##### 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 March 31, 2010
 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)
 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 March 31, 2010 and December 31, 2009
    
    
    3Consolidated Statements of Operations for the three months ended
March 31, 2010 and 2009
    
    
    4Consolidated Statement of Changes in Stockholders Equity
for the three months ended March 31, 2010
    
    
    5Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2010 and 2009
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 4T. Controls and Procedures
    
    
    42PART II. Other InformationItem 6. Exhibits
    
    
    43Signatures
    
    
    44Exhibit 11.1Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)ASSETSCash and cash equivalents
    
    $
    23,707
    
    
    $
    2,973Securities available for sale
    
    
    23,238
    
    
    
    21,241Loans held for sale
    
    
    1,586
    
    
    
    1,775Loans, net of allowance of $7,396 and $7,090
    
    
    223,465
    
    
    
    231,105Federal Home Loan Bank stock
    
    
    1,942
    
    
    
    1,942Loan servicing rights
    
    
    82
    
    
    
    88Premises and equipment, net
    
    
    6,887
    
    
    
    7,003Other intangible assets
    
    
    159
    
    
    
    169Bank owned life insurance
    
    
    4,050
    
    
    
    4,017Accrued interest receivable and other assets
    
    
    3,488
    
    
    
    3,429$
    288,604
    
    
    $
    273,742LIABILITIES AND STOCKHOLDERS EQUITYDepositsNoninterest bearing
    
    $
    20,171
    
    
    $
    17,098Interest bearing
    
    
    214,563
    
    
    
    193,990Total deposits
    
    
    234,734
    
    
    
    211,088Short-term Federal Home Loan Bank advances
    
    
    
    
    
    
    2,065Long-term Federal Home Loan Bank advances
    
    
    23,942
    
    
    
    29,942Advances by borrowers for taxes and insurance
    
    
    75
    
    
    
    161Accrued interest payable and other liabilities
    
    
    1,953
    
    
    
    2,104Subordinated debentures
    
    
    5,155
    
    
    
    5,155Total liabilities
    
    
    265,859
    
    
    
    250,515Stockholders equityPreferred stock, Series A, $.01 par value; $7,225 aggregate
liquidation value, 1,000,000 shares authorized;
7,225 shares issued
    
    
    7,033
    
    
    
    7,021Common stock, $.01 par value; shares authorized;
12,000,000, shares issued; 4,657,204 in 2010 and
4,658,120 in 2009
    
    
    47
    
    
    
    47Common stock warrant
    
    
    217
    
    
    
    217Additional paid-in capital
    
    
    27,506
    
    
    
    27,517Retained earnings (accumulated deficit)
    
    
    (9,231
    )
    
    
    (9,034
    )Accumulated other comprehensive income
    
    
    418
    
    
    
    704Treasury stock, at cost; 558,533 shares
    
    
    (3,245
    )
    
    
    (3,245
    )Total stockholders equity
    
    
    22,745
    
    
    
    23,227$
    288,604
    
    
    $
    273,742
   3




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##### Table of Contents



Three months endedMarch 31,2010
    
    
    2009Interest and dividend incomeLoans, including fees
    
    $
    3,146
    
    
    $
    3,397Securities
    
    
    196
    
    
    
    297Federal Home Loan Bank stock dividends
    
    
    22
    
    
    
    24Federal funds sold and other
    
    
    8
    
    
    
    123,372
    
    
    
    3,730Interest expenseDeposits
    
    
    919
    
    
    
    1,359Short-term Federal Home Loan Bank advances and
other debt
    
    
    
    
    
    
    1Long-term Federal Home Loan Bank advances and
other debt
    
    
    184
    
    
    
    254Subordinated debentures
    
    
    40
    
    
    
    561,143
    
    
    
    1,670Net interest income
    
    
    2,229
    
    
    
    2,060Provision for loan losses
    
    
    748
    
    
    
    550Net interest income after provision for loan losses
    
    
    1,481
    
    
    
    1,510Noninterest incomeService charges on deposit accounts
    
    
    70
    
    
    
    82Net gains on sales of loans
    
    
    150
    
    
    
    152Loan servicing fees, net
    
    
    8
    
    
    
    9Net gain on sales of securities
    
    
    240
    
    
    
    Earnings on bank owned life insurance
    
    
    33
    
    
    
    32Other
    
    
    9
    
    
    
    11510
    
    
    
