##### 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, 2008
 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.)
 2923 Smith Road, Fairlawn, Ohio 44333
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ 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 September 30, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Operations for the three and nine months ended
September 30, 2008 and 2007
    
    
    4Consolidated Statement of Changes in Shareholders Equity
for the nine months ended September 30, 2008
    
    
    5Consolidated Statements of Comprehensive Income for the three and nine
months ended September 30, 2008 and 2007
    
    
    6Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 2008 and 2007
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 4T. Controls and Procedures
    
    
    25PART II. Other InformationItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 6. Exhibits
    
    
    26Signatures
    
    
    27Exhibit 11.1Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCash and cash equivalents
    
    $
    7,601
    
    
    $
    3,894Securities available for sale
    
    
    25,323
    
    
    
    28,398Loans held for sale
    
    
    549
    
    
    
    457Loans, net of allowance of $3,045 and $2,684
    
    
    231,786
    
    
    
    230,475Federal Home Loan Bank stock
    
    
    2,109
    
    
    
    1,963Loan servicing rights
    
    
    123
    
    
    
    157Foreclosed assets, net
    
    
    
    
    
    
    86Premises and equipment, net
    
    
    5,304
    
    
    
    5,717Bank owned life insurance
    
    
    3,863
    
    
    
    3,769Deferred tax asset
    
    
    1,709
    
    
    
    1,995Accrued interest receivable and other assets
    
    
    2,388
    
    
    
    2,671$
    280,755
    
    
    $
    279,582LIABILITIES AND SHAREHOLDERS EQUITYDepositsNoninterest bearing
    
    $
    14,238
    
    
    $
    12,151Interest bearing
    
    
    195,189
    
    
    
    182,157Total deposits
    
    
    209,427
    
    
    
    194,308Federal Home Loan Bank advances
    
    
    38,200
    
    
    
    49,450Advances by borrowers for taxes and insurance
    
    
    79
    
    
    
    154Accrued interest payable and other liabilities
    
    
    2,064
    
    
    
    3,136Subordinated debentures
    
    
    5,155
    
    
    
    5,155Total liabilities
    
    
    254,925
    
    
    
    252,203Shareholders equityPreferred stock, 1,000,000 shares authorized;
none issued
    
    
    
    
    
    
    Common stock, $.01 par value; 6,000,000 shares
authorized; 2008 - 4,661,195 shares issued,
2007 - 4,628,320 shares issued
    
    
    47
    
    
    
    46Additional paid-in capital
    
    
    27,419
    
    
    
    27,348Retained earnings
    
    
    1,406
    
    
    
    1,411Accumulated other comprehensive income
    
    
    203
    
    
    
    187Treasury stock, at cost; 2008 - 558,533 shares,
2007 - 193,533 shares
    
    
    (3,245
    )
    
    
    (1,613
    )Total shareholders equity
    
    
    25,830
    
    
    
    27,379$
    280,755
    
    
    $
    279,582
   3




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest and dividend incomeLoans, including fees
    
    $
    3,815
    
    
    $
    4,221
    
    
    $
    11,524
    
    
    $
    11,535Securities
    
    
    324
    
    
    
    384
    
    
    
    1,017
    
    
    
    1,160Federal Home Loan Bank stock dividends
    
    
    28
    
    
    
    32
    
    
    
    81
    
    
    
    104Federal funds sold and other
    
    
    1
    
    
    
    8
    
    
    
    5
    
    
    
    144,168
    
    
    
    4,645
    
    
    
    12,627
    
    
    
    12,813Interest expenseDeposits
    
    
    1,475
    
    
    
    1,923
    
    
    
    4,700
    
    
    
    5,310Federal Home Loan Bank advances and other debt
    
    
    346
    
    
    
    633
    
    
    
    1,144
    
    
    
    1,555Subordinated debentures
    
    
    74
    
    
    
    108
    
    
    
    247
    
    
    
    3201,895
    
    
    
    2,664
    
    
    
    6,091
    
    
    
    7,185Net interest income
    
    
    2,273
    
    
    
