UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-QSB

[Mark One]

[X]         QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

                                       OR

[ ]         TRANSITION REPORT UNDER SECTION 13 OR
            15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ______________

Commission file number 0-13311

                             CityFed Financial Corp.
                             -----------------------
        (Exact name of small business issuer as specified in its charter)

                   Delaware                            22-2527684
                   --------                            ----------
 (State or other jurisdiction of incorporation        (IRS Employer
               or organization)                    Identification No.)

                        PO Box 3126, Nantucket, MA 02584
                        --------------------------------
                    (Address of principal executive offices)

                                 (508) 228-2366
                           (Issuer's telephone number)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of April 30, 2002, the number of
shares of outstanding common stock was 18,716,134.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]



<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION March 31, 2002 and December 31,
2001 (Dollars in Thousands)
                                                 March 31, 2002    December 31,
                                                  (Unaudited)         2001
                                                  -----------         ----

ASSETS

Cash                                                $      3        $      0
Investment securities at amortized cost
   (Market value $5,028 in 2002 and $6,161 in 2001)    5,070           6,160
Other assets                                              52              51
                                                    --------        --------

TOTAL ASSETS                                        $  5,125        $  6,211
                                                    ========        ========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

LIABILITIES:
  Accrued expenses                                  $     35        $     27
  Other liabilities                                    5,720           6,789
                                                    --------        --------

      Total liabilities                                5,755           6,816
                                                    --------        --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY:
   Preferred stock, 30,000,000 shares authorized:
     $2.10 cumulative convertible, Series B, $25
          par value, issued and outstanding:
          2,538,550 in 2002 and 2001                  63,464          63,464
     Series C Junior, cumulative, $.01 par value,
          liquidation preference $3.00 per share,
          issued and outstanding: 8,257,079 in            82              82
          2002 and 2001
   Common stock, $.01 par value, 100,000,000
      shares authorized, issued:  18,915,134 in
      2002 and 2001, outstanding: 18,716,134 in
      2002 and 2001                                      188             188
   Additional paid-in capital                        108,875         108,875
   Accumulated deficit                              (172,239)       (172,214)
   Treasury stock (199,000 shares of common stock)    (1,000)         (1,000)
                                                     --------       --------

      Total stockholders' deficiency                    (630)           (605)
                                                     --------       ---------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY      $  5,125        $  6,211
                                                    ========        ========

See notes to consolidated financial statements.



                                       2
<PAGE>


CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31, 2002 and 2001
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

                                                         Three Months Ended
                                                         ------------------
                                                              March 31,
                                                              ---------
                                                          2002             2001
                                                          ----             ----

INCOME:
   Interest on investments                           $       51      $       91
   Other income                                              -               -
                                                      ---------       ---------

     Total income                                            51              91
                                                      ---------       ---------

EXPENSES:
   Compensation and employee benefits                        43              43
   Other operating expenses                                  33              21
                                                      ---------       ---------

     Total expenses                                          76              64
                                                      ---------       ---------

NET (LOSS) INCOME                                    $      (25)     $       27
                                                      =========       =========


NET LOSS AVAILABLE FOR COMMON STOCKHOLDERS              $(2,183)        $(2,132)
                                                      =========       =========
BASIC AND DILUTED LOSS PER SHARE:

   Net loss                                             $ (0.12)        $ (0.11)
                                                      =========       =========

AVERAGE SHARES OUTSTANDING                            18,716,134      18,715,609

DIVIDENDS PER COMMON SHARE                                    -               -

See notes to consolidated financial statements.




                                       3
<PAGE>

<TABLE>
CITYFED FINANCIAL CORP.

CONSOLISATED STATEMENTS OF CASH FLOWS Three months ended March 31, 2002 and 2001
(Dollars in Thousands) (Unaudited)


<CAPTION>
                                                                         2002            2001
                                                                         ----            ----
<S>                                                                  <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Interest received                                                $    124         $    81
     Operating expenses                                                    (69)           (122)
     Settlement payments                                                (1,069)             -
                                                                        ------         -------

       Net cash used in operating activities                            (1,014)            (41)
                                                                        ------         -------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Decrease in investment securities                                   1,017              44
                                                                        ------         -------

       Net cash provided by investing activities                         1,017              44
                                                                        ------         -------

NET INCREASE IN CASH                                                         3               3

CASH AT BEGINNING OF PERIOD                                                  0               8
                                                                       -------         -------

CASH AT END OF PERIOD                                                 $      3        $     11
                                                                       =======         =======

RECONCILIATION OF NET (LOSS) INCOME TO NET CASH
     USED IN OPERATING ACTIVITIES:
     Net (loss) income                                                $    (25)       $     27
     Settlement payments                                                (1,069)              -
     Increase in other assets                                               (1)            (49)
     Decrease (increase) in accrued income and expense, net                 81             (19)
                                                                       -------         -------

NET CASH USED IN OPERATING ACTIVITIES                                 $ (1,014)       $    (41)
                                                                       =======         =======
</TABLE>


See notes to consolidated financial statements.



                                       4
<PAGE>

CITYFED FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2002 (UNAUDITED)

1.       CityFed  Financial Corp.  ("CityFed")  was  incorporated in Delaware in
         1984 and until December 8, 1989, CityFed was a unitary savings and loan
         holding  company  that  conducted  its business  primarily  through its
         ownership  of  City  Federal  Savings  Bank  ("City  Federal")  and its
         subsidiaries.  On  December 7, 1989,  the Office of Thrift  Supervision
         ("OTS") of the United States  Department of the Treasury  declared City
         Federal insolvent, ordered it closed and appointed the Resolution Trust
         Corporation  ("RTC") as receiver of City Federal.  A new federal mutual
         savings bank, City Savings Bank, F.S.B. ("City Savings"),  was created,
         which  acquired all deposits  and  substantially  all of the assets and
         liabilities  of City Federal.  CityFed no longer  controls City Federal
         and has no control over City Savings.