    286Noninterest expenseSalaries and employee benefits
    
    
    1,053
    
    
    
    1,046Occupancy and equipment
    
    
    68
    
    
    
    145Data processing
    
    
    155
    
    
    
    156Franchise taxes
    
    
    93
    
    
    
    86Professional fees
    
    
    206
    
    
    
    337Director fees
    
    
    26
    
    
    
    34Postage, printing and supplies
    
    
    59
    
    
    
    59Advertising and promotion
    
    
    28
    
    
    
    12Telephone
    
    
    24
    
    
    
    24Loan expenses
    
    
    27
    
    
    
    12Depreciation
    
    
    131
    
    
    
    119FDIC premiums
    
    
    149
    
    
    
    65Amortization of intangibles
    
    
    10
    
    
    
    Other
    
    
    77
    
    
    
    852,106
    
    
    
    2,180Loss before income taxes
    
    
    (115
    )
    
    
    (384
    )Income tax benefit
    
    
    (20
    )
    
    
    (138
    )Net loss
    
    
    (95
    )
    
    
    (246
    )Preferred stock dividends and accretion of unearned
discount on preferred stock
    
    
    (102
    )
    
    
    (101
    )Net loss available to common stockholders
    
    $
    (197
    )
    
    $
    (347
    )Loss per common share:Basic
    
    $
    (0.05
    )
    
    $
    (0.08
    )Diluted
    
    $
    (0.05
    )
    
    $
    (0.08
    )
   4




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##### Table of Contents



AccumulatedCommon
    
    
    Additional
    
    
    Retained Earnings
    
    
    Other
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    Stock
    
    
    Paid-In
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersStock
    
    
    Stock
    
    
    Warrant
    
    
    Capital
    
    
    Deficit)
    
    
    Income
    
    
    Stock
    
    
    EquityBalance at January 1, 2010
    
    $
    7,021
    
    
    $
    47
    
    
    $
    217
    
    
    $
    27,517
    
    
    $
    (9,034
    )
    
    $
    704
    
    
    $
    (3,245
    )
    
    $
    23,227Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    
    
    
    
    (95
    )Change in unrealized gain (loss) on securities available for sale,
net of reclassification and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (286
    )
    
    
    
    
    
    
    (286
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (381
    )Accretion of discount on preferred stock
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    Release of 1,372 stock based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Tax effect from vesting of stock based incentive plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    (90
    )Balance at March 31, 2010
    
    $
    7,033
    
    
    $
    47
    
    
    $
    217
    
    
    $
    27,506
    
    
    $
    (9,231
    )
    
    $
    418
    
    
    $
    (3,245
    )
    
    $
    22,745
   5




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##### Table of Contents



Three months ended March 31,2010
    
    
    2009Cash flows from operating activities
    
    $
    524
    
    
    $
    (1,698
    )Cash flows from investing activitiesAvailable-for-sale securities:Sales
    
    
    9,031
    
    
    
    Maturities, prepayments and calls
    
    
    1,445
    
    
    
    1,311Purchases
    
    
    (12,572
    )
    
    
    Loan originations and payments, net
    
    
    2,624
    
    
    
    (2,970
    )Proceeds from sale of portfolio loans
    
    
    4,302
    
    
    
    Additions to premises and equipment
    
    
    (15
    )
    
    
    (12
    )Proceeds from the sale of premises and equipment
    
    
    
    
    
    
    1Net cash from investing activities
    
    
    4,815
    
    
    
    (1,670
    )Cash flows from financing activitiesNet change in deposits
    
    
    23,636
    
    
    
    12,732Net change in short-term borrowings from the FHLB and other debt
    
    
    (2,065
    )
    
    
    (5,850
    )Proceeds from long-term FHLB advances and other debt
    
    
    
    
    
    
    7,200Repayments on long-term FHLB advances and other debt
    
    
    (6,000
    )
    
    
    (2,200
    )Net change in advances by borrowers for taxes and insurance
    
    
    (86
    )
    
    
    (74
    )Cash dividends paid on common stock
    
    
    
    
    
    
    (205
    )Cash dividends paid on preferred stock
    
    
    (90
    )
    
    
    (70
    )Costs associated with issuance of preferred stock
    
    
    
    
    
    
    (13
    )Net cash from financing activities
    
    
    15,395
    
    
    
    11,520Net change in cash and cash equivalents
    
    
    20,734
    
    
    
