10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2013

Or

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from __________ to______________

Commission File Number 0-25045

CENTRAL FEDERAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	34-1877137
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

2923 Smith Road, Fairlawn, Ohio  44333

(Address of principal executive offices) (Zip Code)

(330) 666-7979

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X]        No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes [X]   No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]Accelerated filer [  ]  Non-accelerated filer [  ]  Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ]     No[X]

As of May 15, 2013, there were 15,823,710 shares of the registrant’s Common Stock outstanding.

CENTRAL FEDERAL CORPORATION

PART I.  Financial Information		Page
Item 1.  Financial Statements		3
	Consolidated Balance Sheets as of June 30, 2013 (unaudited)
	and December 31, 2012	3
	Consolidated Statements of Operations for the three and six months ended
	June 30, 2013 and 2012 (unaudited)	4
	Consolidated Statements of Comprehensive Income (Loss)
	for the three and six months ended June 30, 2013 and 2012 (unaudited)	5
	Consolidated Statements of Changes in Stockholders’ Equity
	for the six months ended June 30, 2013 and 2012 (unaudited)	6
	Consolidated Statements of Cash Flows for the six months ended
	June 30, 2013 and 2012 (unaudited)	7
	Notes to Consolidated Financial Statements	8
Item 2.  Management’s Discussion and Analysis of
	Financial Condition and Results of Operations	43
Item 3.     Quantitative and Qualitative Disclosures About Market Risk		65
Item 4.     Controls and Procedures		66
PART II.  Other Information		67
Item 1.     Legal Proceedings		67
Item 1A.   Risk Factors		67
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds		67
Item 3.     Defaults Upon Senior Securities		67
Item 4.     Mine Safety Disclosures		67
Item 5.     Other Information		67
Item 6.     Exhibits		67
Signatures		68

CENTRAL FEDERAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands except per share data)

	June 30,		December 31,
	2013		2012
		(unaudited)
ASSETS
Cash and cash equivalents	$	33,197	$	25,152
Interest-bearing deposits in other financial institutions		2,726		2,726
Securities available for sale		12,155		17,639
Loans held for sale		629		623
Loans, net of allowance of $6,065 and $5,237		179,877		153,043
FHLB stock		1,942		1,942
Foreclosed assets, net		1,538		1,525
Premises and equipment, net		5,252		5,317
Assets held for sale		167		167
Other intangible assets		30		49
Bank owned life insurance		4,470		4,405
Accrued interest receivable and other assets		2,631		2,447
	$	244,614	$	215,035
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing	$	23,536	$	18,008
Interest bearing		181,143		155,500
Total deposits		204,679		173,508
FHLB advances		10,000		10,000
Advances by borrowers for taxes and insurance		187		241
Accrued interest payable and other liabilities		2,285		2,488
Subordinated debentures		5,155		5,155
Total liabilities		222,306		191,392
Stockholders' equity
Common stock, $.01 par value,
shares authorized; 50,000,000
shares issued; 15,935,417 in 2013 and 15,936,417 in 2012		159		159
Additional paid-in capital		47,958		47,919
Accumulated deficit		(22,661)		(21,297)
Accumulated other comprehensive income		97		107
Treasury stock, at cost; 111,707 shares		(3,245)		(3,245)
Total stockholders' equity		22,308		23,643
	$	244,614	$	215,035

See accompanying notes to consolidated financial statements.

3

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands except per share data)

(Unaudited)

	Three months  ended				Six months  ended
	June 30,				June 30,
	2013		2012		2013		2012
Interest and dividend income
Loans, including fees	$	1,734	$	1,769	$	3,330	$	3,660
Securities		43		58		103		121
FHLB stock dividends		20		21		41		43
Federal funds sold and other		37		41		71		81
		1,834		1,889		3,545		3,905
Interest expense
Deposits		421		557		829		1,150
Long-term FHLB advances and other debt		77		81		153		190
Subordinated debentures		42		45		83		92
		540		683		1,065		1,432
Net interest income		1,294		1,206		2,480		2,473
						-		-
Provision for loan losses		324		200		650		400
Net interest income after provision for loan losses		970		1,006		1,830		2,073
						-		-
Noninterest income
Service charges on deposit accounts		83		58		156		117
Net gains on sales of loans		107		92		113		135
Loan servicing fees, net		-		5		-		13
Net gain on sales of securities		-		143		-		143
Earnings on bank owned life insurance		33		32		65		65
Other		46		10		68		25
		269		340		402		498
						-		-
Noninterest expense
Salaries and employee benefits		961		953		1,853		1,944
Occupancy and equipment		84		59		159		133
Data processing		143		137		306		279
Franchise taxes		85		46		170		101
Professional fees		175		199		387		417
Director fees		3		46		8		91
Postage, printing and supplies		69		56		127		104
Advertising and promotion		6		4		12		7
Telephone		21		16		37		33
Loan expenses		9		23		26		31
Foreclosed assets, net		1		188		(18)		206
Depreciation		53		62		107		129
FDIC premiums		36		142		147		298
Amortization of intangibles		10		10		19		20
Regulatory assessment		39		21		78		66
Other insurance		36		38		73		80
Other		62		30		105		55
		1,793		2,030		3,596		3,994
Income (loss) before incomes taxes		(554)		(684)		(1,364)		(1,423)
Income tax expense (benefit)		-		-		-		-
Net loss		(554)		(684)		(1,364)		(1,423)
Preferred stock dividends and accretion of discount on preferred stock		-		(111)		-		(221)
Earnings (loss) attributable to common stockholders	$	(554)	$	(795)	$	(1,364)	$	(1,644)
Earnings (loss) per common share:
Basic	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)
Diluted	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)

