95Advertising and promotion
    
    
    2
    
    
    
    15
    
    
    
    14
    
    
    
    27Telephone
    
    
    28
    
    
    
    22
    
    
    
    52
    
    
    
    44Loan expenses
    
    
    10
    
    
    
    1
    
    
    
    18
    
    
    
    8Foreclosed assets, net
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    8Depreciation
    
    
    117
    
    
    
    176
    
    
    
    236
    
    
    
    351FDIC Premiums
    
    
    271
    
    
    
    8
    
    
    
    336
    
    
    
    13Other
    
    
    107
    
    
    
    129
    
    
    
    202
    
    
    
    2272,182
    
    
    
    1,866
    
    
    
    4,362
    
    
    
    3,712Income (loss) before income taxes
    
    
    (1,165
    )
    
    
    310
    
    
    
    (1,549
    )
    
    
    475Income tax expense (benefit)
    
    
    (403
    )
    
    
    86
    
    
    
    (541
    )
    
    
    127Net income (loss)
    
    
    (762
    )
    
    
    224
    
    
    
    (1,008
    )
    
    
    348Preferred stock dividends and accretion of unearned discount on preferred stock
    
    
    (102
    )
    
    
    
    
    
    
    (203
    )
    
    
    Net income (loss) available to common stockholders
    
    $
    (864
    )
    
    $
    224
    
    
    $
    (1,211
    )
    
    $
    348Earnings (loss) per common share:Basic
    
    $
    (0.21
    )
    
    $
    0.05
    
    
    $
    (0.30
    )
    
    $
    0.08Diluted
    
    $
    (0.21
    )
    
    $
    0.05
    
    
    $
    (0.30
    )
    
    $
    0.08
   4




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##### Table of Contents



AccumulatedCommon
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersStock
    
    
    Stock
    
    
    Warrants
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock
    
    
    EquityBalance at January 1, 2009
    
    $
    6,989
    
    
    $
    47
    
    
    $
    217
    
    
    $
    27,455
    
    
    $
    1,262
    
    
    $
    350
    
    
    $
    (3,245
    )
    
    $
    33,075Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,008
    )
    
    
    
    
    
    
    
    
    
    
    (1,008
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151
    
    
    
    
    
    
    
    151Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (857
    )Preferred stock offering costs
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Accretion of unearned discount on preferred stock
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    Release of 6,925 stock based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29Forfeiture 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    (181
    )Balance at June 30, 2009
    
    $
    6,998
    
    
    $
    47
    
    
    $
    217
    
    
    $
    27,480
    
    
    $
    52
    
    
    $
    501
    
    
    $
    (3,245
    )
    
    $
    32,050
   5




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##### Table of Contents



Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    (762
    )
    
    $
    224
    
    
    $
    (1,008
    )
    
    $
    348Change in net unrealized gain (loss) on securities available for sale
    
    
    (37
    )
    
    
    (487
    )
    
    
    229
    
    
    
    (72
    )Less: Reclassification adjustment for gains
later recognized in net income
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    (44
    )Net unrealized gain (loss)
    
    
    (37
    )
    
    
    (508
    )
    
    
    229
    
    
    
    (116
    )Tax effect
    
    
    13
    
    
    
    174
    
    
    
    (78
    )
    
    
    40Other comprehensive income (loss)
    
    
    (24
    )
    
    
    (334
    )
    
    
    151
    
    
    
    (76
    )Comprehensive income (loss)
    
    $
    (786
    )
    
    $
    (110
    )
    
    $
    (857
    )
    
    $
    272
   6




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##### Table of Contents



Six months endedJune 30,2009
    
    
    2008Cash flows from operating activities
    
    $
    (4,808
    )
    
    $
    (1,658
    )Cash flows from investing activitiesAvailable-for-sale securities:Sales
    
    
    
    
    
    
    1,053Maturities, prepayments and calls
    
    
    3,157
    
    
    
    7,121Purchases
    
    
    (2,031
    )
    
    
    (5,963
    )Loan originations and payments, net
    
    
    340
    
    
    
    (916
    )Purchase of FHLB stock
    
    
    
    
    
    
    (65
    )Additions to premises and equipment
    
    
    (22
    )
    
    
    (38
    )Proceeds from the sale of premises and equipment
    
    
    1
    
    
    
    2Proceeds from the sale of foreclosed assets
    
    
    28
    
    
    
    86Net cash from investing activities
    
    
    1,473
    
    
    
