================================================================================

                                  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 June 30, 2005

                                       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                              (IRS Employer
 incorporation or organization)                            Identification No.)


                       P.O. 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 June 30, 2005, the number of
shares of outstanding common stock was 28,716,134.

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

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<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
June 30, 2005
(Dollars in Thousands)
(Unaudited)

<TABLE><CAPTION>
                                                                     June 30,
                                                                       2005
                                                                   ------------
<S>                                                                <C>
ASSETS
------

  Cash                                                             $        771
  Available for sale securities                                             114
  Loans receivable                                                        4,538
  Other assets (net of accumulated depreciation of $17)                     180
                                                                   ------------

           TOTAL ASSETS                                            $      5,603
                                                                   ============


LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------

LIABILITIES:
  Accrued expenses and other liabilities                           $         20
  Notes payable, Stockholders                                             5,662
                                                                   ------------
           TOTAL LIABILITIES                                              5,682
                                                                   ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY:
  Preferred stock, 30,000,000 shares authorized:
     $2.10 cumulative convertible, Series B, $25 par value,
       shares issued and outstanding: 2,538,550                          63,464
     Series C Junior, cumulative, $.01 par value, liquidation
       preference $3.00 per share, shares issued and
       outstanding: 9,457,079                                                95
  Common stock, $.01 par value, 100,000,000 shares authorized,
     issued: 28,915,134, outstanding: 28,716,134                            288
  Additional paid-in capital                                            108,875
  Accumulated deficit                                                  (171,801)
  Treasury stock (199,000 shares of common stock), at cost               (1,000)
                                                                   ------------

           Total stockholders' deficiency                                   (79)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                     $      5,603
                                                                   ============
</TABLE>



See notes to consolidated financial statements.

                                        2
<PAGE>
CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended June 30, 2005 and 2004
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

<TABLE><CAPTION>
                                                      Three months ended June 30,      Six months ended June 30,
                                                     ----------------------------    ----------------------------
                                                         2005            2004            2005            2004
                                                     ------------    ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>             <C>
INTEREST INCOME:
     Interest on investments                         $          2    $         13    $         11    $         28
     Interest on loans                                        181             112             325             226
                                                     ------------    ------------    ------------    ------------
           Total interest income                              183             125             336             254
                                                     ------------    ------------    ------------    ------------
INTEREST EXPENSE:
     Secured borrowings                                         2              --               3               2
     Interest on stockholder notes                             47              --             101              --
                                                     ------------    ------------    ------------    ------------
           Total interest expense                              49              --             104               2
                                                     ------------    ------------    ------------    ------------
           Net interest income                                134             125             232             252
                                                     ------------    ------------    ------------    ------------
NON-INTEREST INCOME (LOSS):
     Loan fees                                                  3               6               5               8
     Loss on investment securities, net                       (75)             --             (68)             --
                                                     ------------    ------------    ------------    ------------
           Total non-interest income (loss)                   (72)              6             (63)              8
                                                     ------------    ------------    ------------    ------------
EXPENSES:
     Compensation and employee benefits                        40              34              78              72
     Other operating expenses                                  28              43              53              73
                                                     ------------    ------------    ------------    ------------
           Total expenses                                      68              77             131             145
                                                     ------------    ------------    ------------    ------------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE                        (6)             54              38             115
                                                     ------------    ------------    ------------    ------------
     Income tax expense, current                                4              --               8              --
                                                     ------------    ------------    ------------    ------------
NET INCOME (LOSS)                                             (10)             54              30             115
                                                     ------------    ------------    ------------    ------------

OTHER COMPREHENSIVE INCOME (LOSS):
  Unrealized loss on available-for-sale securities             --             (21)            (25)            (18)
  Unrealized gain on investment securities
     transferred to available-for-sale                         --              --              35              --
  Reclassification adjustment for gains and losses
     included in net income (loss)                            (38)             --             (60)             --
                                                     ------------    ------------    ------------    ------------
TOTAL OTHER COMPREHENSIVE LOSS                                (38)            (21)            (50)            (18)
                                                     ------------    ------------    ------------    ------------

COMPREHENSIVE INCOME (LOSS)                          $        (48)   $         33    $        (20)   $         97
                                                     ============    ============    ============    ============

NET LOSS AVAILABLE FOR COMMON STOCKHOLDERS           $     (2,288)   $     (2,224)   $     (4,527)   $     (4,442)
                                                     ============    ============    ============    ============

BASIC AND DILUTED LOSS PER COMMON SHARE:             $      (0.08)   $      (0.08)   $      (0.16)   $      (0.15)
                                                     ============    ============    ============    ============

AVERAGE COMMON SHARES OUTSTANDING                      28,716,134      28,716,134      28,716,134      28,716,134

DIVIDENDS PER COMMON SHARE                                     --              --              --              --
</TABLE>

See notes to consolidated financial statements.