See accompanying notes to consolidated financial statements.

4

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands except per share data)

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Net income (loss)	$	(554)	$	(684)	$	(1,364)	$	(1,423)
Other comprehensive income (loss):
Change in unrealized holding gains (losses) on securities available for sale		(35)		(305)		(10)		(198)
Reclassification adjustment for gains realized in income		-		143		-		143
Net change in unrealized gains (losses)		(35)		(162)		(10)		(55)
Tax effect		-		-		-		-
Other comprehensive income (loss)		(35)		(162)		(10)		(55)
Comprehensive income (loss)	$	(589)	$	(846)	$	(1,374)	$	(1,478)

See accompanying notes to consolidated financial statements.

5

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands except per share data)

(Unaudited)

							Accumulated
			Additional				Other				Total
	Common		Paid-In		Accumulated		Comprehensive		Treasury		Stockholders'
	Stock		Capital		Deficit		Income		Stock		Equity
Balance at January 1, 2013	$	159	$	47,919	$	(21,297)	$	107	$	(3,245)	$	23,643
Net loss						(1,364)						(1,364)
Other comprehensive Income (loss)								(10)				(10)
Release of 100 stock-based incentive plan shares, net of forfeitures				(6)								(6)
Stock option expense, net of forfeitures				56								56
Offering costs associated with issuance of common stock				(11)								(11)
Balance at June 30, 2013	$	159	$	47,958	$	(22,661)	$	97	$	(3,245)	$	22,308

									Accumulated
					Additional				Other				Total
	Preferred		Common		Paid-In		Accumulated		Comprehensive		Treasury		Stockholders'
	Stock		Stock		Capital		Deficit		Income		Stock		Equity
Balance at January 1, 2012	$	7,120	$	9	$	27,837	$	(22,163)	$	386	$	(3,245)	$	9,944
Net loss								(1,423)						(1,423)
Other comprehensive income (loss)										(55)				(55)
Accretion of discount on preferred stock		27						(27)						-
Release of 600 stock-based incentive plan shares						7								7
Stock option expense, net of forfeitures						3								3
Preferred stock dividends								(194)						(194)
Balance at June, 2012	$	7,147	$	9	$	27,847	$	(23,807)	$	331	$	(3,245)	$	8,282

See accompanying notes to consolidated financial statements.

6

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

		Six months ended
		June 30,
		2013		2012
Net loss	$	(1,364)	$	(1,423)
Adjustments to reconcile net loss to net cash from operating activities:
Provision for loan losses		650		400
Provision for  losses on foreclosed assets		-		182
Valuation (gain) loss on mortgage servicing rights		-		(1)
Depreciation		107		129
Amortization, net		244		357
Net gains on sales of securitites		-		(143)
Originations of loans held for sale		(13,965)		(11,697)
Proceeds from sale of loans held for sale		14,071		11,360
Net gains on sales of loans		(113)		(135)
Loss on disposal of premises and equipment		-		4
Gain on sale of foreclosed assets		(21)		-
Earnings on bank owned life insurance		(65)		(65)
Stock-based compensation expense		50		10
Net change in:
Accrued interest receivable and other assets		(190)		(667)
Accrued interest payable and other liabilities		(202)		705
Net cash from (used by) operating activities		(798)		(984)
Cash flows from investing activities
Available-for-sale securities:
Sales		-		2,144
Maturities, prepayments and calls		5,298		5,854
Purchases		-		(7,000)
Loan originations and payments, net		(27,572)		18,338
Additions to premises and equipment		(42)		(22)
Proceeds from the sale of foreclosed assets		68		-
Proceeds from mortgage insurance on foreclosed assets		14		29
Net cash from (used by) investing activities		(22,234)		19,343
Cash flows from financing activities
Net change in deposits		31,142		(18,740)
Net change in short-term borrowings from the FHLB and other debt		-		(5,742)
Net change in advances by borrowers for taxes and insurance		(54)		(104)
Cost associated with issuance of common stock		(11)		-
Net cash from (used by) financing activities		31,077		(24,586)
Net change in cash and cash equivalents		8,045		(6,227)
Beginning cash and cash equivalents		25,152		61,436
Ending cash and cash equivalents	$	33,197	$	55,209
Supplemental cash flow information:
Interest paid	$	961	$	1,344
Supplemental noncash disclosures:
Transfers from loans to repossessed assets	$	74	$	186
Loans transferred from held for sale to portfolio		-		(109)

See accompanying notes to consolidated financial statements.