    1,280Cash flows from financing activitiesNet change in deposits
    
    
    7,250
    
    
    
    4,564Net change in short-term borrowings from the FHLB and other debt
    
    
    (5,850
    )
    
    
    (12,675
    )Proceeds from FHLB advances and other debt
    
    
    17,942
    
    
    
    11,000Repayments on FHLB advances and other debt
    
    
    (7,200
    )
    
    
    (1,000
    )Net change in advances by borrowers for taxes and insurance
    
    
    (95
    )
    
    
    (60
    )Cash dividends paid on common stock
    
    
    (205
    )
    
    
    (445
    )Cash dividends paid on preferred stock
    
    
    (161
    )
    
    
    Costs associated with issuance of preferred stock
    
    
    (13
    )
    
    
    Repurchase of common stock
    
    
    
    
    
    
    (1,293
    )Net cash from financing activities
    
    
    11,668
    
    
    
    91Net change in cash and cash equivalents
    
    
    8,333
    
    
    
    (287
    )Beginning cash and cash equivalents
    
    
    4,177
    
    
    
    3,894Ending cash and cash equivalents
    
    $
    12,510
    
    
    $
    3,607Supplemental cash flow information:Interest paid
    
    $
    3,265
    
    
    $
    4,181Income taxes paid
    
    
    
    
    
    
    30Supplemental noncash disclosures:Transfers from loans to repossessed assets
    
    $
    174
    
    
    $
    123Loans issued to finance the sale of repossessed assets
    
    
    162
    
    
    
    
   7




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   Earnings (Loss) Per Common Share
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008BasicNet income (loss)
    
    $
    (762
    )
    
    $
    224
    
    
    $
    (1,008
    )
    
    $
    348Less: Preferred stock dividends and accretion of unearned
discount on preferred stock
    
    
    (102
    )
    
    
    
    
    
    
    (203
    )
    
    
    Net income (loss) available to common stockholders
    
    $
    (864
    )
    
    $
    224
    
    
    $
    (1,211
    )
    
    $
    348Weighted average common shares outstanding
    
    
    4,099,723
    
    
    
    4,253,958
    
    
    
    4,099,828
    
    
    
    4,349,160Basic earnings (loss) per common share
    
    $
    (0.21
    )
    
    $
    0.05
    
    
    $
    (0.30
    )
    
    $
    0.08DilutedNet income (loss) available to common stockholders
    
    $
    (864
    )
    
    $
    224
    
    
    $
    (1,211
    )
    
    $
    348Weighted average common shares outstanding for basic
earnings per common share
    
    
    4,099,723
    
    
    
    4,253,958
    
    
    
    4,099,828
    
    
    
    4,349,160Add: Dilutive effects of assumed exercises of stock
options
    
    
    
    
    
    
    4,154
    
    
    
    
    
    
    
    2,290Add: Dilutive effects of assumed exercises of warrants
to purchase common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average shares and dilutive potential common shares
    
    
    4,099,723
    
    
    
    4,258,112
    
    
    
    4,099,828
    
    
    
    4,351,450Diluted earnings (loss) per common share
    
    $
    (0.21
    )
    
    $
    0.05
    
    
    $
    (0.30
    )
    
    $
    0.08
  8




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock options
    
    
    414,177
    
    
    
    296,400
    
    
    
    415,410
    
    
    
    295,511Stock warrants
    
    
    336,568
    
    
    
    
    
    
    
    336,568
    
    
    
    
 Adoption of New Accounting Standards:
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging
Activities,
 , Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities Earnings per Share
  9




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies. Business Combinations,
 Recognition and Presentation of
Other-Than-Temporary Impairments,
 Determining Fair Value When the Volume and Level of
Activity for the Asset and Liability Have Significantly Decreased and Identifying Transactions That
Are Not Orderly
 Interim Disclosures about Fair Value of
Financial Instruments. Disclosures about Fair Value of Financial
Instruments,
 Subsequent Events,
  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:
 Accounting for Transfers of Financial Assets, an
amendment of FASB Statement No. 140 Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
 Amendments to FASB Interpretation No. 46(R)
  11




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##### Table of Contents



NOTE 2  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueJune 30, 2009Issued by U.S. government-sponsored agencies:Mortgage-backed securities  residential
    
    $
    5,846
    
    
    $
    314
    
    
    $
    
    
    
    $
    6,160Collateralized mortgage obligations
    
    
    14,138
    
    
    
