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 September 30, 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 Identification
              or organization)                                 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 July 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
September 30, 2002 and December 31, 2001
(Dollars in Thousands)

<TABLE>
<CAPTION>

                                                               September     December 31,
                                                               30, 2002         2001
                                                              (UNAUDITED)

<S>                                                            <C>          <C>
ASSETS

  Cash                                                         $       75   $        0
  Investment securities at amortized cost
   (Market value $4,634 in 2002 and $6,161 in 2001)                 4,508        6,160
  Loans receivable                                                  1,068            0
  Other assets                                                         54           51
                                                               ----------   ----------

TOTAL ASSETS                                                   $    5,705   $    6,211
                                                               ==========   ==========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

LIABILITIES:
  Accrued expenses                                             $       21   $       27
  Reverse repurchase agreements                                       575            0
  Other liabilities                                                 5,720        6,789
                                                               ----------   ----------

        Total liabilities                                           6,316        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 2002 and 2001                       82           82
   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                                          (172,220)    (172,214)
   Treasury stock (199,000 shares of common stock)                (1,000)      (1,000)
                                                               ----------   ----------

        Total stockholders' deficiency                              (611)        (605)
                                                               ----------   ----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                 $    5,705   $   6,211
                                                               ==========   ==========

See notes to consolidated financial statements.

</TABLE>
                                       2

<PAGE>



<TABLE>

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months ended September 30, 2002 and 2001
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

<CAPTION>
                                                      Three Months Ended         Nine Months Ended
                                                         September 30,             September 30,
                                                       2002          2001        2002          2001
                                                       ----          ----        ----          ----
<S>                                               <C>          <C>          <C>         <C>

INCOME:
  Interest on investments and loans               $       74   $       72   $      182  $       243
  Other income                                            14           -            14           -
                                                  ----------   ----------   ----------  -----------

    Total income                                          88           72          196          243
                                                    --------     --------     --------     --------

EXPENSES:
  Compensation and employee benefits                      41           43          126          129
  Other operating expenses                                18           27           76          108
                                                    --------     --------     --------     --------

    Total expenses                                        59           70          202          237
                                                    --------     --------     --------     --------

NET (LOSS) INCOME                                    $    29       $    2       $   (6)      $    6
                                                     =======       ======       ======       ======


NET LOSS AVAILABLE FOR COMMON STOCKHOLDERS
                                                     $(2,129)     $(2,157)     $(6,481)     $(6,470)
                                                     ========     ========     ========     ========

BASIC AND DILUTED LOSS PER SHARE:

  Net loss                                           $ (0.12)     $ (0.12)     $ (0.35)     $ (0.35)
                                                     ========     ========     ========     ========

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

DIVIDENDS PER COMMON SHARE                                 -            -            -            -

See notes to consolidated financial statements.

</TABLE>

                                       3

<PAGE>

<TABLE>

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2002 and 2001
(Dollars in Thousands)
(Unaudited)

<CAPTION>
                                                                           2002         2001
                                                                           ----         ----
<S>                                                                   <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Interest received                                                 $     270      $   205
    Operating expenses                                                     (209)        (303)
    Other income                                                             14            -
    Settlement payments                                                  (1,069)           -
                                                                         -------     -------

      Net cash used in operating activities                                (994)         (98)
                                                                         -------     -------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Decrease in investment securities                                     1,562           91
    Increase in loans                                                     1,066            -
    Other                                                                    (2)           0
                                                                         -------     -------

      Net cash provided by investing activities                             494           91
                                                                         -------     -------
CASH FLOWS FROM FINANCING ACTIVITIES
    Increase in reverse repurchase agreements                               575            0
                                                                         -------     -------

      Cash provided by investing activities                                 575            0
                                                                         -------     -------

NET INCREASE (DECREASE) IN CASH                                              75           (7)

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

CASH AT END OF PERIOD                                                   $    75      $     1
                                                                        =======      =======

RECONCILIATION OF NET (LOSS) INCOME TO NET CASH
    USED IN OPERATING ACTIVITIES:
    Net (loss) income                                                 $      (6)     $     6
    Settlement payments                                                  (1,069)           -
    Increase in other assets                                                 (3)         (50)
    Decrease (increase) in accrued income and expense, net                   84          (54)
                                                                      ---------      --------

NET CASH USED IN OPERATING ACTIVITIES                                 $    (994)     $   (98)
                                                                      =========      =======

See notes to consolidated financial statements.