    1,981
    
    
    
    6,536
    
    
    
    5,628Provision for loan losses
    
    
    183
    
    
    
    293
    
    
    
    667
    
    
    
    435Net interest income after provision for loan losses
    
    
    2,090
    
    
    
    1,688
    
    
    
    5,869
    
    
    
    5,193Noninterest incomeService charges on deposit accounts
    
    
    91
    
    
    
    78
    
    
    
    260
    
    
    
    203Net gains on sales of loans
    
    
    33
    
    
    
    35
    
    
    
    130
    
    
    
    207Loan servicing fees, net
    
    
    9
    
    
    
    11
    
    
    
    27
    
    
    
    41Net gain on sales of securities
    
    
    10
    
    
    
    
    
    
    
    54
    
    
    
    Earnings on bank owned life insurance
    
    
    31
    
    
    
    32
    
    
    
    94
    
    
    
    96Other
    
    
    2
    
    
    
    8
    
    
    
    19
    
    
    
    32176
    
    
    
    164
    
    
    
    584
    
    
    
    579Noninterest expenseSalaries and employee benefits
    
    
    991
    
    
    
    1,617
    
    
    
    3,036
    
    
    
    3,631Occupancy and equipment
    
    
    105
    
    
    
    200
    
    
    
    323
    
    
    
    442Data processing
    
    
    131
    
    
    
    135
    
    
    
    421
    
    
    
    418Franchise taxes
    
    
    73
    
    
    
    73
    
    
    
    239
    
    
    
    211Professional fees
    
    
    160
    
    
    
    101
    
    
    
    325
    
    
    
    294Director fees
    
    
    34
    
    
    
    37
    
    
    
    102
    
    
    
    112Postage, printing and supplies
    
    
    32
    
    
    
    39
    
    
    
    127
    
    
    
    132Advertising and promotion
    
    
    12
    
    
    
    80
    
    
    
    39
    
    
    
    176Telephone
    
    
    23
    
    
    
    24
    
    
    
    67
    
    
    
    77Loan expenses
    
    
    6
    
    
    
    3
    
    
    
    14
    
    
    
    10Foreclosed assets, net
    
    
    (18
    )
    
    
    (48
    )
    
    
    (10
    )
    
    
    (38
    )Depreciation
    
    
    167
    
    
    
    168
    
    
    
    518
    
    
    
    465Other
    
    
    148
    
    
    
    159
    
    
    
    375
    
    
    
    3461,864
    
    
    
    2,588
    
    
    
    5,576
    
    
    
    6,276Income (loss) before income taxes
    
    
    402
    
    
    
    (736
    )
    
    
    877
    
    
    
    (504
    )Income tax expense (benefit)
    
    
    117
    
    
    
    (253
    )
    
    
    244
    
    
    
    (190
    )Net income (loss)
    
    $
    285
    
    
    $
    (483
    )
    
    $
    633
    
    
    $
    (314
    )Earnings (loss) per share:Basic
    
    $
    0.07
    
    
    $
    (0.11
    )
    
    $
    0.15
    
    
    $
    (0.07
    )Diluted
    
    $
    0.07
    
    
    $
    (0.11
    )
    
    $
    0.15
    
    
    $
    (0.07
    )
   4




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AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock
    
    
    EquityBalance at January 1, 2008
    
    $
    46
    
    
    $
    27,348
    
    
    $
    1,411
    
    
    $
    187
    
    
    $
    (1,613
    )
    
    $
    27,379Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    633
    
    
    
    
    
    
    
    
    
    
    
    633Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    649Issuance of 32,875 stock based incentive plan shares
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Release of 17,493 stock based incentive plan shares
    
    
    
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96Tax benefits from dividends on unvested stock based
incentive plan shares
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Tax effect from vesting of stock based incentive plan
shares
    
    
    
    
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39
    )Stock option expense
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Purchase of 365,000 treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,632
    )
    
    
    (1,632
    )Cash dividends declared ($.15 per share)
    
    
    
    
    
    
    