                                        3
<PAGE>
CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2005 and 2004
(Dollars in Thousands)
(Unaudited)

<TABLE><CAPTION>
                                                               Six months ended June 30,
                                                             ----------------------------
                                                                 2005            2004
                                                             ------------    ------------
<S>                                                          <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Interest received                                       $        361    $        246
     Operating expenses                                              (146)           (118)
     Other income                                                       5               8
     Cash paid for interest                                            (3)             (2)
     (Increase) decrease in loans receivable                          (57)            246
                                                             ------------    ------------
        Net cash provided by operating activities                     160             380
                                                             ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Decrease in investment securities                                543             401
     Purchase of corporate equity securities                           --             (40)
                                                             ------------    ------------
        Net cash provided by investing activities                     543             361
                                                             ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Decrease in secured borrowings                                    --            (250)
                                                             ------------    ------------
        Cash provided by used in financing activities                  --            (250)
                                                             ------------    ------------

NET INCREASE IN CASH                                                  703             491

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                       68             201
                                                             ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $        771    $        692
                                                             ============    ============

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
     Net income                                              $         30    $        115
     Adjustments to reconcile net income to net cash
     provided by operating activities
        Depreciation                                                    4               2
        Loss on investment securities, net                            (68)             --
        (Increase) decrease in loans receivable                       (57)            246
        Increase in other assets                                       21              (7)
        Increase (decrease) in other liabilities                       94              24
                                                             ------------    ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                    $        160    $        380
                                                             ============    ============

Supplemental Schedule of Non-cash and Financing Activates:
     Interest accrued on notes to stockholders               $        101    $         --
     Recognition of guaranty on loan participation                      5              --
</TABLE>



See notes to consolidated financial statements.

                                        4
<PAGE>

CITYFED FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JUNE 30, 2005 (UNAUDITED)

1.   Since February 2002, CityFed Financial Corp. ("CityFed") has invested in
     real estate related assets through CFF Services Corp. ("Services"), a
     wholly-owned subsidiary of CityFed. The consolidated financial statements
     include the accounts and transactions of CityFed and Services (collectively
     referred to herein as CityFed or the Company) after elimination of all
     intercompany activity. At the end of June 30, 2005, Services held
     $4,538,000 of real estate-related assets.

     Services invests in first and junior mortgage loans, loans secured by real
     estate loans, and other real estate-related loans, including construction
     loans, and acquisition, development and construction loans. Some loans are
     purchased by assignment and serviced directly and some are purchased by
     participation certificates and the loans are serviced by the originator.
     The borrowers generally do not meet the conforming guidelines established
     by banking institutions because of higher loan-to-value ratios, the nature
     or absence of income documentation, limited credit histories, high levels
     of consumer debt, past credit difficulties, or other factors. However, an
     analysis of the underlying characteristics of the borrower, his business or
     employment, and/or the value of additional collateral to support the loan,
     provides support so that the loan is a reasonable risk and is priced
     accordingly. The normal location of the collateral is in the New England
     states with a concentration in Rhode Island and southeastern Massachusetts.

     Management periodically evaluates the adequacy of the allowance for loan
     losses based on past loan loss experience, known and inherent risks in the
     portfolio, adverse situations that might affect the borrower's ability to
     repay, the estimated value of any underlying collateral, and current
     economic conditions. While management uses information available in
     establishing the allowance for loan losses, evaluation assessments made by
     management are inherently subjective and future adjustments to the
     allowance may be necessary if economic conditions differ substantially from
     the assumptions used in making the evaluation. Management has determined
     that no allowance for loan losses was necessary at June 30, 2005 since,
     based on its evaluation, no events causing loss or loan impairment have
     occurred. The allowance for loan losses is a material estimate that is
     particularly susceptible to significant change in the near term.

2.   The consolidated financial statements should be read in conjunction with
     the consolidated financial statements and notes thereto included in
     CityFed's Form 10-KSB for the year ended December 31, 2004 ("2004 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 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,

                                        5
<PAGE>

     $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 June 30, 2005, dividends in arrears were $85.3 million and
     $53.6 million on CityFed's Series B and Series C Stock, respectively.