</TABLE>
                                       4
<PAGE>

CITYFED FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 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.  CityFed's  financial
        statements  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 although as discussed
        above and in Note 4, CityFed is subject to a number of  commitments  and
        contingencies  that raise  substantial doubt about its ability to do so.
        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. At September 30,
        2002, CityFed's business activities consisted primarily of attempting to
        resolve  outstanding   indemnification   claims  against  CityFed,   the
        management  of   investments   and  mortgage  and  real  estate  related
        investments as described below.

        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  invests in first and  second  mortgage  and other real  estate
        related 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.  At the end of September 30, 2002,  Services
        held $1,068,000 of first and second mortgage investments.

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, Cumulative,  $0.01

                                       5
<PAGE>

        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  September  30,  2002,
        dividends in arrears were $70.6  million and $43.8  million on CityFed's
        Series B and Series C Stock, respectively.

4.      COMMITMENTS AND CONTINGENCIES

        INDEMNIFICATION  CLAIMS - The Bylaws 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 were  included  in other  liabilities  at
        December 31, 2001.  At September  30, 2002,  $5,000  remained to be paid
        under the  settlements.  At December  31, 2001 and  September  30, 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 September 30,
        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 and September 30, 2002,
        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  2001.
        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  Nine  months  ended  September  30,  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  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 its determination to rely on Section  3(c)(5)(C) of
        the 1940 Act, CityFed has continued to invest in high grade money market
        instruments and has made investments in pass-through certificates issued
        by  federally  sponsored  agencies  in  addition  to its  investment  in
        Services  and  Services'  investments.  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.

        CityFed believes that it can satisfy its cash  requirements for its next
        twelve  months of  operations  from its existing  assets or by utilizing
        borrowing  arrangements secured by its investments.  During such period,
        CityFed  does not  expect  to  purchase  or sell  plant  or  significant
        equipment, nor does CityFed intend to significantly change its number of
        employees.

        Due to the nature of its assets at and  subsequent  to December 8, 1989,
        CityFed  might  have been  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

                                       13
<PAGE>

        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.

        As stated above, CityFed has determined to expand its investments and is
        currently  relying on Section  3(c)(5)(C) of the 1940 Act, which exempts
        from  registration as an investment  company any person who is primarily
        engaged in "purchasing or otherwise  acquiring mortgages and other liens
        on and interests in real estate."

Liquidity and Capital Resources

        At September  30, 2002,  CityFed had  approximately  $5,705,000 in total
        assets,  $6,316,000  in  total  liabilities  and  $611,000  in  negative
        stockholders'  equity.  At December 31, 2001,  CityFed had approximately
        $6,211,000 in total assets, $6,816,000 in total liabilities and $605,000
        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 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
        invested  in  income  producing   instruments.   After  the  settlements
        described above,  CityFed determined to expand its investment options to
        include pass-through certificates issued by federally sponsored agencies
        and to include an investment  in a subsidiary  that invests in first and
        second   mortgage  and  other  real  estate  related  assets   including
        pass-through   certificates  issued  by  federally  sponsored  agencies.
        Proceeds from  CityFed's  investment in Services are used by Services to
        fund its investments in first and second mortgages and other real estate
        assets. To provide liquidity for its investment in Services, CityFed has
        and may from time to time in the future  enter into  reverse  repurchase
        agreements utilizing its or Services' investments.

Results of Operations

        CityFed  recorded a loss for the nine months ended September 30, 2002 of
        $6,000.  This  compares  to income in the  amount of $6,000 for the nine
        months ended  September  30, 2001.  There was no loss from  discontinued
        operations in either period.

                                       14
<PAGE>

        CityFed  recorded net income for the three months  ended  September  30,
        2002 of $29,000. This compares to net income in the amount of $2,000 for
        the  three  months  ended  September  30,  2001.  There was no loss from
        discontinued operations in either period.

        Interest on investments was $166,000 for the nine months ended September
        30, 2002  compared to $243,000 for the nine months ended  September  30,
        2001 due to the lower amount of funds invested and lower interest rates.
        Interest  on loans for the nine  months  ended  September  30,  2002 was
        $16,000.  There  was no  interest  on  loans in the  nine  months  ended
        September 20, 2001. Total expenses of $202,000 for the nine months ended
        September  30, 2002 were less than the  $237,000  for the same period in
        2001 due primarily to a lower level of professional service fees.