    8,152Beginning cash and cash equivalents
    
    
    2,973
    
    
    
    4,177Ending cash and cash equivalents
    
    $
    23,707
    
    
    $
    12,329Supplemental cash flow information:Interest paid
    
    $
    1,105
    
    
    $
    1,040Supplemental noncash disclosures:Transfers from loans to repossessed assets
    
    $
    
    
    
    $
    175
   6




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   Reclassifications
 Earnings (Loss) Per Common Share
 Three months ended March 31,2010
    
    
    2009BasicNet loss
    
    $
    (95
    )
    
    $
    (246
    )Less: Preferred dividends and accretion of discount on
preferred stock
    
    
    (102
    )
    
    
    (101
    )Less: Net loss allocated to unvested share-based payment awards
    
    
    
    
    
    
    1Net loss allocated to common stockholders
    
    $
    (197
    )
    
    $
    (346
    )Weighted average common shares outstanding
    
    
    4,095,217
    
    
    
    4,084,520Basic loss per common share
    
    $
    (0.05
    )
    
    $
    (0.08
    )DilutedNet loss allocated to common stockholders
    
    $
    (197
    )
    
    $
    (346
    )Weighted average common shares outstanding for basic loss per
common share
    
    
    4,095,217
    
    
    
    4,084,520Add: Dilutive effects of assumed exercises of stock options
    
    
    
    
    
    
    Add: Dilutive effects of assumed exercises of stock warrant
    
    
    
    
    
    
    Average shares and dilutive potential common shares
    
    
    4,095,217
    
    
    
    4,084,520Diluted loss per common share
    
    $
    (0.05
    )
    
    $
    (0.08
    )
  7




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  Three months ended March 31,2010
    
    
    2009Stock options
    
    
    300,220
    
    
    
    416,644Stock warrant
    
    
    336,568
    
    
    
    336,568
 Adoption of New Accounting Standards
 , Accounting for Transfers of Financial Assets, an Amendment of
FASB Statement No. 140
 Amendments to FASB Interpretation No. 46(R)
 Improving Disclosures About Fair Value Measurements.
  8




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##### Table of Contents



NOTE 2  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueMarch 31, 2010Issued by U.S. government-sponsored entities and agencies:Mortgage-backed securities  residential
    
    $
    2,357
    
    
    $
    259
    
    
    $
    
    
    
    $
    2,616Collateralized mortgage obligations
    
    
    20,283
    
    
    
    375
    
    
    
    36
    
    
    
    20,622Total
    
    $
    22,640
    
    
    $
    634
    
    
    $
    36
    
    
    $
    23,238
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2009Issued by U.S. government-sponsored entities:Mortgage-backed securities  residential
    
    $
    5,171
    
    
    $
    390
    
    
    $
    
    
    
    $
    5,561Collateralized mortgage obligations
    
    
    13,551
    
    
    
    479
    
    
    
    
    
    
    
    14,030Collateralized mortgage obligations issued by private issuers
    
    
    1,635
    
    
    
    15
    
    
    
    
    
    
    
    1,650Total
    
    $
    20,357
    
    
    $
    884
    
    
    $
    
    
    
    $
    21,241
  Three monthsended March 31,2010Proceeds
    
    $
    9,031Gross gains
    
    
    240Gross losses
    
    
    
   9




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##### Table of Contents



NOTE 2  SECURITIES (continued)
   March 31,
    
    
    December 31,2010
    
    
    2009Pledged as collateral for:FHLB advances
    
    $
    11,121
    
    
    $
    11,045Public deposits
    
    
    5,516
    
    
    
    4,038Customer repurchase agreements
    
    
    3,327
    
    
    
    3,088Interest-rate swaps
    
    
    1,070
    
    
    
    1,010Total
    
    $
    21,034
    
    
    $
    19,181
   Less than 12 Months
    
    
    12 Months or More
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Fair Value
    
    
    LossIssued by U.S. government-sponsored agencies:Collateralized mortgage obligations
    
    $
    6,899
    
    
    $
    36
    
    
    $
    
    
    
    $
    
    
    
    $
    6,899
    
    
    $
    36Total temporarily impaired
    
    $
    6,899
    
    
    $
    36
    
    
    $
    
    
    
    $
    
    
    
    $
    6,899
    
    
    $
    36
    10




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##### Table of Contents



NOTE 3  LOANS
 March 31,
    
    
    December 31,2010
    
    
    2009Commercial
    
    $
    43,591
    
    
    $
    42,769Real estate:Single-family residential
    
    
    28,023
    
    
    