4.   In accordance with Statement of Financial Accounting Standards (SFAS) No.
     115, "Accounting for Certain Investments in Debt and Equity Securities,"
     the Company classifies debt and equity securities, at acquisition, into one
     of three categories: held to maturity, available for sale, or trading.
     Available for sale securities are carried at fair value, based principally
     on quoted market prices. Securities for which sale is restricted have been
     categorized as non-marketable equity securities and have been valued at
     cost. Unrealized holding gains and losses resulting from changes in fair
     value are reported in other comprehensive income (loss). Securities sold
     are identified using the specific identification method.

     In the first quarter of 2005, the remaining 229,118 shares of i2 Telecom
     International Inc. ("i2 Telecom").stock became available-for-sale and the
     unrealized gain when transferred from cost to fair value was $35,000.
     During the second quarter of 2005, management determined that the
     impairment in value of its interest in i2 Telecom represented an other than
     temporary impairment, and consequently, reclassified $38,000 of unrealized
     gain previously recorded as a component of other comprehensive income and
     recognized a loss on investment securities totaling $75,000 as component of
     net income (loss) for the three and six months period ended June 30, 2005.
     At June 30, 2005, all the issued shares are recorded at the quoted market
     price of $0.31 per share. Subsequent reductions in fair value deemed other
     than temporary will be charged to income. At April 13, 2006, the quoted
     market price of i2 shares was $0.13 per share.

5.   Notes payable, Stockholders at June 30, 2005 include the principal balance
     of $4,750,000, which is payable at maturity on May 31, 2007 (see Note 10).
     The balance also includes interest payable at maturity of $912,000, which
     is comprised of $344,000 computed at the prime rate as it existed from time
     to time through June 30, 2005 and the balance of $568,000 computed at 6.25%
     (the prime rate at June 30, 2005) through maturity. The interest is due at
     the maturity of the notes and, when actually paid, will be computed at the
     prime rate as it will exist from time to time until maturity. During the
     three month period ended June 30, 2005, the prime rate increased, resulting
     in an increase in the amount of interest expected to be paid at maturity in
     excess of the amount previously recorded, which has been recognized by a
     charge to interest expense of $101,000 during the six month period ended
     June 30, 2005. Any increase of the amount recorded as a liability resulting
     from increases in interest rates after June 30, 2005 through May 31, 2007
     will be charged as an expense to operating income.

6.   Income tax expense for the three month period ended June 30, 2005 does not
     have a relationship to expected income tax expense computed at the expected
     statutory tax rates since it represents only income taxes payable to the
     state based on the taxable income of Services which is not allowable to be
     offset by the Company's available state net operating loss carryforwards.
     No provision for federal income taxes for the six months ended June 30,
     2005 and 2004 have been included in the accompanying consolidated financial
     statements since the Company has available net operating losses for federal
     income tax reporting purposes. At June 30, 2005 deferred tax assets have
     been fully reserved.

                                        6
<PAGE>

7.   The Company entered into an incentive compensation arrangement with its one
     employee, who is a director and shareholder of the Company. Incentive
     compensation included in expenses for the six months ended June 30, 2005
     totaled approximately $4,000.

8.   Services is a guarantor of up to $70,000 under a loan participation
     agreement in a first mortgage loan. At June 30, 2005 the carrying value of
     the guarantee is $5,000. Before the guarantee is enforceable, the borrower
     must default under the terms of the underlying note. Services would be
     required to pay the participant for any loss suffered by the participant up
     to the amount of the guarantee.

9.   CityFed is party to financial instruments with off-balance sheet risk in
     the normal course of business to meet the financing needs of its customers.
     These financial instruments consist solely of commitments to extend credit
     and involve, to varying degrees, elements of credit risk in excess of the
     amount recognized in CityFed's consolidated statement of financial
     condition. The contract or notional amounts of such instruments reflect the
     extent of involvement CityFed has in the financial instruments. CityFed's
     exposure to credit loss in the event of nonperformance by the other party
     to the financial instrument for commitments to extend credit is represented
     by the contractual notional amount of those instruments. CityFed uses the
     same credit policies in making commitments as it does for on-balance sheet
     instruments. At June 30, 2005, the contractual notional amounts
     representing commitments to fund loans in the future total $474,000.

     At June 30, 2005, four loans comprise approximately 40% of total loans
     receivable.