    
    
    
    (638
    )
    
    
    
    
    
    
    
    
    
    
    (638
    )Balance at September 30, 2008
    
    $
    47
    
    
    $
    27,419
    
    
    $
    1,406
    
    
    $
    203
    
    
    $
    (3,245
    )
    
    $
    25,830
   5




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Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss)
    
    $
    285
    
    
    $
    (483
    )
    
    $
    633
    
    
    $
    (314
    )Change in net unrealized gain on securities
available for sale
    
    
    149
    
    
    
    319
    
    
    
    77
    
    
    
    37Less: Reclassification adjustment for gains
realized in net income
    
    
    (10
    )
    
    
    
    
    
    
    (54
    )
    
    
    Net unrealized gain
    
    
    139
    
    
    
    319
    
    
    
    23
    
    
    
    37Tax effect
    
    
    (47
    )
    
    
    (109
    )
    
    
    (7
    )
    
    
    (13
    )Other comprehensive income
    
    
    92
    
    
    
    210
    
    
    
    16
    
    
    
    24Comprehensive income (loss)
    
    $
    377
    
    
    $
    (273
    )
    
    $
    649
    
    
    $
    (290
    )
   6




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##### Table of Contents



Nine months endedSeptember 30,2008
    
    
    2007Cash flows from operating activities
    
    $
    1,022
    
    
    $
    1,962Cash flows from investing activitiesAvailable-for-sale securities:Sales
    
    
    2,064
    
    
    
    Maturities, prepayments and calls
    
    
    8,087
    
    
    
    5,404Purchases
    
    
    (6,917
    )
    
    
    (4,873
    )Loan originations and payments, net
    
    
    (2,038
    )
    
    
    (32,499
    )Loans purchased
    
    
    
    
    
    
    (5,145
    )Proceeds from redemption of FHLB stock
    
    
    
    
    
    
    850Purchase of FHLB stock
    
    
    (65
    )
    
    
    Additions to premises and equipment
    
    
    (105
    )
    
    
    (2,241
    )Proceeds from the sale of premises and equipment
    
    
    1
    
    
    
    9Proceeds from the sale of foreclosed assets
    
    
    231
    
    
    
    231Net cash from investing activities
    
    
    1,258
    
    
    
    (38,264
    )Cash flows from financing activitiesNet change in deposits
    
    
    15,039
    
    
    
    18,865Net change in short-term borrowings from the FHLB and other debt
    
    
    (23,250
    )
    
    
    18,725Proceeds from FHLB advances and other debt
    
    
    14,000
    
    
    
    3,200Repayments on FHLB advances and other debt
    
    
    (2,000
    )
    
    
    (4,270
    )Net change in advances by borrowers for taxes and insurance
    
    
    (75
    )
    
    
    (52
    )Cash dividends paid
    
    
    (655
    )
    
    
    (1,180
    )Repurchase of common stock
    
    
    (1,632
    )
    
    
    (830
    )Net cash from financing activities
    
    
    1,427
    
    
    
    34,458Net change in cash and cash equivalents
    
    
    3,707
    
    
    
    (1,844
    )Beginning cash and cash equivalents
    
    
    3,894
    
    
    
    5,403Ending cash and cash equivalents
    
    $
    7,601
    
    
    $
    3,559Supplemental cash flow information:Interest paid
    
    $
    5,423
    
    
    $
    6,951Income taxes paid
    
    
    42
    
    
    
    15Supplemental noncash disclosures:Transfers from loans to repossessed assets
    
    $
    123
    
    
    $
    277
   7




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   Earnings Per Share
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007BasicNet income (loss)
    
    $
    285
    
    
    $
    (483
    )
    
    $
    633
    
    
    $
    (314
    )Weighted average common shares outstanding
    
    
    4,082,000
    
    
    
    4,417,040
    
    
    
    4,241,499
    
    
    
    4,483,419Basic earnings (loss) per common share
    
    $
    0.07
    
    
    $
    (0.11
    )
    