         As a result of the receivership of City Federal,  CityFed has undergone
         material  changes  in the  nature  of  its  business  and is no  longer
         operating  as a savings and loan  holding  company.  At March 31, 2002,
         CityFed's  business  activities  consisted  primarily of  attempting to
         resolve  outstanding  indemnification  claims  against  CityFed and the
         management of investments.

         After the settlements described below, CityFed has determined to expand
         its  investment  options  through  a  subsidiary,  CFF  Services  Corp.
         ("Services").  Services was  incorporated in Delaware in February 2002.
         Services  will  invest in first and second  mortgage  assets  including
         pass-through  certificates issued by federally sponsored agencies.  The
         consolidated financial statements include the accounts and transactions
         of CityFed and Services after elimination of all intercompany activity.

         As a  result  of  the  receivership  of  City  Federal,  the  financial
         statements  of CityFed at December 31,  1989,  for the year then ended,
         and for subsequent periods,  reflect CityFed's interest in City Federal
         as discontinued operations. The financial statements have been prepared
         assuming  CityFed will continue as a going concern.  As discussed above
         and in Note 4, substantially all of the operations of CityFed have been
         discontinued  and  CityFed is subject  to a number of  commitments  and
         contingencies  that  raise  substantial  doubt  about  its  ability  to
         continue  as a going  concern.  Except  as  indicated  in  Note 4,  the
         financial  statements do not include any adjustments  that might result
         from the outcome of these  uncertainties which may be determined in the
         near term.

2.       The  consolidated  financial  statements  should be read in conjunction
         with the financial  statements and notes thereto  included in CityFed's
         Form 10-KSB for the year ended  December 31, 2001 ("2001 Form 10-KSB").
         The interim  statements  reflect all adjustments of a normal  recurring
         nature  that are, in the opinion of  management,  necessary  for a fair
         presentation  of the results  and  financial  position  for the periods
         presented.

3.       In July 1989,  CityFed's  Board of Directors  suspended  the payment of
         dividends on all three currently outstanding series of CityFed's stock.
         These  include  CityFed's  common  stock,  $0.01  par  value  per share
         ("Common Stock"),  on which CityFed had been paying quarterly dividends
         of  one  cent  per  share;   the  Series  C,  Junior  Preferred  Stock,


                                       5
<PAGE>

         Cumulative,  $0.01  par  value per share  ("Series  C  Stock"),  with a
         quarterly  dividend  of ten cents per share;  and the $2.10  Cumulative
         Convertible  Preferred  Stock,  Series  B,  $25.00  par value per share
         ("Series  B Stock"),  with a  quarterly  dividend  of $0.525 per share.
         Dividends on both series of CityFed's  preferred  stock are cumulative.
         At March 31, 2002,  dividends  in arrears were $68.0  million and $42.1
         million on CityFed's Series B and Series C Stock, respectively.

4.       COMMITMENTS AND CONTINGENCIES

         INDEMNIFICATION  CLAIMS - The By-laws of CityFed,  INTER ALIA, obligate
         CityFed to indemnify,  to the fullest extent authorized by the Delaware
         General  Corporation  Law, any person who is made or  threatened  to be
         made a party to or becomes  involved in an action by reason of the fact
         that  he or  she  is or  was  an  employee  of  CityFed  or  one of its
         subsidiaries,  and to pay on his or her  behalf  expenses  incurred  in
         defending such an action prior to the final disposition of such action;
         provided that  expenses  incurred by an officer or director may be paid
         in advance only if such person  delivers an  undertaking  to CityFed to
         repay such amounts if it ultimately  is  determined  that the person is
         not entitled to be indemnified  under CityFed's Bylaws and the Delaware
         General  Corporation Law. These undertakings are generally not secured.
         Consequently,  CityFed may become  obligated to indemnify  such persons
         for their expenses  incurred in connection  with any such action and to
         advance  legal  expenses  incurred by such  persons  prior to the final
         disposition  of any such  action.  In addition  to any amounts  paid on
         behalf of such person for expenses  incurred in connection with such an
         action, CityFed also may have further indemnification  responsibilities
         to the  extent  damages  are  assessed  against  such a person  and for
         settlement amounts.

         As  described  below,  CityFed  and  several  former  directors  and/or
         officers of City Federal were named as defendants or respondents in the
         First and Second  RTC  Actions  and in the  Notice of Charges  (as such
         terms  are  defined  below).  Many of  these  former  directors  and/or
         officers of City Federal have  requested  CityFed to indemnify them and
         to advance expenses to them in connection with these matters. A special
         committee of CityFed's  Board of Directors,  comprised of directors who
         were not named in the First or Second RTC Actions,  was  established to
         consider this request for  indemnification  and advancement of expenses
         with  respect  to the First and Second  RTC  Actions.  On the advice of
         counsel  to  the  special  committee,  CityFed  paid a  portion  of the
         defendants' reasonable defense costs on behalf of such former directors
         and officers in such connection with the First and Second RTC Actions.

         In addition to the First and Second RTC Actions,  the Notice of Charges
         and the  "Indemnification  Claims  Relating  to  Deferred  Compensation
         Plans"  (described  below),  CityFed is currently  aware of other legal
         actions and matters with respect to which  current or former  officers,
         directors  or  employees  of CityFed or its  former  subsidiaries  have
         requested that CityFed advance expenses and indemnify them.

         In  January  2002,   CityFed  entered  into  settlements  with  certain
         individuals and in the future may be required to make payments of legal
         fees and expenses  (including  settlement amounts) to other individuals
         who have settled with the RTC or Federal Deposit Insurance  Corporation
         ("FDIC") in the Second RTC Action. For more information regarding these
         settlements, see "Second RTC Action" below.