7

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: 

The consolidated financial statements include Central Federal Corporation (the Holding Company) and its wholly owned subsidiaries, CFBank, Ghent Road, Inc., and Smith Ghent LLC (together with the Holding Company referred to as the Company).  The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and in compliance with U.S. generally accepted accounting principles (GAAP).  Because this report is based on an interim period, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

In the opinion of the management of the Company, the accompanying unaudited interim consolidated financial statements include all adjustments necessary for a fair presentation of the Company’s financial condition and the results of operations for the periods presented.  These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The financial performance reported for the Company for the three and six months ended June 30, 2013 is not necessarily indicative of the results that may be expected for the full year.  This information should be read in conjunction with the Company’s latest Annual Report to Stockholders and Form 10-K. Reference is made to the accounting policies of the Company described in Note 1 of the Notes to Consolidated Financial Statements contained in the Company’s 2012 Annual Report that was filed as Exhibit 13.1 to the Company’s Form 10-K for the year ended December 31, 2012.  The Company has consistently followed those policies in preparing this Form 10-Q.

Reclassifications and Reverse Stock Split:  Some items in the prior period financial statements were reclassified to conform to the current presentation.  Reclassifications did not impact prior period net loss or total stockholders' equity.  On May 4, 2012, the Company completed a 1-for-5 reverse stock split, whereby every 5 shares of the Company’s common stock were reclassified into one share of common stock. All share and per share amounts for all periods presented have been adjusted to reflect the reverse split as though it had occurred prior to the earliest period presented.

Earnings (Loss) Per Common Share: The two-class method is used in the calculation of basic and diluted earnings per share.  Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities (unvested share-based payment awards) according to dividends declared (or accumulated) and participation rights in undistributed earnings.  The factors used in the earnings per share computation follow:

8

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Basic
Net loss	$	(554)	$	(684)	$	(1,364)	$	(1,423)
Less: Preferred dividends and accretion of discount on preferred stock		-		(111)		-		(221)
Less: Net loss allocated to unvested share-based payment awards		-		3		-		6
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding including unvested share-based payment awards		15,823,677		825,491		15,823,869		825,469
Less: Unvested share-based payment awards		(133)		(2,700)		(299)		(3,000)
Average shares		15,823,544		822,791		15,823,570		822,469
Basic loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)
Diluted
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding for basic loss per common share		15,823,544		822,791		15,823,570		822,469
Add:  Dilutive effects of assumed exercises of stock options		-		-		-		-
Add:  Dilutive effects of assumed exercises of stock warrant		-		-		-		-
Average shares and dilutive potential common shares		15,823,544		822,791		15,823,570		822,469
Diluted loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)

The following stock options and warrant were not considered in computing diluted earnings (loss) per common share because the options or warrant were anti-dilutive or the Company reported a net loss for the periods presented.

	Three months ended June 30,		Six months ended June 30,
	2013	2012	2013	2012
Stock options	240,406	42,116	240,406	42,116
Stock warrant	-	67,314	-	67,314

Adoption of New Accounting Standards:

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220); Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The objective of this Update is to improve the reporting of reclassifications out of accumulated other comprehensive income.  The amendments in this Update require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S.GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012.  The adoption of this ASU did not have a material impact on the Company, however, disclosures have been presented as part of notes to the financial statements.

9

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 2- REGULATORY ORDER CONSIDERATIONS

Regulatory Order Considerations: On May 25, 2011, the Holding Company and CFBank each consented to the issuance of an Order to Cease and Desist (the Holding Company Order and the CFBank Order, respectively, and collectively, the Orders) by the Office of Thrift Supervision (OTS), the primary regulator of the Holding Company and CFBank at the time the Orders were issued.  In July 2011, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the Federal Reserve Bank replaced the OTS as the primary regulator of the Holding Company and the Office of the Comptroller of the Currency (OCC) replaced the OTS as the primary regulator of CFBank.