    29,461Multi-family residential
    
    
    38,536
    
    
    
    37,679Commercial
    
    
    92,827
    
    
    
    96,443Construction
    
    
    7,282
    
    
    
    5,791Consumer
    
    
    20,602
    
    
    
    26,052Subtotal
    
    
    230,861
    
    
    
    238,195Less: Allowance for loan losses (ALLL)
    
    
    (7,396
    )
    
    
    (7,090
    )Loans, net
    
    $
    223,465
    
    
    $
    231,105
   Three months endedMarch 31,2010
    
    
    2009Beginning balance
    
    $
    7,090
    
    
    $
    3,119Provision for loan losses
    
    
    748
    
    
    
    550Reclassification of allowance for losses on loan-related commitments (1)
    
    
    (12
    )
    
    
    Loans charged-off
    
    
    (523
    )
    
    
    (143
    )Recoveries
    
    
    93
    
    
    
    2Ending balance
    
    $
    7,396
    
    
    $
    3,528
 (1)
    
    Reclassified to accrued interest payable and other liabilities in the consolidated balance
sheet.  March 31,
    
    
    December 31,2010
    
    
    2009Period-end loans with no allocated
ALLL
    
    $
    4,322
    
    
    $
    6,964Period-end loans with allocated ALLL
    
    
    9,075
    
    
    
    6,734Total
    
    $
    13,397
    
    
    $
    13,698Amount of the ALLL allocated
    
    $
    3,582
    
    
    $
    2,033
  11




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##### Table of Contents



NOTE 3  LOANS (continued)
 Three months endedMarch 31,2010
    
    
    2009Average of individually impaired loans during the period
    
    $
    13,191
    
    
    $
    2,158Interest income recognized during impairment
    
    
    3
    
    
    
    Cash-basis interest income recognized
    
    
    
    
    
    
    
  March 31,
    
    
    December 31,2010
    
    
    2009Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    14Nonaccrual loans:Commercial
    
    $
    647
    
    
    $
    217Single-family residential real estate
    
    
    553
    
    
    
    426Multi-family residential real estate
    
    
    3,835
    
    
    
    4,406Commercial real estate
    
    
    7,869
    
    
    
    6,864Home equity lines of credit
    
    
    1,162
    
    
    
    1,307Total nonaccrual loans
    
    $
    14,066
    
    
    $
    13,220
   March 31,
    
    
    December 31,2010
    
    
    2009Commercial
    
    $
    197
    
    
    $
    217Single-family residential real estate
    
    
    260
    
    
    
    261Commercial real estate
    
    
    727
    
    
    
    854Home equity lines of credit
    
    
    495
    
    
    
    496Total
    
    $
    1,679
    
    
    $
    1,828
    12




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##### Table of Contents



NOTE 4  FAIR VALUE
      Securities available for sale
 Derivatives
 Impaired loans
 Loan servicing rights
  13




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
 Assets and Liabilities Measured on a Recurring Basis
  Fair ValueMeasurements atMarch 31, 2010 UsingSignificant OtherObservable Inputs(Level 2)Assets:Securities available for sale:Issued by U.S. government-sponsored entities and agencies:Mortgage-backed securities  residential
    
    $
    2,616Collateralized mortgage obligations
    
    
    20,622Total securities available for sale
    
    $
    23,238Yield maintenance provisions (embedded derivatives)
    
    $
    556Liabilities:Interest-rate swaps
    
    $
    556
 Fair ValueMeasurements atDecember 31, 2009Using SignificantOther ObservableInputs(Level 2)Assets:Securities available for sale:Issued by U.S. government-sponsored agencies:Mortgage-backed securities  residential
    
    $
    5,561Collateralized mortgage obligations
    
    
    14,030Collateralized mortgage obligations issued by private issuers
    
    
    1,650Total securities available for sale
    
    $
    21,241Yield maintenance provisions (embedded derivatives)
    
    $
    480Liabilities:Interest-rate swaps
    
    $
    480
  14




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
 Assets Measured on a Non-Recurring Basis
  Fair Value Measurements at March 31, 2010 UsingSignificant Other
    
    
    SignificantObservable Inputs
    
    
    Unobservable Inputs(Level 2)
    
    
    (Level 3)Loan servicing rights
    
    $
    23
    
    
    $
    Impaired loans
    
    
    