        Interest on investments was $59,000 for the three months ended September
        30, 2002  compared to $72,000 for the three months ended  September  30,
        2001 due to the lower amount of funds invested and lower interest rates.
        Interest  on loans for the three  months  ended  September  30, 2002 was
        $15,000.  There  was no  interest  on loans in the  three  months  ended
        September 30, 2001. Total expenses of $59,000 for the three months ended
        September  30,  2002 were less than the  $70,000  for the same period in
        2001 due primarily to a lower level of professional service fees.

        At September 30, 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 September 30, 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
        entered into in January 2002 described  above under Note 4. At September
        30, 2002, $5,000 remained to be paid under the settlements.

        The basic (and  diluted)  loss per share from  continuing  operations of
        $0.35 and $0.35 for the nine months ended  September  30, 2002 and 2001,
        respectively,  is after the deduction of unpaid  preferred  dividends of
        $6,475,300 in 2002 and  $6,475,800 in 2001. The basic (and diluted) loss
        per share from continuing operations of $0.12 and $0.12 for the quarters
        ended September 30, 2002 and 2001, respectively,  is after the deduction
        of unpaid  preferred  dividends of $2,158,400 in 2002 and  $2,158,600 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.

Item 3. Controls and Procedures

CityFed has adopted  disclosure  controls and  procedures as required by Section
302 of the Sarbanes-Oxley Act and the Securities and Exchange Commission's rules
thereunder.  CityFed's  disclosure controls and procedures reflect the fact that
it currently has only one employee. CityFed's President, Chief Executive Officer
and Treasurer has evaluated the  effectiveness of these disclosure  controls and
procedures within the last 90 days. There were no changes to CityFed's  internal
controls this past quarter.

                                       15
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 2. Changes in Securities.

        (a)  None.

        (b)  None.

        (c)  None.

        (d)  Not applicable.

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 September 30, 2002, the aggregate  deficiency on the Series
        B Stock was approximately $70.6 million and the aggregate  deficiency on
        the Series C Stock was approximately $43.8 million.

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

        None.

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

(a)     Exhibits

        11.  Statement Regarding the Computation of Per Share Loss.

        (b)  None.

                                       16

<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:  November 13, 2002






                                       17
<PAGE>



                                  CERTIFICATION

I, John W. Atherton, Jr., certify that:

  1.    I have reviewed this quarterly report on Form 10-QSB of CityFed
        Financial Corp.;

  2.    Based on my knowledge, this quarterly report does not contain any untrue
        statement of a material fact or omit to state a material fact necessary
        to make the statements made, in light of the circumstances under which
        such statements were made, not misleading with respect to the period
        covered by this quarterly report;

  3.    Based on my knowledge, the financial statements, and other financial
        information included in this quarterly report, fairly present in all
        material respects the financial condition, results of operations and
        cash flows of the registrant as of, and for, the periods presented in
        this quarterly report;

  4.    The registrant's other certifying officers and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
        have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to me by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;
          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and
          c.   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

  5.    The registrant's other certifying officers and I have disclosed, based
        on our most recent evaluation, to the registrant's auditors and the
        audit committee of registrant's board of directors (or persons
        performing the equivalent functions):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and
          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

  6.    The registrant's other certifying officers and I have indicated in this
        quarterly report whether or not there were significant changes in
        internal controls or in other factors that could significantly affect
        internal controls subsequent to the date of our most recent evaluation,
        including any corrective actions with regard to significant deficiencies
        and material weaknesses.


                                       18

<PAGE>



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

Date:  November 13, 2002




                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CityFed Financial Corp. (the
"Company") on Form 10-QSB for the period ended September 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

1.     The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.


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


Date:  November 13, 2002


                                       20

<PAGE>


                                                                      Exhibit 11


                             CityFed Financial Corp.
             Statement Regarding the Computation of Per Share Loss



                                                        NINE MONTHS ENDED
                                                          SEPTEMBER 30,

                                                      2002              2001
                                                      ----              ----
 Computation of Loss Per Share:


 Weighted average number of shares outstanding     18,716,134        18,715,609

 Loss applicable to common stock:1

  Net loss                                        $(6,481,000)      $(6,470,000)
                                                  ============      ============

 Basic and diluted loss per share:

  Net loss                                             $(0.35)           $(0.35)
                                                       =======           =======








-------------------
1 Losses applicable to Common Stock include unpaid preferred stock dividends for
the three months ended September 30, 2002 and 2001 in the amount of $6,475,000
and $6,476,000 respectively.


                                       21