The Holding Company Order requires it, among other things, to: (i) submit by every December 31 a capital plan to regulators that establishes a minimum tangible capital ratio commensurate with the Holding Company’s consolidated risk profile, reduces the risk from current debt levels and addresses the Holding Company’s cash flow needs; (ii) not pay cash dividends, redeem stock or make any other capital distributions without prior regulatory approval; (iii) not pay interest or principal on any debt or increase any Holding Company debt or guarantee the debt of any entity without prior regulatory approval; (iv) obtain prior regulatory approval for changes in directors and senior executive officers; and (v) not enter into any new contractual arrangement related to compensation or benefits with any director or senior executive officer without prior notification to regulators.

The CFBank Order requires it, among other things, to: (i) maintain 8% core capital and 12% total risk-based capital, after establishing an adequate allowance for loan and lease losses; (ii) submit by every December 31 a capital and business plan to regulators that describes strategies to meet these required capital ratios and contains operating strategies to achieve realistic core earnings; (iii) raise capital to reach the required levels; (iv) not originate, participate in or acquire any nonresidential real estate loans or commercial loans not in line with agreed Board approval conditions, loan policies and credit administration procedures; (v) adopt a revised credit administration policy, problem asset reduction plan, management succession plan and liquidity management policy; (vi) limit asset growth in line with CFBank’sbusiness plan absent prior regulatory approval for additional growth; (vii) not pay cash dividends or make any other capital distributions without prior regulatory approval; (viii) obtain prior regulatory approval for changes in directors and senior executive officers; (ix) not enter into any new contractual arrangement related to compensation or benefits with any director or senior executive officer without prior notification to regulators; (x) not enter into any significant arrangement or contract with a third party service provider without prior regulatory approval; and (xi) comply with the Federal Deposit Insurance Corporation (FDIC) limits on brokered deposits.  As a result of the CFBank Order, we are prohibited from offering above-market interest rates and are subject to market rates published by the FDIC when offering deposits to the general public.  In addition,CFBank is considered “adequately capitalized” for regulatory purposes and will not be considered “well-capitalized” so long as the CFBank Order remains in effect.  If CFBank’s capital falls below the levels to be considered adequately capitalized, it may be subject to substantially greater regulatory scrutiny, including the imposition of additional restrictions on our operations. 

The Company has been unprofitable for the past three years.  If we do not generate profits in the future, our capital levels will be negatively impacted and the regulators could take additional enforcement action against us, including the imposition of further operating restrictions.

Because CFBank is under a regulatory order, it is prohibited from accepting or renewing brokered deposits, including reciprocal deposits in the Certificate of Deposit Account Registry Service (CDARS) program, without FDIC approval.  CFBank received limited waivers from the prohibition on renewal of reciprocal CDARS deposits from the FDIC, each for 90 day periods, commencing in June, 2011, through the current 90-day waiver period which runs through September 11, 2013.  Management intends to submit additional requests for waivers in the future; however, there can be no assurance that the additional requests will be granted by the FDIC or that customers will roll over their CDARS deposits even if CFBank is granted additional waivers.

10

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The prohibition on brokered deposits significantly limits CFBank’s ability to participate in the CDARS program and impacts CFBank’s liquidity management.  The Company monitors on-balance-sheet liquidity to deal with scheduled brokered deposit maturities and the potential impact of other regulatory restrictions on liquidity.  At June 30, 2013, CFBank had $27,272 in brokered deposits,  which included $3.6 million in reciprocal CDARS deposits in the program,with maturity dates from August 2013 through August 2016. At June 30, 2013, cash, unpledged securities and deposits in other financial institutions totaled $37,047.  

Brokered deposit maturities over the next four years are as follows:

June 30, 2014	$	17,214
June 30,2015		3,427
June 30, 2016		6,432
June 30, 2017		199
		27,272

Pursuant to the CFBank Order, CFBank may not declare or pay dividends or make any other capital distributions without receiving the prior written approval of the OCC.  Future dividend payments by CFBank to the Holding Company would be based on future earnings and the approval of the OCC. The payment of dividends from CFBank to the Holding Company is not likely to be approved by the OCC while CFBank is suffering losses.

The directives contained in the Orders, including higher capital requirements, requirements to reduce the level of our classified and criticized assets and various operating restrictions, may impede our full ability to operate our business and compete effectively in our markets.

We have taken such actions as we believe are necessary to comply with all requirements of the Orders which are currently effective and we are continuing to work toward compliance with the provisions of the Orders having future compliance dates.

We have received or provided all required approvals, non-objections, notifications and waivers with regard to the Orders.  Details of these items are disclosed in Note 2- Regulatory Order Considerations to the Consolidated Financial Statements contained in the Company’s 2012 Annual Report that was filed as Exhibit 13.1 to the Company’s Form 10-K for the year ended December 31, 2012.

The requirements of the Orders will remain in effect until terminated, modified or suspended by our regulators.