    464
    
    
    
    (2
    )
    
    
    14,600Collateralized mortgage obligations issued
by private issuers
    
    
    1,957
    
    
    
    
    
    
    
    (17
    )
    
    
    1,940Total
    
    $
    21,941
    
    
    $
    778
    
    
    $
    (19
    )
    
    $
    22,700
 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
   12




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##### Table of Contents



NOTE 2  SECURITIES (continued)
  Less than 12 Months
    
    
    12 Months or More
    
    
    TotalJune 30, 2009
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    LossIssued by U.S. governmentsponsored agencies:Collateralized mortgage obligations
    
    $
    1,940
    
    
    $
    (2
    )
    
    $
    
    
    
    $
    
    
    
    $
    1,940
    
    
    $
    (2
    )Collateralized mortgage obligations issued
by private issuers
    
    
    969
    
    
    $
    (17
    )
    
    
    
    
    
    
    
    
    
    
    969
    
    
    
    (17
    )Total temporarily impaired
    
    $
    2,909
    
    
    $
    (19
    )
    
    $
    
    
    
    $
    
    
    
    $
    2,909
    
    
    $
    (19
    )
 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 June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Proceeds
    
    $
    
    
    
    $
    1,030
    
    
    $
    
    
    
    $
    1,053Gross gains
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    44Gross losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  13




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NOTE 2  SECURITIES (continued)
  Accounting for Certain
Investments in Debt and Equity Securities Recognition of Interest Income and
Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a
Transfer in Securitized Financial Assets
     14




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##### Table of Contents



NOTE 3  LOANS
 June 30,
    
    
    December 31,2009
    
    
    2008Commercial
    
    $
    40,960
    
    
    $
    40,945Real estate:Single-family residential
    
    
    28,810
    
    
    
    28,884Multi-family residential
    
    
    40,303
    
    
    
    41,495Commercial
    
    
    100,845
    
    
    
    99,652Consumer
    
    
    25,060
    
    
    
    26,429Subtotal
    
    
    235,978
    
    
    
    237,405Less: Net deferred loan fees
    
    
    (275
    )
    
    
    (364
    )Allowance for loan losses
    
    
    (3,996
    )
    
    
    (3,119
    )Loans, net
    
    $
    231,707
    
    
    $
    233,922
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Beginning balance
    
    $
    3,528
    
    
    $
    2,729
    
    
    $
    3,119
    
    
    $
    2,684Provision for loan losses
    
    
    1,357
    
    
    
    260
    
    
    
    1,907
    
    
    
    484Loans charged-off
    
    
    (893
    )
    
    
    (46
    )
    
    
    (1,036
    )
    
    
    (226
    )Recoveries
    
    
    4
    
    
    
    4
    
    
    
    6
    
    
    
    5Ending balance
    
    $
    3,996
    
    
    $
    2,947
    
    
    $
    3,996
    
    
    $
    2,947
  June 30,
    
    
    December 31,2009
    
    
    2008Period-end loans with no allocated allowance for loan losses
    
    $
    
    
    
    $
    Period-end loans with allocated allowance for loan losses
    
    
    5,933
    
    
    
    2,257Total
    
    $
    5,933
    
    
    $
    2,257Amount of the allowance for loan losses allocated
    
    $
    1,867
    
    
    $
    514
  15




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##### Table of Contents



NOTE 3  LOANS (continued)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Average of individually impaired loans
during the period
    
    $
    5,675
    
    
    $
    1,694
    
    
    $
    3,900
    
    
    $
    1,269Interest income recognized during impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash-basis interest income recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  June 30,
    
    
    December 31,2009
    
    
    2008Loans past due over 90 days still on accrual
    
    $
    302
    
    
    $
    348Nonaccrual loans:Commercial
    
    
    349
    
    
    
    646Single-family residential real estate
    
    
    75
    
    
    
    63Multi-family residential real estate
    
    
    
    
    
    
    1,264Commercial real estate
    
    
    5,084
    
    
    
    Home equity lines of credit
    
    
    1,478
    
    
    
    60Other consumer
    
    
    
    
    
    
    31Total nonaccrual loans
    
    $
    6,986
    
    
    $
    2,064
   16




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##### Table of Contents



NOTE 4  FAIR VALUE
 Fair Value Measurements
 Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets
that the entity has the ability to access as of the measurement date.Level 2: Significant other observable inputs other than Level 1 prices such as quoted
prices for similar assets or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by observable market data.Level 3: Significant unobservable inputs that reflect a reporting entitys own assumptions
about the assumptions that market participants would use in pricing an asset or liability.
       17