    
    
    
    6,143
 Fair Value Measurements at December 31, 2009 UsingSignificant Other
    
    
    SignificantObservable Inputs
    
    
    Unobservable Inputs(Level 2)
    
    
    (Level 3)Loan servicing rights
    
    $
    16
    
    
    $
    Impaired loans
    
    
    
    
    
    
    6,757
     15




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##### Table of Contents



NOTE 4  FAIR VALUE (continued)
  March 31, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assetsCash and cash equivalents
    
    $
    23,707
    
    
    $
    23,707
    
    
    $
    2,973
    
    
    $
    2,973Securities available for sale
    
    
    23,238
    
    
    
    23,238
    
    
    
    21,241
    
    
    
    21,241Loans held for sale
    
    
    1,586
    
    
    
    1,611
    
    
    
    1,775
    
    
    
    1,804Loans, net
    
    
    223,465
    
    
    
    225,124
    
    
    
    231,105
    
    
    
    232,595FHLB stock
    
    
    1,942
    
    
    
    n/a
    
    
    
    1,942
    
    
    
    n/aAccrued interest receivable
    
    
    935
    
    
    
    935
    
    
    
    984
    
    
    
    984Yield maintenance provisions
(embedded derivatives)
    
    
    556
    
    
    
    556
    
    
    
    480
    
    
    
    480Financial liabilitiesDeposits
    
    $
    (234,734
    )
    
    $
    (235,623
    )
    
    $
    (211,088
    )
    
    $
    (212,306
    )FHLB advances
    
    
    (23,942
    )
    
    
    (24,477
    )
    
    
    (32,007
    )
    
    
    (32,443
    )Subordinated debentures
    
    
    (5,155
    )
    
    
    n/a
    
    
    
    (5,155
    )
    
    
    n/aAccrued interest payable
    
    
    (198
    )
    
    
    (198
    )
    
    
    (160
    )
    
    
    (160
    )Interest-rate swaps
    
    
    (556
    )
    
    
    (556
    )
    
    
    (480
    )
    
    
    (480
    )
    16




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##### Table of Contents



NOTE
5  FHLB ADVANCES
  March 31,
    
    
    December 31,Rate
    
    
    2010
    
    
    2009Fixed-rate advances:Maturing January 2010
    
    
    3.19
    %
    
    $
    
    
    
    $
    5,000Maturing March 2010
    
    
    4.96
    %
    
    
    
    
    
    
    1,000Maturing March 2011
    
    
    1.90
    %
    
    
    2,200
    
    
    
    2,200Maturing April 2011
    
    
    2.88
    %
    
    
    3,000
    
    
    
    3,000Maturing July 2011
    
    
    3.85
    %
    
    
    3,000
    
    
    
    3,000Maturing April 2012
    
    
    2.30
    %
    
    
    5,000
    
    
    
    5,000Maturing June 2012
    
    
    2.05
    %
    
    
    742
    
    
    
    742Maturing January 2014
    
    
    3.12
    %
    
    
    5,000
    
    
    
    5,000Maturing May 2014
    
    
    3.06
    %
    
    
    5,000
    
    
    
    5,000Total
    
    
    
    
    
    $
    23,942
    
    
    $
    29,942
   March 31,
    
    
    December 31,2010
    
    
    2009First mortgage loans under a blanket lien
arrangement
    
    $
    23,496
    
    
    $
    25,053Second mortgages
    
    
    926
    
    
    
    938Multi-family mortgage loans
    
    
    10,696
    
    
    
    12,703Home equity lines of credit
    
    
    13,251
    
    
    
    13,331Commercial real estate loans
    
    
    2,055
    
    
    
    62,313Securities
    
    
    11,121
    
    
    
    11,045Total
    
    $
    61,545
    
    
    $
    125,383
  Payment information
  March 31, 2011
    
    $
    2,200March 31, 2012
    
    
    6,000March 31, 2013
    
    
    5,742March 31, 2014
    
    
    5,000March 31, 2015
    
    
    5,000Total
    
    $
    23,942
  17




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##### Table of Contents



NOTE 6  OTHER BORROWINGS
   March 31,
    
    
    December 31,2010
    
    
    2009Commercial loans
    
    $
    17,385
    
    
    $
    18,407Commercial real estate loans
    
    
    42,988
    
    
    