Capital Raise: The Company announced the terms of a registered common stock offering on August 9, 2011.  In  April 2012, the Company suspended this offering and returned all subscriptions received.  The Company subsequently modified the terms of the offering and filed post-effective amendments to its registration statement with the SEC, and the amended registration statement was declared effective on June 14, 2012.

The restructured registered common stock offering consisted of a rights offering of up to $18,000 and a $4,500 offering to a group of standby purchasers, as well as a public offering of any unsold shares.  Under the terms of the rights offering, all holders of the Company’s common stock as of the record date, June 14, 2012, received, at no charge, one subscription right for each share of common stock held as of the record date, which was after the 1 for 5 reverse stock split effective May 4, 2012.  Each subscription right entitled the holder of the right to purchase 14.5329 shares of Company common stock (post-split) at a subscription price of $1.50 per share (post-split).  The rights offering period expired on July 16, 2012, and unsubscribed shares were made available to the public beginning on July 17, 2012, at $1.50 per share. The public offering of unsubscribed shares of common stock ended on August 14, 2012.  The Company separately entered into a series of standby purchase agreements with a group of investors led by Timothy T. O’Dell, Thad R. Perry and Robert E. Hoeweler.  Under the standby purchase agreements, the standby purchasers agreed to purchase 3.0 million shares of Company common stock at a price of $1.50 per share. The standby purchasers had conditioned their purchase of shares of common stock upon the receipt by the Company of at least $13,500 in net proceeds from the rights offering

11

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

and public offering.

On August 20, 2012, the Company announced the successful completion of its restructured registered common stock offering.  The Company sold 15.0 million shares of its common stock (including shares sold to the standby purchasers) at $1.50 per share, resulting in gross proceeds of $22,500 before expenses of $2,279.  

A portion of the proceeds from the restructured registered common stock offering was retained by the Holding Company for general corporate purposes and is estimated to be sufficient to support the Holding Company’s cash requirements for the foreseeable future based on its current business plan.Holding Company cash provided from net proceeds of the stock offering was reduced by $3,000 for redemption of the Company’s TARP obligations from the U.S. Treasury and a $13,500 capital contribution to CFBank to improve its capital ratios and support future growth and expansion, bringing CFBank into compliance with the capital ratios required by the CFBank Order. See Note 10 – Preferred Stock for additional information on redemption of the TARP obligations.  The Holding Company’s current cash requirements include debt service on the subordinated debentures and operating expenses.  See Note 8–  Subordinated Debentures for additional information on debt service requirements of the subordinated debentures.  Management believes the Holding Company’s liquidity is sufficient at June 30, 2013. 

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at June 30, 2013 and December 31, 2012 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
June 30, 2013
Corporate debt	$	4,394	$	1	$	21	$	4,374
State and municipal		1,941		2		7		1,936
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,159		58		-		1,217
Collateralized mortgage obligations		4,564		64		-		4,628
Total	$	12,058	$	125	$	28	$	12,155

12

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2012
Corporate debt	$	4,429	$	-	$	64	$	4,365
State and municipal		2,006		-		20		1,986
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,399		87		-		1,486
Collateralized mortgage obligations		9,698		117		13		9,802
Total	$	17,532	$	204	$	97	$	17,639

There was no other-than-temporary impairment recognized in accumulated other comprehensive income (loss) for securities available for sale at June 30, 2013 or December 31, 2012.

The proceeds from the sales of securities for the three and six months endedJune 30, 2012 are listed below.

		Three months ended				Six months ended
		June 30,				June 30,
	2013		2012		2013		2012
Proceeds	$	-	$	2,144	$	-	$	2,144
Gross gains		-		143		-		143
Gross losses		-		-		-		-
Tax effect-expense	$	-	$	-	$	-	$	-

The amortized cost and fair value of debt securities at June 30, 2013 are shown by contractual maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date are shown separately.

		June 30, 2013				December 31, 2012
		Amortized		Fair		Amortized		Fair
		Cost		Value		Cost		Value
Due in one year or less	$	-	$	-	$	50	$	50
Due from one to five years		6,336		6,310		6,385		6,301
Mortgage-backed securities		1,159		1,217		1,399		1,486
Collateralized mortgage obligations		4,564		4,628		9,698		9,802
Total	$	12,059	$	12,155	$	17,532	$	17,639

Fair value of securities pledged was as follows:

	June 30,		December 31,
	2013		2012
Pledged as collateral for:
FHLB advances	$	3,324	$	4,707
Public deposits		1,713		2,199
Interest-rate swaps		787		1,511
Total	$	5,824	$	8,417

13

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

At June 30, 2013 and December 31, 2012, there were no holdings of securities of any one issuer, other than U.S. government-sponsored entities and agencies, in an amount greater than 10% of stockholders’ equity.