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
 Assets and Liabilities Measured on a Recurring Basis
  Fair ValueMeasurements atJune 30, 2009Significant OtherObservable Inputs(Level 2)Assets:Securities available for sale:Issued by U.S. government-sponsored agencies:Mortgage-backed securities  residential
    
    $
    6,160Collateralized mortgage obligations
    
    
    14,600Collateralized mortgage obligations issued by private issuers
    
    
    1,940Interest-rate swaps
    
    
    499Liabilities:Interest-rate swaps
    
    $
    499
 Fair ValueMeasurements atDecember 31, 2008Using SignificantOther ObservableInputs(Level 2)Assets:Securities available for sale:Mortgage-backed securities  residential
    
    $
    6,922Collateralized mortgage obligations
    
    
    16,628Interest-rate swaps
    
    
    929Liabilities:Interest-rate swaps
    
    $
    929
  18




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
 Assets Measured on a Non-Recurring Basis
  Fair Value Measurements at June 30, 2009 UsingSignificant Other
    
    
    SignificantObservable Inputs
    
    
    Unobservable Inputs(Level 2)
    
    
    (Level 3)Loan servicing rights
    
    $
    30
    
    
    $
    Impaired loans
    
    
    
    
    
    
    4,066
 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
    19




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
  June 30, 2009
    
    
    December 31, 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assetsCash and cash equivalents
    
    $
    12,510
    
    
    $
    12,510
    
    
    $
    4,177
    
    
    $
    4,177Securities available for sale
    
    
    22,700
    
    
    
    22,700
    
    
    
    23,550
    
    
    
    23,550Loans held for sale
    
    
    5,995
    
    
    
    6,050
    
    
    
    284
    
    
    
    287Loans, net
    
    
    231,707
    
    
    
    236,209
    
    
    
    233,922
    
    
    
    239,399FHLB stock
    
    
    2,109
    
    
    
    n/a
    
    
    
    2,109
    
    
    
    n/aAccrued interest receivable
    
    
    979
    
    
    
    979
    
    
    
    1,100
    
    
    
    1,100Interest-rate swaps
    
    
    499
    
    
    
    499
    
    
    
    929
    
    
    
    929Financial liabilitiesDeposits
    
    
    (214,918
    )
    
    
    (216,629
    )
    
    
    (207,647
    )
    
    
    (210,052
    )FHLB advances
    
    
    (33,942
    )
    
    
    (34,168
    )
    
    
    (29,050
    )
    
    
    (29,531
    )Subordinated debentures
    
    
    (5,155
    )
    
    
    (5,155
    )
    
    
    (5,155
    )
    
    
    (5,155
    )Accrued interest payable
    
    
    (280
    )
    
    
    (280
    )
    
    
    (301
    )
    
    
    (301
    )Interest-rate swaps
    
    
    (499
    )
    
    
    (499
    )
    
    
    (929
    )
    
    
    (929
    )
    20




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##### Table of Contents



NOTE 5  FEDERAL HOME LOAN BANK (FHLB) ADVANCES
  June 30, 2009
    
    
    December 31, 2008Maturity January 2009 at 0.54% floating rate
    
    $
    
    
    
    $
    5,850Maturities September 2009 thru May 2014,
fixed at rates from 1.90% to 4.96%,
averaging 2.98% at June 30, 2009;
Maturities February 2009 thru July 2011,
fixed at rates from 2.48% to 5.60%,
averaging 3.98% at December 31, 2008
    
    
    33,942
    
    
    
    23,200Total
    
    $
    33,942
    
    
    $
    29,050
   June 30, 2009
    
    
    December 31, 2008First mortgage loans under a blanket lien arrangement
    
    $
    25,481
    
    
    $
    26,285Second mortgage loans
    
    
    592
    
    
    
    462Multi-family mortgage loans
    
    
    16,404
    
    
    
    17,421Home equity lines of credit
    
    
    16,137
    
    
    
    19,271Commercial real estate loans
    
    
    61,030
    
    
    
    61,818Securities
    
    
    12,352
    
    
    
    13,508Total
    
    $
    131,996
    
    
    $
    138,765
  Payment information
 Required payments over the next five years are:June 30, 2010
    