                                       6
<PAGE>

         CityFed  received a letter dated June 21,  1995,  from  Skadden,  Arps,
         Slate,  Meagher & Flom ("Skadden"),  which is counsel for Gordon Allen,
         Marshall  Criser,  Edwin Halkyard,  Peter Kellogg,  William Liffers and
         Victor Pelson ("Outside Directors"),  who are or were parties to one or
         more of the following  matters  (collectively,  the  "Cases"):  (1) the
         Second RTC Action; (2) the efforts to set aside the Temporary Order (as
         defined  below);  and (3)  the  administrative  enforcement  proceeding
         brought by the OTS against  CityFed and the Individual  Respondents (as
         defined below).  In the letter,  the Outside  Directors  demanded that,
         pursuant to CityFed's Bylaws and Restated Certificate of Incorporation,
         CityFed pay all  outstanding  invoices from Skadden for legal  services
         rendered to the Outside  Directors in  connection  with the Cases.  The
         letter states that, if CityFed  refuses to make the payments  demanded,
         the Outside Directors will consider taking  appropriate legal action to
         enforce their rights.  CityFed  received a similar letter from Venable,
         Baetjer, Howard & Civiletti,  counsel for John Kean, who was a party to
         the Second RTC  Action,  as well as from Alfred J.  Hedden,  Gilbert G.
         Roessner,  and  Gordon  Allen,  who were or are  parties  to the Cases.
         CityFed also received  similar  letters in connection with the deferred
         compensation  matters  described  below.  See  "Indemnification  Claims
         Relating to Deferred Compensation Plans."

         During January 2002,  CityFed  entered into Mutual  Release  Agreements
         with a number of former officers, directors and employees of CityFed or
         City Federal to settle in full amounts claimed for  indemnification  of
         settlement  payments made, and legal fees and expenses paid or incurred
         in  connection  with  defenses,  in  the  Cases  by  such  individuals.
         Settlement amounts totaling approximately  $1,074,000 agreed to be paid
         by CityFed to such former officers,  directors and employees of CityFed
         or City  Federal  during  2002 are  included  in other  liabilities  at
         December 31, 2001. At March 31, 2002,  $5,000 remained to be paid under
         the  settlements.  At  December  31,  2001 and  March 31,  2002,  other
         liabilities   also  include   approximately   $5,715,000  of  estimated
         indemnification claims made by former officers, directors and employees
         of  CityFed  or  City  Federal   representing   $3,010,000  related  to
         settlement  payments  made in the  Cases,  $2,379,000  related to legal
         services  and expenses  paid or incurred by such parties in  connection
         with their  defense  in the Cases,  and  $326,000  related to  deferred
         compensation arrangements.

         On May 19,  2000,  CityFed  finalized  with  the  OTS  and  the  FDIC a
         settlement ("Settlement") that settled the action described below under
         "In the  Matter of  CityFed  Financial  Corporation."  Pursuant  to the
         Settlement, the Temporary Order was dissolved, and the Escrow Agreement
         (as described below) was terminated.  Following the Settlement, CityFed
         may  reorganize,  perhaps  involving  a  bankruptcy  proceeding.  It is
         anticipated that any remaining indemnification claims will be addressed
         prior to or as part of any such reorganization.

         CityFed does not know whether all current or former officers, directors
         or  employees  of CityFed or its  former  subsidiaries  who are or were
         involved in actions or proceedings will request  advancement or payment
         of legal expenses and  indemnification  or, if requested,  whether they
         will be entitled to advancement of expenses or  indemnification.  While
         CityFed believes amounts accrued in other liabilities at March 31, 2002
         for  remaining  unpaid  claims  from the  Cases  referred  to above are
         reasonable  estimates,  it is not possible for CityFed to estimate with
         accuracy  the probable  amount or range of liability  relating to other
         potential  indemnification  claims  that  might  be  made  pursuant  to
         CityFed's Bylaws or state statutes,  although the amount of such claims
         could be material.



                                       7
<PAGE>

         CityFed has held settlement  discussions  with respect to the remaining
         claims of certain of its,  and its former  subsidiaries',  current  and
         former officers,  directors and employees who have previously requested
         indemnification from CityFed. Negotiations are ongoing.

         Certain  insurance   policies  may  provide  coverage  to  CityFed  for
         indemnification  payments made by CityFed.  These policies,  subject to
         certain  exclusions,  limitations  and loss  participation  provisions,
         provide coverage to CityFed for amounts that it may be obligated to pay
         to indemnify its current and former directors and officers, and in some
         cases also provide  coverage to the  directors  and officers of CityFed
         directly  for  covered  losses   resulting  from  claims  made  against
         CityFed's  directors and officers for certain  wrongful acts. Under the
         insurance policies,  CityFed would be required, prior to any payment by
         the insurers to it, to absorb a retention  amount equal to the first $4
         million of each  covered loss unless it is unable to do so by reason of
         insolvency.

         The  insurers  have  denied  coverage  with  respect to the claims made
         against the directors and officers in the First and Second RTC Actions.
         Consequently,  CityFed may not be  reimbursed  by the  insurers for any
         expenses advanced or indemnification payments made to these individuals
         in the First and Second RTC Actions.

         IN THE MATTER OF CITYFED FINANCIAL CORPORATION,  OTS Order No. AP 94-26
         (June 2,  1994) - On June 2,  1994,  the  Office of Thrift  Supervision
         issued a Notice of Charges  ("Notice of Charges")  against  CityFed and
         against  Gordon E. Allen,  John W.  Atherton,  Jr.,  Edwin M. Halkyard,
         Alfred J. Hedden,  Peter R. Kellogg,  William A. Liffers and Gilbert G.
         Roessner  ("Individual   Respondents"),   who  are  current  or  former
         directors  or officers of CityFed and of CityFed's  former  subsidiary,
         City Federal.