The following table summarizes securities with unrealized losses at June 30, 2013 and December 31, 2012 aggregated by major security type and length of time in a continuous unrealized loss position.

June 30, 2013	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate debt	$	3,873	$	22	$	-	$	-	$	3,873	$	22
State and municipal		909		7		-		-		909		7
Issued by U.S. government-sponsored entities and agencies:
Collateralized mortgage obligations		-		-		-		-		-		-
Total temporarily impaired	$	4,782	$	29	$	-	$	-	$	4,782	$	29

December 31, 2012	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate debt	$	4,365	$	64	$	-	$	-	$	4,365	$	64
State and municipal		1,936		20		-		-		1,936		20
Issued by U.S. government-sponsored entities and agencies:
Collateralized mortgage obligations		1,673		13		-		-		1,673		13
Total temporarily impaired	$	7,974	$	97	$	-	$	-	$	7,974	$	97

The unrealized losses inCorporate  debt and State and Municipal Securities at June  30, 2013 and December 31, 2012, are related to multiple securities.  Because the decline in fair value is attributable to changes in market conditions, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be

required to sell these securities before their anticipated recovery, the Company did not consider these securities to be other-than-temporarily impaired at June 30, 2013 and December 31, 2012.

There was no unrealized loss in Collateralized Mortgage Obligations at June 30, 2013.  The unrealized loss at December 31, 2012 is related to one Ginnie Mae collateralized mortgage obligation. This security carries the full faith and credit guarantee of the U.S. government.   Because the decline in fair value is attributable to changes in market conditions, and not credit quality, and because the Company does not have the intent to sell this security and it is likely that it will not be required to sell this security before their anticipated recovery, the Company did not consider this security  to be other-than-temporarily impaired at December 31, 2012.

14

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 4 – LOANS

The following table presents the recorded investment in loans by portfolio segment.  The recorded investment in loans includes the principal balance outstanding adjusted for purchase premiums and discounts, deferred loan fees and costs and includes accrued interest.

	June 30,		December 31,
	2013		2012
Commercial	$	27,611	$	25,408
Real estate:
Single-family residential		55,123		43,058
Multi-family residential		24,501		21,576
Commercial		62,242		54,291
Construction		1,701		14
Consumer:
Home equity lines of credit		13,809		12,963
Other		955		970
Subtotal		185,942		158,280
Less: ALLL		(6,065)		(5,237)
Loans, net	$	179,877	$	153,043

Commercial loans included $12,538 and$11,782, respectively, of commercial lines of credit which required interest only payments at June 30, 2013 and December 31, 2012.

Home equity lines of credit included $11,658 and $10,447, respectively, of loans which required interest only payments at June 30, 2013 and December 31, 2012.

15

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

Mortgage Purchase Program

On December 11, 2012, CFBank entered into a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation.  At June 30, 2013 and December 31,2012, CFBank held $35,763 and $25,373, respectively, of such loans which have been included in single family residential loan totals above.  Through a participation agreement, CFBank agreed to purchase from Northpointe an 80% interest in fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S. The participation agreement provides for CFBank to purchase individually (MERS registered) loans from Northpointe and hold them until funded by the end investor.  The mortgage loan investors include Fannie Mae and Freddie Mac, and other major financial institutions such as Wells Fargo Bank.  This process on average takes approximately 14 days.  Given the short term nature of each of these individual loans, common credit risks such as past due, impairment and trouble debt restructure (TDR), nonperforming, and nonaccrual classification are substantially reduced.  The maximum aggregate purchase interest shall not exceed $45,000.  Northpointe maintains a 20% ownership interest in each loan it participates.  The agreement further calls for full control to be relinquished by the broker to Northpointe and its participants with recourse to the broker after 120 days, at the sole discretion of Northpointe. As such, these purchased loans are classified as portfolio loans.  These loans are 100% risk rated for CFBank capital adequacy purposes.

The ALLL is a valuation allowance for probable incurred credit losses in the loan portfolio based on management’s evaluation of various factors including past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. A provision for loan losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors described in Note 1 to the Consolidated Financial Statements contained in the Company’s 2012 Annual Report that was filed as Exhibit 13.1 to the Company’s Form 10-K for the year ended December 31, 2012. 