    $
    0.15
    
    
    $
    (0.07
    )DilutedNet income (loss)
    
    $
    285
    
    
    $
    (483
    )
    
    $
    633
    
    
    $
    (314
    )Weighted average common shares outstanding for
basic earnings (loss) per share
    
    
    4,082,000
    
    
    
    4,417,040
    
    
    
    4,241,499
    
    
    
    4,483,419Add: Dilutive effects of assumed exercises of
stock options and stock based incentive plan
shares
    
    
    
    
    
    
    
    
    
    
    1,527
    
    
    
    Average shares and dilutive potential common shares
    
    
    4,082,000
    
    
    
    4,417,040
    
    
    
    4,243,026
    
    
    
    4,483,419Diluted earnings (loss) per common share
    
    $
    0.07
    
    
    $
    (0.11
    )
    
    $
    0.15
    
    
    $
    (0.07
    )
  8




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock options
    
    
    334,702
    
    
    
    296,289
    
    
    
    308,575
    
    
    
    290,447Stock based incentive plan shares
    
    
    28,326
    
    
    
    16,377
    
    
    
    27,465
    
    
    
    18,901
 Operating Segments:
  Adoption of New Accounting Standards:
 Fair Value Option and Fair Value Measurements
 Fair Value Measurements Effective Date of FASB Statement
No. 157.
 The Fair Value Option for Financial Assets and
Financial Liabilities.
  9




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##### Table of Contents



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




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  Fair Value Measurements at September 30, 2008 UsingQuoted Prices inActive Markets
    
    
    
    
    
    
    Significantfor Identical
    
    
    Significant Other
    
    
    UnobservableSeptember 30,
    
    
    Assets
    
    
    Observable Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available for sale
securities
    
    $
    25,323
    
    
    $
    
    
    
    $
    25,323
    
    
    $
    
  Fair Value Measurements at September 30, 2008 UsingQuoted Prices inActive Markets
    
    
    
    
    
    
    Significantfor Identical
    
    
    Significant Other
    
    
    UnobservableSeptember 30,
    
    
    Assets
    
    
    Observable Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Loan servicing rights
    
    $
    123
    
    
    $
    
    
    
    $
    123
    
    
    $
    Impaired loans
    
    $
    646
    
    
    $
    
    
    
    $
    646
    
    
    $
    
   Accounting for
Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements
 Written Loan
Commitments Recorded at Fair Value through Earnings Application of Accounting Principles to Loan Commitments
  11




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Share-Based
Payment
 Effect of Newly Issued But Not Yet Effective 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
  12




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##### Table of Contents



NOTE 2  LOANS
  September 30,
    
    
    December 31,2008
    
    
    2007Commercial
    
    $
    40,366
    
    
    $
    35,334Real estate:Single-family residential
    
    
    27,934
    
    
    
    31,082Multi-family residential
    
    
    42,207
    
    
    
    43,789Commercial
    
    
    97,909
    
    
    
    95,088Consumer
    
    
    26,802
    
    
    
    28,248Subtotal
    
    
    235,218
    
    
    
    233,541Less: Net deferred loan fees
    
    
    (387
    )
    
    
    (382
    )Allowance for loan losses
    
    
    (3,045
    )
    
    
    (2,684
    )Loans, net
    
    $
    231,786
    
    
    $
    230,475
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Beginning balance
    
    $
    2,947
    
    
    $
    2,272
    
    
    $
    2,684
    
    
    $
    2,109Provision for loan losses
    
    
    183
    
    
    
    293
    
    
    
    667
    
    
    
    435Loans charged-off
    
    
    (89
    )
    
    
    (28
    )
    
    
    (315
    )
    
    
    (37
    )Recoveries
    
    
    4
    
    
    
    47
    
    
    
    9
    
    
    
    77Ending balance
    
    $
    3,045
    
    
    $
    2,584
    
    
    $
    3,045
    
    
    $
    2,584
  September 30,
    
    
    December 31,2008
    
    
    2007Period-end loans with no allocated allowance for loan losses
    
    $
    1,264
    
    
    $
    Period-end loans with allocated allowance for loan losses
    
    
    646
    
    
    