         The OTS charged that  CityFed  failed to maintain the net worth of City
         Federal  at levels  required  by  applicable  capital  requirements  in
         violation  of a  stipulation  dated  December 4, 1984  ("Stipulation").
         CityFed had provided the  Stipulation  to the Federal  Savings and Loan
         Insurance  Corporation  in connection  with the approval by the Federal
         Home Loan Bank Board ("FHLBB") of CityFed's acquisition of City Federal
         in December 1984. FHLBB Resolution No. 84-664, dated November 21, 1984,
         approved  CityFed's  acquisition of City Federal on the condition that,
         among other  things,  CityFed  provide the  Stipulation  to the Federal
         Savings and Loan Insurance Corporation.  The Stipulation provided that,
         as long as CityFed controlled City Federal, CityFed would cause the net
         worth of City Federal to be maintained at a level  consistent with that
         required by regulations and would infuse  sufficient  additional equity
         capital, in a form satisfactory to the regulators, to effect compliance
         with the capital  requirement.  For further  information  regarding the
         Stipulation, see "First RTC Action" below.

         The Notice of  Charges  sought  restitution  in an amount not less than
         $118.4  million,  which the OTS  alleged to be the  regulatory  capital
         deficiency reported by City Federal in the fall of 1989.

         The OTS also  sought  a civil  money  penalty  against  CityFed  on the
         grounds  that  CityFed  allegedly  "knowingly"  committed  the  alleged
         violations  described  above and  allegedly  "knowingly  or  recklessly
         caused a  substantial  loss to City  Federal."  The amount of the civil
         money  penalty  assessed  against  CityFed in the Notice of Charges was
         $2,649,600.



                                       8
<PAGE>

         The OTS charged  that the  Individual  Respondents  had an  affirmative
         obligation to see that CityFed complied with its net worth maintenance.
         The OTS alleged that some of the Individual Respondents (Messrs. Allen,
         Atherton,  Hedden, Kellogg and Roessner) were unjustly enriched through
         CityFed's  payment of their legal  expenses  with  CityFed  assets,  an
         allegation that refers to the  advancement by CityFed,  pursuant to its
         obligations in its Bylaws and Restated Certificate of Incorporation, of
         litigation  expenses to those Individual  Respondents in the RTC action
         in the United  States  District  Court for the  District  of New Jersey
         ("N.J. Court"), RESOLUTION TRUST CORPORATION V. ATHERTON, ET al., Civil
         Action No. 93-1811  (consolidated  with RESOLUTION TRUST CORPORATION V.
         SIMMONS,  ET AL.,  Civil Action No.  92-5261-B).  The Notice of Charges
         requested that an order be entered by the Director of the OTS requiring
         the Individual Respondents to make restitution, reimburse, indemnify or
         guarantee  the OTS  against  loss in an amount not less than  $400,000,
         which the OTS alleged to be the amount of legal  expenses  CityFed paid
         on their behalf from April to December 1993.

         In the Notice of Charges,  the OTS also  assessed a civil money penalty
         against the  Individual  Respondents on the grounds that they allegedly
         "violated a condition  imposed in writing and/or a written  agreement."
         The amount of civil money  penalties  assessed  against the  Individual
         Respondents was $51,750 each.

         Also on June 2,  1994,  the OTS issued a  Temporary  Order to Cease and
         Desist ("Temporary Order") against CityFed.  The Temporary Order sought
         to "freeze"  CityFed's assets by placing them in various respects under
         the  control  of  the  OTS.  CityFed  and  several  of  the  Individual
         Respondents  attempted to have the Temporary  Order set aside in court,
         but that attempt was unsuccessful.

         On  October  26,  1994,  CityFed  and the OTS  entered  into an  Escrow
         Agreement with  CoreStates  Bank,  N.A. (now First Union National Bank)
         pursuant to which CityFed  transferred  substantially all of its assets
         to First  Union Bank for  deposit  into an escrow  account.  The Escrow
         Agreement  provided  CityFed with $15,000 per month for normal business
         expenses  and allowed  CityFed to sell and purchase  securities  in the
         escrow account.

         The terms of the Settlement generally included the following:

            o   CityFed  paid  to  the  FDIC,  as  receiver  for  City  Federal,
                $3,169,115;

            o   CityFed  assigned to the FDIC all of  CityFed's  interest in its
                goodwill claim (see "Supervisory Goodwill Action" below);

            o   CityFed  conveyed  to the FDIC its  ownership  interest  in City
                Federal and gave up any claims against its receivership estate;

            o   The OTS dismissed with prejudice the Notice of Charges,  and the
                OTS and the FDIC gave full and complete  releases to CityFed and
                the Individual Respondents;

            o   CityFed and the  Individual  Respondents  gave full and complete
                releases to the OTS and the FDIC; and



                                       9
<PAGE>

            o   The OTS dissolved the Temporary Order and authorized First Union
                Bank to release to CityFed  all of its assets  remaining  in the
                escrow account following payment of the Settlement amount to the
                FDIC as receiver for City Federal.

         FIRST RTC ACTION - On  December  7, 1992,  the RTC in its  capacity  as
         receiver for City Savings, and the RTC in its corporate capacity, filed
         the First RTC Action in the N.J. Court against  CityFed and against two
         former  officers of City  Federal.  In its  complaint  in the First RTC
         Action,  the RTC, in its  corporate  capacity,  sought,  INTER ALIA, to
         recover damages in excess of $12 million against CityFed resulting from
         CityFed's  alleged  violation  of the  Stipulation  to maintain the net
         worth of City Federal (RESOLUTION TRUST CORPORATION V. SIMMONS, ET AL.,
         Civil Action No. 92-5261-B ("First RTC Action").