10.  On September 1, 2005, CityFed, Services, and the stockholders to whom
     CityFed issued notes ("the Noteholders") (see Note 5), entered into an
     agreement, which was effective as of June 1, 2005, ("the Agreement"). Among
     other provisions contained within the Agreement, the Noteholders extended
     the maturity dates of the notes from May 31, 2007 to December 31, 2007; the
     parties to the Agreement agreed to run the business of CityFed and Services
     as separate entities; the business of Services would be run for the benefit
     of the Noteholders; and the business of CityFed would be run for the
     benefit of the stockholders of CityFed. In accordance with FASB
     Interpretation No. 46R, "Consolidation of Variable Interest Entities",
     CityFed determined that it and its related parties had a variable interest
     in Services which required the continued consolidation of Services'
     accounts and transactions in the accompanying financial statements.

11.  The Company's reportable segments are legally separate entities that are
     managed separately, and whose operating results are reviewed by the chief
     operating decision maker to make decisions about resources and to assess
     performance. The Company has two reportable segments, Services which
     operates as a finance company and CityFed which invests in securities.
     CityFed and Services are managed separately since their businesses are run
     as separate entities, and the business of Services is run for the benefit
     of the Noteholders while the business of CityFed is run for the benefit of
     the stockholders of CityFed. Accounting policies applied to determine the
     segment information are the same as those described in the summary of
     significant accounting policies included in the 2004 Form 10-KSB.

                                        7
<PAGE>
<TABLE><CAPTION>
                                             CityFed
                          CFF Services       Six Months                  Consolidated
                          Six Months Ended   Ended June                  Six Months Ended
(Dollars in Thousands)    June 30, 2005      30, 2005     Eliminations   June 30, 2005
                          -------------      --------     ------------   -------------
<S>                           <C>              <C>           <C>             <C>
Interest income, other                          $11                           $11
Interest income from
  external business            $325                                           325
Interest expense(a)             101               3                           104
Net Interest income             224               8                           232
Other income                     30                          ($25)              5
  Gain/Loss on sale of
   securities                                   (68)                          (68)
Segment profit (loss)           162            (124)                           38
Income Tax Expense                8                                             8
Intersegment interest
  income (expense)(b)          (179)            179
Segment assets:
  Investment in and
   advances to
   subsidiary                                 4,963        (4,963)
  Other                       5,262             341                         5,603
</TABLE>

The information below reports the comprehensive income available for the Common
Stockholders and the Noteholders after allocating segment income and losses as
reflected above. Such amounts are disclosed herein, rather than on the face of
the accompanying consolidated balance sheet, since such allocations are not
included within the terms of the equity securities.

                                                      Six months
                                                        ended
                                                       June 30,
NET INCOME (LOSS) AVAILABLE FOR AND                      2005
     ALLOCATED TO:                                    ----------
     NOTEHOLDERS                                      $      154
     COMMON STOCKHOLDERS                                  (4,681)
                                                      ----------
     TOTAL                                            $   (4,527)
                                                      ==========

BASIC AND DILUTED INCOME (LOSS) PER
     COMMON SHARE ALLOCATED TO:
     NOTEHOLDERS                                      $     0.01
     COMMON STOCKHOLDERS                                   (0.17)
                                                      ----------
     TOTAL                                            $    (0.16)
                                                      ==========

AVERAGE COMMON SHARES OUTSTANDING                     28,716,134

DIVIDENDS PER COMMON SHARE                                  --

     (a) Interest expense related to the notes payable executed by and between
     CityFed and the Noteholders is allocated to Services since such interest
     expense is required to be borne by Services under the Agreement (see Note
     10).

     (b) The chief operating decision maker of each segment evaluates the
     performance of its segment prior to intersegment interest charges presented
     in internal reports which has been disclosed above. Intersegment interest
     is accounted for at an interest rate which management believes Services
     would be required to pay to an external party for a similar financing
     arrangement.

                                        8
<PAGE>

     As a result of the Agreement, the Company has presented segment information
     as required by FASB Statement No. 131, "Disclosure about Segments of an
     Enterprise and Related Information," and has presented information for the
     six months ended June 30, 2005 as if the Agreement was in effect since
     January 1, 2005. The Company has not restated its disclosures to include
     segment information for the six months ended June 30, 2004 since the
     Company's chief operating decision maker did not allocate resources to
     separate segments and it is not practicable to develop separate
     information.

12.  At June 30, 2005, CityFed has a stockholders' deficiency of $79,000 and
     cumulative unpaid dividends totaling approximately $138.9 million. No
     common or preferred dividends have been paid since the second quarter of
     1989 and none are expected to be declared or paid until CityFed's financial
     situation changes significantly. Management believes that CityFed will
     generate sufficient cash flows from operations to satisfy its operating
     requirements for, and its obligations due within, the next twelve months.