    254$
    60,373
    
    
    $
    18,661
   18




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##### Table of Contents



NOTE 7  STOCK-BASED COMPENSATION
   Stock Options
    Three months endedMarch 31, 2009Risk-free interest rate
    
    
    1.64
    %Expected term (years)
    
    
    7Expected stock price volatility
    
    
    27
    %Dividend yield
    
    
    3.63
    %
  19




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##### Table of Contents



NOTE 7  STOCK-BASED COMPENSATION (continued)
  WeightedAverageRemainingWeighted
    
    
    ContractualAverage
    
    
    Term
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    (Years)
    
    
    ValueOutstanding at beginning of period
    
    
    310,361
    
    
    $
    7.89Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (10,141
    )
    
    
    5.00Outstanding at end of period
    
    
    300,220
    
    
    $
    7.99
    
    
    
    6.2
    
    
    $
    Exercisable at end of period
    
    
    231,424
    
    
    $
    9.36
    
    
    
    5.5
    
    
    $
    
   Restricted Stock Awards
   20




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##### Table of Contents



NOTE 7  STOCK-BASED COMPENSATION (continued)
  Weighted AverageGrant-Date FairShares
    
    
    ValueNonvested at beginning of period
    
    
    28,733
    
    
    $
    5.35Granted
    
    
    
    
    
    
    Vested
    
    
    (15,126
    )
    
    
    5.11Forfeited
    
    
    (916
    )
    
    
    4.03Nonvested shares outstanding at end of period
    
    
    12,691
    
    
    $
    5.74
   21




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NOTE 8  PREFERRED STOCK
      22




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##### Table of Contents



NOTE 9  REGULATORY CAPITAL MATTERS
    To Be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action RegulationsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioMarch 31, 2010Total Capital to risk
weighted assets
    
    $
    26,909
    
    
    
    12.2
    %
    
    $
    17,610
    
    
    
    8.0
    %
    
    $
    22,012
    
    
    
    10.0
    %Tier 1 (Core) Capital to risk
weighted assets
    
    
    24,144
    
    
    
    11.0
    %
    
    
    8,805
    
    
    
    4.0
    %
    
    
    13,207
    
    
    
    6.0
    %Tier 1 (Core) Capital to
adjusted total assets
    
    
    24,144
    
    
    
    8.4
    %
    
    
    11,447
    
    
    
    4.0
    %
    
    
    14,309
    
    
    
    5.0
    %Tangible Capital to
adjusted total assets
    
    
    24,144
    
    
    
    8.4
    %
    
    
    4,293
    
    
    
    1.5
    %
    
    
    N/A
    
    
    
    N/A
  23




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##### Table of Contents



NOTE 9  REGULATORY CAPITAL MATTERS (continued)
 To Be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action RegulationsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioDecember 31, 2009Total Capital to risk
weighted assets
    
    $
    26,978
    
    
    
    11.7
    %
    
    $
    18,417
    
    
    
    8.0
    %
    
    $
    23,021
    
    
    
    10.0
    %Tier 1 (Core) Capital to risk
weighted assets
    
    
    24,073
    
    
    
    10.5
    %
    
    
    9,208
    
    
    
    4.0
    %
    
    
    13,813
    
    
    
    6.0
    %Tier 1 (Core) Capital to
adjusted total assets
    
    
    24,073
    
    
    
    8.9
    %
    
    
    10,850
    
    
    
    4.0
    %
    
    
    13,563
    
    
    
    5.0
    %Tangible Capital to
adjusted total assets
    
    
    24,073
    
    
    
    8.9
    %
    
    
    4,069
    
    
    
    1.5
    %
    
    
    N/A
    
    
    
    N/A
   Dividend Restrictions
  24




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##### Table of Contents



NOTE 10  OTHER COMPREHENSIVE INCOME (LOSS)
  Three months ended March 31,2010
    
    
    2009Change in unrealized holding gains on securities available for sale
    
    $
    (46
    )
    
    $
    266Reclassification adjustment for gains realized in income
    
    
    (240
    )
    
    
    Net change in unrealized gains
    
    
    (286
    )
    
    
    266Tax effect
    
    
    
    
    
    
    (91
    )Net of tax amount
    
    $
    (286
    )
    
    $
    175
  December 31,
    
    
    Current period
    
    
    March 31,2009
    
    
    change
    
    
    2010Unrealized gains (losses) on securities available for sale
    
    $
    704
    
    
    $
    (286
    )
    