         Pursuant to the Settlement,  the FDIC released  CityFed from all claims
         in the First RTC Action.

         SECOND RTC ACTION - On April 26,  1993,  the RTC,  in its  capacity  as
         receiver  for City  Savings,  filed the  Second  RTC Action in the N.J.
         Court against John W. Atherton, Jr., Gordon E. Allen, Alfred J. Hedden,
         Peter R. Kellogg, John Kean, Gilbert G. Roessner,  George E. Mikula and
         James P. McTernan, all former directors and/or officers of City Federal
         (RESOLUTION  TRUST  CORPORATION  V.  ATHERTON ET AL.,  Civil Action No.
         93-1811) ("Second RTC Action").  In its initial complaint in the Second
         RTC Action, the RTC sought to recover damages in excess of $130 million
         for alleged negligence, gross negligence and breach of fiduciary duties
         by the  defendants  in  connection  with  certain  loans  made  by City
         Federal.  Although the Second RTC Action was filed  separately from the
         First RTC  Action,  the N.J.  Court  consolidated  the two  actions for
         administrative purposes.

         On June 17,  1993,  the RTC  filed a First  Amended  Complaint  ("First
         Amended  Complaint")  in the Second RTC Action that named as additional
         defendants  in the Second RTC Action  Victor A. Pelson and  Marshall M.
         Criser, two former directors of City Federal. With the exception of the
         addition of Messrs.  Pelson and Criser as defendants,  the substance of
         the First Amended Complaint was identical to the complaint filed by the
         RTC on April 26, 1993.

         For  additional  information  concerning  the First RTC  Action and the
         Second RTC Action see CityFed's 2001 Form 10-KSB.

         CityFed  is aware that all of the  defendants  in the Second RTC Action
         have settled with the RTC or FDIC. The settlement  agreement for Victor
         Pelson  included a waiver by him of his  indemnification  claim against
         CityFed for legal fees and  expenses  and the amount of his  settlement
         payment  in the Second  RTC  Action,  which  occurred  pursuant  to the
         Settlement.  Mr.  Pelson  agreed to pay the RTC  $650,000 to settle the
         Second RTC Action.  The settlement  agreements for John Kean,  Marshall
         Criser,  Alfred Hedden and Gilbert Roessner  included (1) an assignment
         by them to the RTC or FDIC of their respective  indemnification  claims
         against CityFed for settlement payments they make to the RTC or FDIC to
         settle  the  Second  RTC  Action,  and (2)  retention  by them of their
         respective  indemnification  claims against  CityFed for legal fees and
         expenses  incurred in the Second RTC Action.  The  settlement  payments
         agreed to be made by Messrs.  Kean, Criser,  Hedden and Roessner to the
         RTC or FDIC, and thus the amount of  indemnification  claim assigned by
         them to the RTC or FDIC, were $1,200,000 for Mr. Kean, $400,000 for Mr.


                                       10
<PAGE>

         Criser,  $265,000 for Mr. Hedden and $335,000 for Mr. Roessner. The RTC
         agreed to allow a $70,000  credit  toward  the amount to be paid by Mr.
         Roessner as a means of resolving Mr.  Roessner's  claim against the RTC
         for lost earnings on deferred  compensation amounts Mr. Roessner claims
         were withheld from him by the RTC. In their  settlements with the FDIC,
         Gordon  Allen  and  Peter  Kellogg   retained   their  rights  to  seek
         indemnification  from CityFed for settlement  payments they made to the
         FDIC as well as for legal  fees and  expenses  incurred  by them in the
         Second RTC  Action.  Mr.  Allen  agreed to pay  $250,000  to settle the
         Second RTC Action and Mr.  Kellogg  agreed to pay  $3,000,000.  CityFed
         understands  also that the FDIC has settled with George  Mikula,  James
         McTernan,  John W. Atherton, Jr., Richard Simmons and Michael DeFreytas
         for  $5,000  each and they  each  have  retained  their  rights to seek
         indemnification from CityFed for their settlement payments.

         Pursuant to the Settlement, the FDIC assigned any rights it acquired in
         the  settlements  described  above  to  CityFed.  See  "Indemnification
         Claims" above.

         "SUPERVISORY GOODWILL" ACTION - The United States Supreme Court held in
         UNITED STATES V. WINSTAR  CORP.,  518 U.S. 839, 116 S. Ct. 2432 (1996),
         that  the  loss by a  financial  institution  of  supervisory  goodwill
         carried on its books as a consequence of earlier  supervisory  mergers,
         as  a  result  of  the  Financial  Institutions  Reform,  Recovery  and
         Enforcement Act of 1989,  could  constitute a breach of contract by the
         United States. On August 7, 1995, CityFed,  acting in its own right and
         as  shareholder  of City  Federal,  filed a civil  action in the United
         States Court of Federal Claims seeking  damages for loss of supervisory
         goodwill  on its  books as a result  of  various  acquisitions  by City
         Federal of troubled depository  institutions.  CITYFED FINANCIAL CORP.,
         IN ITS OWN RIGHT AND IN ITS  CAPACITY AS  SHAREHOLDER  OF CITY  FEDERAL
         SAVING BANK,  BEDMINSTER,  NEW JERSEY V. UNITED STATES OF AMERICA,  No.
         95-508c.

         Pursuant  to  the  Settlement,  CityFed  assigned  to the  FDIC  all of
         CityFed's  interest in its  supervisory  goodwill case,  ceased to be a
         party to that case,  and has no right to share in the  recovery in that
         case, should there be one.