13.  Certain prior year amounts have been reclassified to conform to the current
     year presentation.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL

Since its determination in February 2003 to rely on Section 3(c)(5)(C) of the
Investment Company Act of 1940, as amended, CityFed has invested in money market
instruments, corporate securities, and pass-through certificates issued by
federally sponsored agencies in addition to its investment in Services and
Services' investments. The operating expenses of Services consist of the
compensation of its employee, interest expense on borrowings, the expenses of
its office, expenses relating to the audit of its financial statements by its
independent auditors, and expenses of its outside legal counsel. The operating
expenses of CityFed consist primarily of its administrative, legal and auditing
expenses. Currently, Services has one full-time employee and owns an office
condominium, purchased in September 2004, located at 37 Old South Road,
Nantucket, Massachusetts. CityFed has no employees.

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.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2005, CityFed had $5,603,000 in total assets, $5,682,000 in total
liabilities and a stockholders' deficiency of $79,000 compared to $5,529,000 in
total assets, $5,588,000 in total liabilities and a stockholders' deficiency of
$59,000 at December 31, 2004. CityFed expects to meet its commitments to
originate loans, borrowing commitments and its operating expenses from cash
generated from operations, from the sale of marketable securities or from loan
repayments.

                                       9
<PAGE>

CURRENT OPERATIONS

CityFed invests in pass-through certificates issued by federally sponsored
agencies, corporate debt and equity securities. Services operates as an
originator and investor in first and junior mortgage loans and other real
estate-related assets. Proceeds from CityFed's investment in and advances to
Services are used by Services to fund its investments in first and second
mortgage loans and other real estate assets.

Services invests in first and junior mortgage loans, loans secured by real
estate loans, and other real estate-related loans, including construction, and
acquisition, development and construction loans. Some loans are purchased by
assignment and serviced directly and some are purchased by participation
certificates and the loans are serviced by the originator. The borrowers
generally do not meet the conforming guidelines established by banking
institutions because of higher loan-to-value ratios, the nature or absence of
income documentation, limited credit histories, high levels of consumer debt,
past credit difficulties, or other factors. However, an analysis of the
underlying characteristics of the borrower, his business or employment, and/or
the value of additional collateral to support the loan, provides support so that
the loan is a reasonable risk and is priced accordingly. The normal location of
the collateral is in the New England states with a concentration in Rhode Island
and southeastern Massachusetts.

At June 30, 2005, CityFed held 368,638 shares of i2 Telecom. As part of the
original consideration, under certain conditions an additional 33,300 shares of
common stock may be issued to CityFed. i2 Telecom became a public company on
February 27, 2004 in a reverse merger. CityFed also holds a warrant to purchase
66,438 common shares of i2 Telecom at $0.903 per share until February 2006 and
at $1.20 per share for an additional twelve months. Pursuant to an agreement, in
October 2004 i2 Telecom registered 139,520 of CityFed's shares of i2 Telecom
stock and those shares were then recorded as available-for-sale. The remaining
229,118 shares of i2 Telecom became available-for-sale in the first quarter of
2005 and the unrealized gain when transferred from cost to fair value was
$35,000. During the second quarter of 2005, management determined that the
impairment in value of its interest in i2 Telecom represented an other than
temporary impairment, and consequently, reclassified $38,000 of unrealized gain
previously recorded as a component of other comprehensive income and recognized
a loss on investment securities totaling $75,000 as component of net income
(loss) for the three and six months period ended June 30, 2005. At June 30,
2005, all the issued shares are recorded at the quoted market price of $0.31 per
share.

RESULTS OF OPERATIONS

Six months ended June 30:

     CityFed recorded a consolidated net income for the six months ended June
     30, 2005 of $30,000. This compares to a consolidated net income in the
     amount of $115,000 for the six months ended June 30, 2004. Other
     comprehensive income includes a consolidated loss of $50,000 for the six
     months ended June 30, 2005. There was an unrealized loss on
     available-for-sale securities for the six months ended June 30, 2004 of
     $18,000.