    $
    418
  25




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##### Table of Contents



Forward-Looking Statements
  
    
    changes in general economic conditions and economic conditions in the
markets we serve, any of which may affect, among other things, our level of
nonperforming assets, charge-offs, and provision for loan loss expense;
 
    
    changes in interest rates that may reduce net interest margin and impact
funding sources;
 
    
    changes in market rates and prices, including real estate values, which
may adversely impact the value of financial products including securities, loans and
deposits;
 
    
    changes in tax laws, rules and regulations;
 
    
    various monetary and fiscal policies and regulations, including those
determined by the Federal Reserve Board, the Federal Deposit Insurance Corporation
(FDIC) and the Office of Thrift Supervision (OTS);
 
    
    competition with other local and regional commercial banks, savings
banks, credit unions and other non-bank financial institutions;
 
    
    our ability to grow our core businesses;
 
    
    technological factors which may affect our operations, pricing, products
and services;
 
    
    unanticipated litigation, claims or assessments; and
 
    
    managements ability to manage these and other risks.
   Business Overview
   26




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##### Table of Contents



General
       27




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##### Table of Contents



Financial Condition
 General.
 Cash and cash equivalents.
 Securities.
 Loans.
 Allowance for loan losses.
   28




---



##### Table of Contents



29




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##### Table of Contents



®
  30




---



##### Table of Contents



March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Special mentionCommercial
    
    $
    5,677
    
    
    $
    3,892Multi-family residential real estate
    
    
    3,138
    
    
    
    3,143Commercial real estate
    
    
    2,830
    
    
    
    1,432Home equity lines of credit
    
    
    3,621
    
    
    
    3,894Total
    
    $
    15,266
    
    
    $
    12,361SubstandardCommercial
    
    $
    647
    
    
    $
    317Single-family residential real estate
    
    
    553
    
    
    
    426Multi-family residential real estate
    
    
    5,097
    
    
    
    5,671Commercial real estate
    
    
    10,215
    
    
    
    10,723Home equity lines of credit
    
    
    1,162
    
    
    
    1,307Other consumer loans
    
    
    
    
    
    
    14Total
    
    $
    17,674
    
    
    $
    18,458
    31




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##### Table of Contents



Deposits
 ®
    Short-term FHLB advances.
  32




---



##### Table of Contents



Long-term FHLB advances.
 Stockholders equity.
  Comparison of the Results of Operations for the Three Months Ended March 31, 2010 and 2009
 General.
 Net interest income. Average Balances, Interest Rates and Yields Rate/Volume
Analysis of Net Interest Income
   33




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##### Table of Contents



Interest income. .
 Interest expense. .
  Provision for loan losses Allowance for loan losses
   34




---



##### Table of Contents



Noninterest income.
  Noninterest expense.
  Income taxes.
  35




---



##### Table of Contents



Average Balances, Interest Rates and Yields.
 For Three Months Ended March 31,2010
    
    
    2009Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageOutstanding
    
    
    Earned/
    
    
    Yield/
    
    
    Outstanding
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(Dollars in thousands)Interest-earning assets:Securities (1) (2)
    
    $
    21,877
    
    
    $
    196
    
    
    
    3.70
    %
    
    $
    22,949
    
    
    $
    297
    
    
    
    5.35
    %Loans and loans held for sale (3)
    
    
    227,827
    
    
    
    3,146
    
    
    
    5.52
    %
    
    
    236,870
    
    
    
    3,397
    
    
    
    5.74
    %Other earning assets
    
    
    12,327
    
    
    
    8
    
    
    
    0.26
    %
    
    
    8,672
    
    
    
    12
    
    
    
    0.55
    %FHLB stock
    
    
    1,942
    
    
    
    22
    
    
    
    4.53
    %
    
    
    2,109
    
    
    
    24
    
    
    
    4.55
    %Total interest-earning assets
    
    
    263,973
    
    
    
    3,372
    
    
    
    5.12
    %
    
    
    270,600
    
    
    
    3,730
    
    
    
    5.53
    %Noninterest-earning assets
    
    
    20,032
    
    
    
    
    
    
    
    
    
    
    
    16,616Total assets
    
    $
    284,005
    
    
    
    
    
    
    
    
    
    
    $
    287,216Interest-bearing liabilities:Deposits
    
    $
    208,996
    
    
    
    919
    
    
    
    1.76
    %
    
    $
    202,814
    
    
    