         CLAIM  OF  A  FORMER  DIRECTOR  AND  OFFICER  -  As  a  result  of  the
         receivership  of City  Federal,  City Federal  failed to pay Gilbert G.
         Roessner, a former director and officer of CityFed, the amounts owed to
         him under various deferred  compensation  arrangements City Federal had
         with  him.  He claims  that  CityFed  is  responsible  for this  amount
         (approximately  $1.1 million as of November  1989).  On April 30, 1991,
         special  counsel to the  Compensation  Committee of CityFed's  Board of
         Directors recommended to the full Board that no payments be made to Mr.
         Roessner currently,  but that the Board keep Mr. Roessner's claim under
         advisement,  to be reconsidered in light of then existing circumstances
         and any additional  evidence provided by Mr. Roessner in support of his
         claim.  The full  Board of  Directors  received  the  report of special
         counsel to the Compensation Committee.

         Pursuant to Mr.  Roessner's  settlement with the RTC as discussed under
         "Second RTC Action"  above,  CityFed  believes Mr.  Roessner's  current
         deferred  compensation  claim  is in the  amount  of  $169,365.60  plus
         accrued interest  thereon,  if any. All of Mr.  Roessner's  claims were
         settled as part of the  settlements  entered  into during  January 2002
         referred to under "Indemnification Claims" above.



                                       11
<PAGE>

         INDEMNIFICATION  CLAIMS  RELATING TO DEFERRED  COMPENSATION  PLANS - In
         September  1990,  the RTC, as receiver  for City  Federal  (and the new
         Federal  mutual savings bank created to acquire all of the deposits and
         substantially  all of the assets  and  indebtedness  of City  Federal),
         caused an action to be filed in the N.J.  Court  seeking  the return of
         approximately  $3.1 million (since reduced to $1.9 million) in deferred
         compensation  paid by City Federal to certain  officers,  directors and
         employees  of City  Federal,  some of whom are or were  also  officers,
         directors  or employees  of CityFed.  Pursuant to the Delaware  General
         Corporation Law and the Bylaws of CityFed, CityFed paid the defendants'
         legal fees in connection with their defense of the litigation.

         A  settlement  agreement,  under  which  the  defendants  were  to  pay
         $790,000, was entered into by the parties in June 1993. This settlement
         agreement concluded the case.

         Several  defendants  requested  that  CityFed  reimburse  them  for the
         settlement payments made by them under the settlement agreement.

         CityFed  has  settled  with all but three of the parties as part of the
         settlements  describe above. At December 31, 2001, CityFed has included
         $326,000  related  to the  remaining  claims  in this  matter  in other
         liabilities.

         TAX LIABILITIES - CityFed's  liability for federal income taxes for tax
         years through 1990 was  calculated on the basis of CityFed's  inclusion
         in a  consolidated  group that  includes City Federal and the successor
         institutions  created by the OTS to acquire the assets and  liabilities
         of City  Federal.  Under  the  applicable  provisions  of the  Internal
         Revenue  Code  of  1986,  as  amended  ("Code"),  and  the  regulations
         thereunder,  all members of the consolidated group,  including CityFed,
         are  jointly  and  severally  liable for any  income  taxes owed by the
         group.  CityFed  has  not  included  City  Federal  and  the  successor
         institutions  in the Federal  income tax returns  CityFed filed for its
         tax  years  1991  through  2000.  CityFed's  position  is not free from
         challenge,  although  CityFed  believes that its position is reasonable
         under the current tax law.

         POTENTIAL  BANKRUPTCY  -  CityFed  is  considering  a filing  under the
         Federal  Bankruptcy Code to assist in resolving the claims made against
         it.

Item 2.  Management's Discussion and Analysis or Plan of Operation.

General

         On December 7, 1989,  the OTS  appointed  the RTC as receiver  for City
         Federal,  the then sole  subsidiary  of CityFed.  A new federal  mutual
         savings bank,  City Savings,  was created,  which acquired all deposits
         and  substantially  all of the assets and  liabilities of City Federal.
         CityFed no longer  controls  City  Federal and has no control over City
         Savings.

         As a result of this  action,  the  financial  statements  of CityFed at
         December 31, 1989, for the year then ended, and for subsequent  periods
         reflect CityFed's interest in City Federal as discontinued operations.

         As a result of the  Settlement,  CityFed  conveyed  all its interest in
         City Federal to the FDIC and gave up any claim against the receivership
         estate of City Federal. See Note 4 to the Notes to Financial Statements


                                       12
<PAGE>

         for the Three months ended March 31, 2002 in this Form 10-QSB ("Notes")
         under "In the  Matter of CityFed  Financial  Corporation"  for  further
         information regarding the Settlement.

         Since the receivership of City Federal, CityFed has been, and currently
         is, in the  process  of  determining  its  liabilities,  including  its
         contingent  liabilities  described in Note 4 to the Notes.  To maintain
         the  principal  value of its  existing  assets  while  this  process is
         ongoing,  CityFed  has  invested  substantially  all  of its  funds  in
         high-grade  money market  instruments with maturity of one year or less
         and money market mutual funds.  Since the receivership of City Federal,
         the operating expenses of CityFed have consisted of the salaries of the
         employees of CityFed,  the expenses of the small office  maintained  by
         CityFed and the related office operating expenses, expenses relating to
         the audit of its financial statements by its independent auditors,  and
         expenses  of its  outside  legal  counsel.  Currently,  CityFed has one
         full-time employee and one office.