    $
    10,000June 30, 2011
    
    
    5,200June 30, 2012
    
    
    8,742June 30, 2013
    
    
    June 30, 2014
    
    
    10,000Total
    
    $
    33,942
  21




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##### Table of Contents



NOTE 6  STOCK-BASED COMPENSATION
   Stock Options
    Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Risk-free interest rate
    
    
    n/a
    
    
    
    3.10
    %
    
    
    1.64
    %
    
    
    2.46
    %Expected term (years)
    
    
    n/a
    
    
    
    6
    
    
    
    7
    
    
    
    6Expected stock price volatility
    
    
    n/a
    
    
    
    22
    %
    
    
    27
    %
    
    
    23
    %Dividend yield
    
    
    n/a
    
    
    
    4.30
    %
    
    
    3.63
    %
    
    
    4.87
    %
  22




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##### Table of Contents



NOTE 6  STOCK-BASED COMPENSATION
  Six months ended June 30, 2009WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Term (Years)
    
    
    ValueOptions outstanding, beginning of period
    
    
    416,377
    
    
    $
    8.47Granted
    
    
    800
    
    
    
    2.75Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (3,000
    )
    
    
    3.33Options outstanding, end of period
    
    
    414,177
    
    
    $
    8.50
    
    
    
    5.9
    
    
    $
    Options exercisable, end of period
    
    
    285,657
    
    
    $
    10.70
    
    
    
    4.5
    
    
    $
    
  Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Weighted average
fair value of
options granted
    
    $
    
    
    
    $
    0.66
    
    
    $
    0.49
    
    
    $
    0.51
  Restricted Stock Awards
   23




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##### Table of Contents



NOTE 6  STOCK-BASED COMPENSATION (continued)
  Six months ended  June 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  FEDERAL INCOME TAX
   24




---



##### Table of Contents



Forward-Looking Statements
  Business Overview
   General
    25




---



##### Table of Contents



Financial Condition
 General.
 Cash and cash equivalents.
  26




---



##### Table of Contents



Securities.
 Loans.
 Deposits
  FHLB advances.
 Stockholders equity.
  Comparison of the Results of Operations for the Three Months Ended June 30, 2009 and 2008
 General.
  27




---



##### Table of Contents



Net interest income.
 Interest income. .
 Interest expense. .
 Provision for loan losses
  28




---



##### Table of Contents



Noninterest income.
 Noninterest expense.
  29




---



##### Table of Contents



Income taxes.
 Comparison of the Results of Operations for the Six Months Ended June 30, 2009 and 2008
 General.
 Net interest income.
 Interest income.
  30




---



##### Table of Contents



Interest expense.
 Provision for loan losses.
   Noninterest income.
  31




---



##### Table of Contents



Noninterest expense.
  Income taxes.
 Critical Accounting Policies
  Provision for Loan Losses
  Liquidity and Capital Resources
   32




---



##### Table of Contents



Deposits.
    33




---



##### Table of Contents



Evaluation of disclosure controls and procedures.
 Changes in internal control over financial reporting.
  34




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
    Nominee
    
    For
    
    
    Votes WithheldJeffrey W. Aldrich
    
    
    3,554,871
    
    
    
    210,114Mark S. Allio
    
    
    3,561,892
    
    
    
    203,093
  Continuing Director
    
    YearThomas P. Ash
    
    
    2010Jerry F. Whitmer
    
    
    2010William R. Downing
    
    
    2011Gerry W. Grace
    
    
    2011
  For
    
    Against
    
    Abstain
    
    Broker Non-Vote1,178,518
    
    746,464
    
    13,900
    
    1,826,103
  For
    
    Against
    
    Abstain3,313,795
    
    438,815
    
    12,375
  For
    
    Against
    
    Abstain3,188,678
    
    551,114
    
    25,193
  For
    
    Against
    
    Abstain3,636,752
    
    55,671
    
    72,562
   35




---



##### Table of Contents



Item 6. Exhibits.
   36




---



##### Table of Contents



CENTRAL FEDERAL CORPORATIONDated:  August 14, 2009
    By:
    /s/ Mark S. AllioMark S. AllioChairman of the Board, President and
Chief Executive OfficerDated:  August 14, 2009
    By:
    /s/ Therese Ann LiutkusTherese Ann Liutkus, CPATreasurer and Chief Financial Officer  37




---



##### 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 registrant4.1
    
    
    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)10.1
    
    
    Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference
to Appendix A of the registrants Proxy Statement (Schedule 14A) filed with the
Commission on March 31, 2009)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
  38