     Interest income on investments was $11,000 for the six months ended June
     30, 2005 compared to $28,000 for the six months ended June 30, 2004 due to
     a lower amount of funds invested in securities by CityFed in the 2005
     period. Interest income on loans earned by Services for the six months
     ended June 30, 2005 was $325,000. Included in interest income earned by
     Services for 2005 was $65,000 of additional interest on a loan that called
     for payment of a percent of the profit earned by the borrower on the sale
     of the collateral

                                       10
<PAGE>

     securing the loan. Interest income earned by Services on loans for the six
     months ended June 30, 2004 was $226,000 due primarily to the lower amount
     of average loans outstanding in the 2004 period. Interest expense was
     $104,000 for the six months ended June 30, 2005. Of the $104,000, $101,000
     was due to the increase in the interest due on the Notes payable,
     Stockholders (see Note 5 above).

     The loss on investment securities incurred by CityFed was $68,000 for the
     six months ended June 30, 2005. No gain or loss was incurred in the six
     months ended June 30, 2004. Total expenses of $131,000 for the six months
     ended June 30, 2005 were less than the $145,000 for the same period in
     2004.

     The basic (and diluted) loss per common share of $0.16 for the six months
     ended June 30, 2005 and $0.15 for the six months ended June 30, 2004 is
     after the deduction of unpaid preferred dividends of $4,557,000 in both
     years. No preferred or common dividends have been paid since the second
     quarter of 1989 and none are expected to be declared or paid until
     CityFed's situation changes significantly.

Three months ended June 30:

     CityFed recorded a consolidated net loss for the three months ended June
     30, 2005 of $10,000. This compares to a consolidated net income in the
     amount of $54,000 for the three months ended June 30, 2004. Other
     comprehensive income includes a loss of $38,000 for the three months ended
     June 30, 2005. CityFed recognized an unrealized loss on available-for-sale
     securities for the three months ended June 30, 2004 of $21,000.

     Interest income on investments earned by CityFed was $2,000 for the three
     months ended June 30, 2005 compared to $13,000 for the three months ended
     June 30, 2004 due to a lower amount of funds invested in securities in the
     2005 period. Interest income on loans earned by Services for the three
     months ended June 30, 2005 was $181,000. Included in interest income earned
     by Services for 2005 was $45,000 of additional interest on a loan that
     called for payment of a percent of the profit earned by the borrower on the
     sale of the collateral securing the loan. Interest income earned by
     Services on loans for the three months ended June 30, 2004 was $112,000 due
     primarily to the lower amount of average loans outstanding in the 2004
     period. Interest expense was $49,000 for the three months ended June 30,
     2005. Of the $49,000, $47,000 was due to the increase in the interest due
     on the Notes payable, Stockholders (see Note 5 above).

     Total expenses of $68,000 for the three months ended June 30, 2005 were
     less than the $77,000 for the same period in 2004.

     The basic (and diluted) loss per common share of $0.08 for the three months
     ended June 30, 2005 and 2004 is after the deduction of unpaid preferred
     dividends of $2,278,000 in both years. 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.

OFF-BALANCE SHEET ARRANGEMENTS

See Notes 8 and 9 to the financial statements above.

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<PAGE>

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 as of the end of the quarterly period ended June 30, 2005. There have
been no changes to CityFed's internal controls during the second quarter of 2005
or from June 30, to April 17, 2006.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

At June 30, 2005 there are no suits or claims against CityFed. For a description
of the settlement of prior indemnification claims of current or former officers
and directors see the description under Settlement of Claims in Part I Item
1-Description of Business in CityFed's 2004 Form 10-KSB.

ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES.

     (a) None.

     (b) None.

     (c) None.

     (d) Not applicable.

     (e) 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

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<PAGE>

          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
          June 30, 2005, the aggregate deficiency on the Series B Stock was
          approximately $85.3 million and the aggregate deficiency on the Series
          C Stock was approximately $53.6 million.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

ITEM 5. OTHER INFORMATION.

     (a)  None

     (b)  None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits

          11.  Statement Regarding the Computation of Per Share Loss.

          31.  Rule 15d-14(a) Certification.

          32.  Section 1350 Certification.

     (b)  Reports on Form 8-K.

          A report on Form 8-K was filed on August 12, 2005 reporting the
          resignation of director Richard N. Morash.

          A report on Form 8-K was filed on September 2, 2005 reporting the
          resignation of director Peter R. Kellogg.

          A report on Form 8-K was filed on October 17, 2005 reporting the
          entering into an Agreement between CityFed, CFF Services Corp. Peter
          R. Kellogg, John Kean and John W. Atherton, Jr.

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<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.
                                            Vice President, and Treasurer
                                            (Principal Financial Officer)


Date: April 17, 2006
























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