         Due to the nature of its assets at and  subsequent to December 8, 1989,
         CityFed may be deemed to fall within the  definition of an  "investment
         company"  under the  Investment  Company Act of 1940, as amended ("1940
         Act"), from that date to the present. To resolve any question regarding
         its current status under the 1940 Act,  CityFed filed an application on
         October 19,  1990 with the  Division of  Investment  Management  of the
         Securities and Exchange  Commission  ("SEC") for an order  exempting it
         from  certain  provisions  of  the  1940  Act  and  certain  rules  and
         regulations  thereunder.  This application was amended on September 23,
         1993,  January 18, 1994 and March 1, 1994. The  application was granted
         under  Sections  6(c) and (e) of the 1940 Act on March 15, 1994.  Under
         the order granting the application ("1940 Act Order"),  CityFed was not
         required to register as an  investment  company.  However,  CityFed and
         other persons in their  transactions  and  relations  with CityFed are,
         under the terms of the 1940 Act Order,  subject to  Sections  9, 17(a),
         17(d),  17(e),  17(f), 36 through 45 and 47 through 51 of the 1940 Act,
         and the rules  thereunder,  as if CityFed were a registered  investment
         company,  except  insofar as permitted by the 1940 Act Order.  The 1940
         Act Order  exempted  CityFed  from having to register as an  investment
         company  until the  earlier  of March 15,  1995 or such time as CityFed
         would no longer be required to register as an  investment  company.  On
         February  28,  1995,  an  Order  was  issued  extending  the  requested
         exemption  until  February 28, 1996, on February 21, 1996, an order was
         issued  extending the requested  exemption  until February 21, 1997, on
         February  12,  1997,  an  Order  was  issued  extending  the  requested
         exemption  until  February 12, 1999, on February 12, 1999, an Order was
         issued  extending the requested  exemption  until February 12, 2000, on
         February 9, 2000, an order was issued extending the requested exemption
         until  February  9, 2001,  on  February  6,  2001,  an Order was issued
         extending  the  requested  exemption  until  February  6,  2002  and on
         February 6, 2002, an Order was issued extending the requested exemption
         until February 6, 2003.

Liquidity and Capital Resources

         At March  31,  2002,  CityFed  had  approximately  $5,125,000  in total
         assets,  5,755,000  in  total  liabilities  and  $630,000  in  negative
         stockholders'  equity. At December 31, 2001,  CityFed had approximately
         $6,211,000  in  total  assets,  $6,816,000  in  total  liabilities  and
         $615,000 in negative  stockholders'  equity.  However,  as discussed in
         Note 4 to the Notes and  under  Item 1.,  "Description  of  Business  -
         Potential  Obligations  of CityFed" in CityFed's  2001 Form  10-KSB,  a
         number of claims have been asserted against  CityFed.  If the claimants


                                       13
<PAGE>

         under some or all of these claims are successful,  their claims against
         CityFed could greatly exceed CityFed's assets.

         While CityFed's liquidity is expected to be sufficient to meet expected
         litigation and administrative expenses over the next twelve months, any
         substantial  indemnification  expense,  settlement  or  judgment  could
         reduce  liquidity to a level that would  jeopardize the continuation of
         CityFed's  activities.  However,  as a  result  of  accruals  to  other
         liabilities to reflect the items described under Item 1.,  "Description
         of Business - Potential  Obligations of CityFed" in CityFed's 2001 Form
         10-KSB,  CityFed  currently has a negative net worth and it is unlikely
         that  CityFed  will be able to  achieve  a  positive  net  worth in the
         foreseeable future. Although management believes that CityFed's current
         level of accruals are  sufficient,  no assurances can be given that the
         amounts  established will be adequate,  that any ultimate resolution of
         the claims will not result in  substantial  amounts  being  incurred or
         that further claims will not be asserted.

         As discussed  above,  since the  receivership of City Federal,  CityFed
         initially  marshaled its assets and has been,  and currently is, in the
         process  of  determining  its  liabilities.  To  maintain  the value of
         CityFed's  existing  assets while this process is ongoing,  CityFed has
         invested  in  income  producing  instruments.   After  the  settlements
         described  above,  CityFed  has  determined  to expand  its  investment
         options  through  a  subsidiary  that will  invest in first and  second
         mortgage assets including pass-through certificates issued by federally
         sponsored agencies.

         Except for the  investment  in Services,  CityFed has invested and will
         continue  to  invest  its  funds in  money  market  instruments  with a
         maturity of one year or less. These consist of United States government
         or agency  securities,  commercial paper, bank certificates of deposit,
         one or more money market mutual funds and corporate  debt  obligations.
         Repurchase  agreements  may only be entered into using U.S.  government
         securities as collateral.  Non-governmental  or agency  investments are
         purchased  only if they are rated in one of the two highest  categories
         by an  established  rating  agency.  Investment in any one of the money
         market funds is limited to 5% of CityFed's  assets.  Investment  in the
         corporate debt securities of any one issuer is limited to $2,500,000.


                  Under the terms of the 1940 Act Order:

                           (1) CityFed may not purchase or otherwise acquire any
                  securities other than short-term U.S.  government  securities,
                  certificates of deposit,  commercial paper rated A-1/P-1,  and
                  shares of registered  money market funds;  except that CityFed
                  may  acquire  equity  securities  of an issuer  that is not an
                  investment  company as defined in section 3(a) of the 1940 Act
                  or  is  relying  on  an  exclusion   from  the  definition  of
                  investment  company  under  section 3(c) of the 1940 Act other
                  than  section  3(c)(1)  or  3(c)(7),  in  connection  with the
                  acquisition  of  an  operating  business  as  evidenced  by  a
                  resolution approved by CityFed's board of directors.

                           (2) CityFed may not hold itself out as being  engaged
                  in the business of investing, reinvesting, owning, holding, or
                  trading in securities.



                                       14
<PAGE>

                           (3)  CityFed's  Form  10-KSB,  Form 10-QSB and annual
                  reports to shareholders must state that an exemptive order has
                  been  granted  pursuant to Sections  6(c) and 6(e) of the 1940
                  Act and that CityFed and other persons,  in their transactions
                  and relations with CityFed,  are subject to Sections 9, 17(a),
                  17(d),  17(e),  17(f),  36 through 45 and 47 through 51 of the
                  1940  Act,  and the rules  thereunder,  as if  CityFed  were a
                  registered investment company,  except insofar as permitted by
                  the 1940 Act Order.