    1,359
    
    
    
    2.68
    %FHLB advances and other borrowings
    
    
    29,764
    
    
    
    224
    
    
    
    3.01
    %
    
    
    33,873
    
    
    
    311
    
    
    
    3.67
    %Total interest-bearing liabilities
    
    
    238,760
    
    
    
    1,143
    
    
    
    1.91
    %
    
    
    236,687
    
    
    
    1,670
    
    
    
    2.82
    %Noninterest-bearing liabilities
    
    
    21,773
    
    
    
    
    
    
    
    
    
    
    
    17,460Total liabilities
    
    
    260,533
    
    
    
    
    
    
    
    
    
    
    
    254,147Equity
    
    
    23,472
    
    
    
    
    
    
    
    
    
    
    
    33,069Total liabilities and equity
    
    $
    284,005
    
    
    
    
    
    
    
    
    
    
    $
    287,216Net interest-earning assets
    
    $
    25,213
    
    
    
    
    
    
    
    
    
    
    $
    33,913Net interest income/interest rate spread
    
    
    
    
    
    $
    2,229
    
    
    
    3.21
    %
    
    
    
    
    
    $
    2,060
    
    
    
    2.71
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.39
    %
    
    
    
    
    
    
    
    
    
    
    3.05
    %Average interest-earning assets
to average interest-bearing liabilities
    
    
    110.56
    %
    
    
    
    
    
    
    
    
    
    
    114.33
    %
 
 (1)
    
    Average balance is computed
using the carrying value of securities.Average yield is computed
using the historical amortized cost average balance for available for
sale securities.(2)
    
    Average yields and interest earned are stated on a fully taxable equivalent basis.(3)
    
    Balance is net of the ALLL, deferred loan origination fees, undisbursed proceeds of construction loans and includes nonperforming loans.  36




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##### Table of Contents



Rate/Volume Analysis of Net Interest Income.
 Three Months EndedMarch 31, 2010Compared to Three Months EndedMarch 31, 2009Increase (decrease)due toRate
    
    
    Volume
    
    
    Net(Dollars in thousands)Interest-earning assets:Securities (1)
    
    $
    (88
    )
    
    $
    (13
    )
    
    $
    (101
    )Loans and loans held for sale
    
    
    (124
    )
    
    
    (127
    )
    
    
    (251
    )Other earning assets
    
    
    (24
    )
    
    
    20
    
    
    
    (4
    )FHLB stock
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Total interest-earning assets
    
    
    (236
    )
    
    
    (122
    )
    
    
    (358
    )Interest-bearing liabilities:Deposits
    
    
    (709
    )
    
    
    269
    
    
    
    (440
    )FHLB advances and other borrowings
    
    
    (52
    )
    
    
    (35
    )
    
    
    (87
    )Total interest-bearing liabilities
    
    
    (761
    )
    
    
    234
    
    
    
    (527
    )Net change in net interest income
    
    $
    525
    
    
    $
    (356
    )
    
    $
    169
 (1)
    
    Securities amounts are presented on a fully taxable equivalent basis.  37




---



##### Table of Contents



Critical Accounting Policies
   Determination of the allowance for loan losses. " Allowance for loan losses
  38




---



##### Table of Contents



Valuation of the deferred tax asset. Income taxes
 Fair value of financial instruments.
 Liquidity and Capital Resources
     39




---



##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Cash and unpledged securities
    
    $
    25,911
    
    
    $
    5,033Additional borrowing capacity at the FHLB
    
    
    5,788
    
    
    
    7,720Additional borrowing capacity at the FRB
    
    
    39,242
    
    
    
    12,129Unused commercial bank lines of credit
    
    
    8,000
    
    
    
    8,000Total
    
    $
    78,941
    
    
    $
    32,882
     40




---



##### Table of Contents



41




---



##### Table of Contents



Evaluation of disclosure controls and procedures.
 Changes in internal control over financial reporting.
  42




---



##### Table of Contents



Item 6.
    
    Exhibits.
   43




---



##### Table of Contents



CENTRAL FEDERAL CORPORATIONDated:  May 14, 2010
    By:
    /s/ Mark S. AllioMark S. AllioChairman of the Board, President and
Chief Executive OfficerDated:  May 14, 2010
    By:
    /s/ Therese Ann LiutkusTherese Ann Liutkus, CPATreasurer and Chief Financial Officer  44




---



##### 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
  45