The following tables present the activity in the ALLL by portfolio segment for the three and six months ended June 30, 2013:

	Three months ended June 30, 2013
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,409	$	239	$	1,604	$	2,197	$	1	$	220	$	12	$	5,682
Addition to (reduction in) provision for loan losses		31		128		69		(44)		18		125		(3)		324
Charge-offs		-		-		-		-		-		(17)		-		(17)
Recoveries		9		1		57		4		-		3		2		76
Ending balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065

16

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

	Six months ended June 30, 2013
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,311	$	332	$	1,396	$	1,946	$	-	$	241	$	11	$	5,237
Addition to (reduction in) provision for loan losses		112		34		248		153		19		102		(18)		650
Charge-offs		-		-		-		-		-		(17)		-		(17)
Recoveries		26		2		86		58		-		5		18		195
Ending balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065

The following tables present the activity in the ALLL by portfolio segment for the three and six months ended June 30, 2012:

	Three months ended June 30, 2012
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,802	$	190	$	1,446	$	1,912	$	-	$	274	$	17	$	5,641
Addition to (reduction in) provision for loan losses		(589)		58		(58)		712		-		45		32		200
Charge-offs		(84)		(7)		(18)		(496)		-		(40)		(34)		(679)
Recoveries		248		4		-		2		-		7		2		263
Reclass of ALLL on loan -related commitments (1)		9		-		-		-		-		-		-		9
Ending balance	$	1,386	$	245	$	1,370	$	2,130	$	-	$	286	$	17	$	5,434

	Six months ended June 30, 2012
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	2,281	$	207	$	1,470	$	1,863	$		$	272	$	17	$	6,110
Addition to (reduction in) provision for loan losses		(1,097)		39		312		1,059				64		23		400
Charge-offs		(99)		(7)		(434)		(930)				(60)		(34)		(1,564)
Recoveries		292		6		22		138				10		11		479
Reclass of ALLL on loan -related commitments (1)		9		-		-						-		-		9
Ending balance	$	1,386	$	245	$	1,370	$	2,130	$	-	$	286	$	17	$	5,434

The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on the impairment method as of June 30, 2013:

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	632	$	111	$	673	$	143	$	-	$	-	$	-	$	1,559
Collectively evaluated for impairment		817		257		1,057		2,014		19		331		11		4,506
Total ending allowance balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065
Loans:
Individually evaluated for impairment	$	1,092	$	479	$	2,068	$	5,610	$	-	$	-	$	-	$	9,249
Collectively evaluated for impairment		26,519		54,644		22,433		56,632		1,701		13,809		955		176,693
Total ending loan balance	$	27,611	$	55,123	$	24,501	$	62,242	$	1,701	$	13,809	$	955	$	185,942

17

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on the impairment method as of December 31, 2012: 

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	609	$	71	$	24	$	126	$	-	$	-	$	-	$	830
Collectively evaluated for impairment		702		261		1,372		1,820		-		241		11		4,407
Total ending allowance balance	$	1,311	$	332	$	1,396	$	1,946	$	-	$	241	$	11	$	5,237
Loans:
Individually evaluated for impairment		1,091		129		2,167		6,467		-		-		-		9,854
Collectively evaluated for impairment		24,317		42,929		19,409		47,824		14		12,963		970		148,426
Total ending loan balance	$	25,408	$	43,058	$	21,576	$	54,291	$	14	$	12,963	$	970	$	158,280

The following table presents loans individually evaluated for impairment by class of loans at June 30, 2013.  The unpaid principal balance is the contractual principal balance outstanding.  The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs and includes accrued interest. The table presents accrual basis interest income recognized during the three and six months ended June 30, 2013.  Cash payments of interest during the three and six months ended June 30, 2013 totaled $57 and $114, respectively.

	As of June 30, 2013						Three months ended June 30, 2013				Six  months ended June 30, 2013
	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	135	$	121	$	-	$	165	$	-	$	169	$	-
Real estate:
Single-family residential		-		-		-		-		-		-		-
Multi-family residential		185		185		-		188		-		192		-
Commercial:
Non-owner occupied		2,172		1,505		-		1,510		-		1,913		-
Owner occupied		2,110		1,159		-		1,174		-		1,197		-
Land		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other												-		-
Total with no allowance recorded		4,602		2,970		-		3,037		-		3,471		-
With an allowance recorded:
Commercial		971		971		632		849		5		866		11
Real estate:
Single-family residential		479		479		111		127		3		127		5
Multi-family residential		2,005		1,883		673		1,900		1		1,922		2
Commercial:
Non-owner occupied		2,186		2,187		124		2,191		34		2,211		69
Owner occupied		388		388		7		390		6		392		12
Land		416		371		12		377		6		381		11
Construction
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total with an allowance recorded		6,445		6,279		1,559		5,834		55		5,899		110
Total	$	11,047	$	9,249	$	1,559	$	8,871	$	55	$	9,370	$	110

18

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The following table presents loans individually evaluated for impairment by class of loans at December 31, 2012.  The unpaid principal balance is the contractual principal balance outstanding.  The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs and includes accrued interest. The table presents accrual basis interest income recognized during the three and six months ended June 30, 2012.  Cash payments of interest during the three and six months ended June 30, 2012 totaled $50 and $118, respectively