    Total
    
    $
    1,910
    
    
    $
    Amount of the allowance for loan losses allocated
    
    $
    394
    
    
    $
    
  13




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##### Table of Contents



NOTE 2  LOANS (continued)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Average of individually impaired
loans during the period
    
    $
    1,910
    
    
    $
    
    
    
    $
    1,482
    
    
    $
    Interest income recognized during
impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash-basis interest income recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  September 30,
    
    
    December 31,2008
    
    
    2007Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    97Nonaccrual loans
    
    
    2,038
    
    
    
    391
  NOTE 3  STOCK COMPENSATION PLANS
   Stock Options
   14




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##### Table of Contents



NOTE 3  STOCK COMPENSATION PLANS (continued)
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Risk-free interest rate
    
    
    
    
    
    
    4.31
    %
    
    
    2.46
    %
    
    
    4.61
    %Expected term (years)
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    6Expected stock price volatility
    
    
    
    
    
    
    19
    %
    
    
    23
    %
    
    
    22
    %Dividend yield
    
    
    
    
    
    
    3.63
    %
    
    
    4.87
    %
    
    
    4.66
    %
  Nine months ended September 30, 2008WeightedAverageWeighted
    
    
    RemainingAverage Exercise
    
    
    ContractualShares
    
    
    Price
    
    
    Term (Years)
    
    
    Intrinsic ValueOptions
outstanding,
beginning of period
    
    
    299,622
    
    
    $
    10.94Granted
    
    
    43,975
    
    
    
    4.11Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (12,425
    )
    
    
    9.67Options
outstanding, end of
period
    
    
    331,172
    
    
    $
    10.08
    
    
    
    5.7
    
    
    $
    Options
exercisable, end of
period
    
    
    276,055
    
    
    $
    11.12
    
    
    
    4.8
    
    
    $
    
  15




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NOTE 3  STOCK COMPENSATION PLANS (continued)
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Intrinsic value of options exercised
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash received from option exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Related tax benefit realized from
option exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of
options granted
    
    $
    
    
    
    
    0.12
    
    
    $
    0.51
    
    
    $
    0.99
  Restricted Stock Awards
   Nine months ended September 30, 2008Weighted AverageGrant-Date FairShares
    
    
    ValueNonvested shares outstanding at beginning of period
    
    
    32,525
    
    
    $
    8.79Granted
    
    
    32,875
    
    
    
    4.03Vested
    
    
    (14,692
    )
    
    
    8.86Forfeited
    
    
    
    
    
    
    Nonvested shares outstanding at end of period
    
    
    50,708
    
    
    $
    5.68
   16




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##### Table of Contents



NOTE 4  FEDERAL HOME LOAN BANK ADVANCES
  September 30,
    
    
    December 31,2008
    
    
    2007Maturity October 2008 at 1.80% floating rate
    
    $
    15,000
    
    
    $
    Maturity January 2008 at 4.00% floating rate
    
    
    
    
    
    
    38,250Maturities February 2009 thru July 2011,
fixed at rates from 2.48% to 5.60%,
averaging 3.98% at September 30, 2008, and
maturities March 2008 thru March 2010,
fixed at rates from 2.90% to 5.60%,
averaging 4.89% at December 31, 2007
    
    
    23,200
    
    
    
    11,200Total
    
    $
    38,200
    
    
    $
    49,450
   September 30,
    
    
    December 31,2008
    
    
    2007First mortgage loans under a blanket lien arrangement
    
    $
    25,595
    
    
    $
    26,649Second mortgage loans
    
    
    507
    
    
    
    577Multi-family mortgage loans
    
    
    17,855
    
    
    
    15,227Home equity lines of credit
    
    
    18,963
    
    
    
    9,918Commercial real estate loans
    
    
    61,964
    
    
    
    62,287Securities
    
    
    13,816
    
    
    