                           (4)  Notwithstanding  Sections 17(a) and 17(d) of the
                  1940 Act, an affiliated  person (as defined in Section 2(a)(3)
                  of the 1940 Act) of CityFed may engage in a  transaction  that
                  otherwise would be prohibited by these sections with CityFed:

                                    (a) if such  proposed  transaction  is first
                           approved by a bankruptcy  court on the basis that (i)
                           the terms thereof,  including the consideration to be
                           paid or received, are reasonable and fair to CityFed,
                           and (ii) the participation of CityFed in the proposed
                           transaction will not be on a basis less  advantageous
                           to CityFed than that of other participants; and

                                    (b)   in    connection    with   each   such
                           transaction,  CityFed  shall  inform  the  bankruptcy
                           court of (i) the  identity  of all of its  affiliated
                           persons  who are  parties  to,  or have a  direct  or
                           indirect financial interest in, the transaction; (ii)
                           the  nature  of  the   affiliation;   and  (iii)  the
                           financial   interests   of   such   persons   in  the
                           transaction.

Results of Operations

         CityFed  recorded a loss for the three  months  ended March 31, 2002 of
         $25,000. This compares to income in the amount of $27,000 for the three
         months  ended  March 31,  2001.  There  was no loss  from  discontinued
         operations in either period.

         Interest on  investments  was $51,000 for the three  months ended March
         31, 2002  compared to $91,000 for the three months ended March 31, 2001
         due to the lower  amount of funds  invested and lower  interest  rates.
         Total  expenses  of $76,000 for the three  months  ended March 31, 2002
         were more than the $64,000 for the same period in 2001 due primarily to
         a higher level of professional service fees.

         At March 31,  2002,  there  remain  claims from five  parties  totaling
         $3,010,000 for settlements made in the Cases,  $326,000 for settlements
         made in the  deferred  compensation  matter  and  $2,379,000  for legal
         services  and  expenses  paid  or  incurred  by  the  same  parties  in
         connection  with their defense in the Cases.  See Note 4 above and Item
         1.,  "Description  of Business - Potential  Obligations  of CityFed" in
         CityFed's  2001  Form  10-KSB.  These  amounts  are  included  in other
         liabilities at March 31, 2002 and are unchanged from December 31, 2001.

         At December  31,  2001,  CityFed  had accrued in its other  liabilities
         $1,074,000  representing  the  indemnification  claims for  settlements


                                       15
<PAGE>

         entered into in January 2002 described above under Note 4. At March 31,
         2002, $5,000 remained to be paid under the settlements.

         The basic (and  diluted) loss per share from  continuing  operations of
         $0.12  and  $0.11  for the  quarters  ended  March  31,  2002 and 2001,
         respectively,  is after the deduction of unpaid preferred  dividends of
         $2,158,500  in 2002 and  $2,158,500  in 2001.  No  preferred  or common
         dividends  have been paid since the second quarter of 1989 and none are
         expected to be paid until CityFed's situation changes significantly.

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

         See Note 4 to the Notes for a description of litigation.

Item 2. Changes in Securities.

         None.

Item 3. Defaults Upon Senior Securities.

         (a)  None.

         (b) CityFed's $2.10 Cumulative  Convertible  Preferred Stock, Series B,
         par value  $25.00  per share  ("Series B Stock"),  is  required  to pay
         quarterly  dividends  at a rate of $0.525 per share on March 1, June 1,
         September  1 and  December 1 of each year.  CityFed's  Series C, Junior
         Preferred  Stock,  Cumulative,  par value  $0.01 per share  ("Series  C
         Stock"),  is required to pay quarterly dividends at a rate of $0.10 per
         share on March 15, June 15,  September 15 and December 15 of each year.
         The  dividends  on both  the  Series  B and  the  Series  C  Stock  are
         cumulative.  The  Series C Stock is junior to the Series B Stock in the
         payment of dividends.

         Beginning  with the payment due on September  1, 1989,  CityFed has not
         paid any  quarterly  dividends  on the  Series B  Stock.  Beginning  on
         September 15, 1989,  CityFed also has not paid any quarterly  dividends
         on the Series C Stock.  Because  CityFed has failed to pay at least six
         quarterly  dividends  on the Series B Stock,  the holders of such stock
         have the exclusive right,  voting  separately as a class, to elect, and
         have elected, two directors of CityFed.  Until the aggregate deficiency
         is  declared  and fully  paid on the  Series B Stock  and the  Series C
         Stock,  CityFed  may  not  declare  any  dividends  or make  any  other
         distributions  on or redeem  the  Common  Stock.  Until  the  aggregate
         deficiency  is declared  and fully paid on the Series B Stock,  CityFed
         may not declare any  dividends  or make any other  distributions  on or
         redeem  the  Series  C Stock.  As of  March  31,  2002,  the  aggregate
         deficiency  on the Series B Stock was  approximately  $68.0 million and
         the aggregate  deficiency on the Series C Stock was approximately $42.1
         million.

Item 4. Submission of Matters to a Vote of Security Holders.

         None.



                                       16
<PAGE>

Item 5. Other Information.

         None.

Item 6. Exhibits and Reports on Form 8-K.

         (a)  Exhibits

         11.  Statement Regarding the Computation of Per Share Loss.

         (b)  None.



























                                       17
<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                 CITYFED FINANCIAL CORP.

                                     By: /s/ John W. Atherton, Jr.
                                         -----------------------------
                                          John W. Atherton, Jr.
                                          President, Chief Executive Officer
                                              and Treasurer (Principal Executive
                                              and Financial Officer)

Date:  May 13, 2002
























                                       18