    15,401Total
    
    $
    138,700
    
    
    $
    130,059
  Payment information
  September 30, 2009
    
    $
    25,200September 30, 2010
    
    
    7,000September 30, 2011
    
    
    6,000Total
    
    $
    38,200
  17




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##### Table of Contents



Forward-Looking Statements
  Business Overview
   General
    18




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##### Table of Contents



Financial Condition
 General.
 Cash and cash equivalents.
 Securities.
 Loans.
 Deposits ®
 Federal Home Loan Bank advances.
 Shareholders equity.
 Comparison of the Results of Operations for the Three Months Ended September 30, 2008 and 2007
 General.
  19




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##### Table of Contents



Net interest income.
 Interest income. .
 Interest expense. .
 Provision for loan losses
  20




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##### Table of Contents



Noninterest income.
 Noninterest expense.
 Income taxes.
 Comparison of the Results of Operations for the Nine Months Ended September 30, 2008 and 2007
 General.
 Net interest income.
 Interest income.
  21




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##### Table of Contents



Interest expense. .
 Provision for loan losses.
    22




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##### Table of Contents



Noninterest income.
 Noninterest expense.
 Income taxes.
 Critical Accounting Policies
  Provision for Loan Losses
  23




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##### Table of Contents



Form 10-K.
 Liquidity and Capital Resources
   Deposits.
  Tier 1 Tier 1
  24




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##### Table of Contents



Evaluation of disclosure controls and procedures.
 Changes in internal control over financial reporting.
  25




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 ISSUER PURCHASES OF EQUITY SECURITIES
 MaximumTotal
    
    
    Number (orNumber of
    
    
    ApproximateShares (or
    
    
    Dollar Value)Units)
    
    
    of Shares (orPurchased as
    
    
    Units) thatPart of
    
    
    May Yet BeTotal Number
    
    
    Average
    
    
    Publicly
    
    
    Purchasedof Shares (or
    
    
    Price Paid
    
    
    Announced
    
    
    Under theUnits)
    
    
    per Share
    
    
    Plans or
    
    
    Plans orPeriod
    
    Purchased
    
    
    (or Unit)
    
    
    Programs
    
    
    ProgramsJuly 1 - 31, 2008
    
    
    90,000
    (1)
    
    $
    3.77
    
    
    
    90,000
    
    
    
    
    (2)August 1 - 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    September 1 - 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    These shares were purchased in a privately negotiated transaction.(2)
    
    This 400,000 share repurchase program was announced on June 26, 2007 and expired on July 30, 2008. 
 Item 6. Exhibits
  ExhibitNumber
    
    Exhibit3.1
    *
    
    Certificate of Incorporation3.2
    **
    
    Amendment to Certificate of Incorporation of the registrant3.2
    ***
    
    Second Amended and Restated Bylaws of the registrant4.0
    *
    
    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**
    
    Incorporated by reference to the Exhibits included with the registrants Registration
Statement on Form S-2 No. 333-129315 filed with the Commission on October 28, 2005***
    
    Incorporated by reference to Exhibit 3.3 to the registrants Form 10-K for the fiscal year
ended December 31, 2007  26




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##### Table of Contents



CENTRAL FEDERAL CORPORATIONDated:  November 13, 2008
    By:
    /s/ Mark S. AllioMark S. AllioChairman of the Board, President and
Chief Executive OfficerDated:  November 13, 2008
    By:
    /s/ Therese Ann LiutkusTherese Ann Liutkus, CPATreasurer and Chief Financial Officer  27




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##### Table of Contents



ExhibitNumber
    
    Exhibit3.1
    *
    
    Certificate of Incorporation3.2
    **
    
    Amendment to Certificate of Incorporation of the registrant3.2
    ***
    
    Second Amended and Restated Bylaws of the registrant4.0
    *
    
    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**
    
    Incorporated by reference to the Exhibits included with the registrants Registration
Statement on Form S-2 No. 333-129315 filed with the Commission on October 28, 2005***
    
    Incorporated by reference to Exhibit 3.3 to the registrants Form 10-K for the fiscal year
ended December 31, 2007  28