	As of December 31, 2012						Three months ended June 30, 2012				Six  months ended June 30, 2012
	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	136	$	121	$	-	$	133	$	-	$	89	$	-
Real estate:
Single-family residential		-		-		-		-		-		-		-
Multi-family residential		2,001		1,879		-		3,955		29		4,099		39
Commercial:
Non-owner occupied		3,000		2,195		-		1,909		-		1,571		-
Owner occupied		2,195		1,244		-		413		-		422		-
Land		-		-		-		-		-		-		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Total with no allowance recorded		7,332		5,439		-		6,410		29		6,181		39
With an allowance recorded:
Commercial		970		970		609		679		9		687		22
Real estate:
Single-family residential		129		129		71		131		-		111		-
Multi-family residential		288		288		24		90		2		91		3
Commercial:
Non-owner occupied		2,239		2,239		105		2,411		36		2,404		87
Owner occupied		396		396		7		406		6		407		12
Land		438		393		14		438		6		461		13
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Total with an allowance recorded		4,460		4,415		830		4,155		59		4,161		137
Total	$	11,792	$	9,854	$	830	$	10,565	$	88	$	10,342	$	176

19

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The following table presents the recorded investment in nonaccrual loans by class of loans:

	June 30,		December 31,
	2013		2012
Nonaccrual loans:
Commercial	$	599	$	714
Real estate:
Single-family residential		171		113
Multi-family residential		2,006		2,082
Commercial:
Non-owner occupied		1,505		2,195
Owner occupied		1,159		1,243
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-
Purchased for portfolio		-		9
Total nonaccrual and nonperforming loans	$	5,440	$	6,356

Nonaccrual loans include both smaller balance single-family mortgage and consumer loans that are collectively evaluated for impairment and individually classified impaired loans. There were no loans 90 days or more past due and still accruing interest at June 30, 2013 or December 31, 2012.

The following table presents the aging of the recorded investment in past due loans by class of loans as of June 30, 2013:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	-	$	121	$	121	$	27,490	$	478
Real estate:
Single-family residential		1,059		110		149		1,318		53,805		22
Multi-family residential		-		-		-		-		24,501		2,006
Commercial:
Non-owner occupied		-		-		949		949		31,614		556
Owner occupied		-		-		-		-		24,807		1,159
Land		-		-		-		-		4,872		-
Construction		-		-		-		-		1,701		-
Consumer:
Home equity lines of credit:
Originated for portfolio				61		-		61		11,822		-
Purchased for portfolio		126		-		-		126		1,800		-
Other		3		-		-		3		952		-
Total	$	1,188	$	171	$	1,219	$	2,578	$	183,364	$	4,221

20

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2012:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	65	$	121	$	186	$	25,222	$	593
Real estate:
Single-family residential		1,105		122		74		1,301		41,757		39
Multi-family residential		-		-		-		-		21,576		2,082
Commercial:
Non-owner occupied		40		-		1,611		1,651		28,299		583
Owner occupied		-		-		-		-		19,774		1,244
Land		-		-		-		-		4,568		-
Construction		-		-		-		-		14		-
Consumer:
Home equity lines of credit:
Originated for portfolio		20		-		-		20		10,699		-
Purchased for portfolio		-		-		9		9		2,235		-
Other		18		-		-		18		951		-
Total	$	1,183	$	187	$	1,815	$	3,185	$	155,095	$	4,541

Troubled Debt Restructurings (TDRs):

As of June 30, 2013 and December 31, 2012, TDR’s totaled $6.6 million and $7.0 million, respectively.  The Company allocated $1.6 million and $830 of specific reserves to loans whose terms had been modified in TDRs as of June 30, 2013 and December 31, 2012, respectively.  The Company had not committed to lend any additional amounts as of June 30, 2013 or December 31, 2012 to customers with outstanding loans classified as nonaccrual TDRs.

During the three and six months ended June 30, 2013, there was one single-family residential loan modified as a TDR, where concessions were granted to a borrower experiencing financial difficulties. The modified terms included a reduction in the stated interest rate of the loan from 6.5% to 3.5%, for a period of six months, and a deferral of two interest payments to the end of the loan. The impact to the income statement was approximately $5,200.

21

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

During the quarter ended June 30, 2012, the terms of one loan were modified as a TDR, where concessions were granted to a borrower experiencing financial difficulties. The modification of the terms of this non-owner occupied commercial real estate loan included an extension of the maturity date from May 31, 2012 to September 30, 2012 and required a $50 principal repayment at the date of modification.

During the six months ended June 30, 2012, the terms of two loans were modified as TDRs, where concessions were granted to borrowers experiencing financial difficulties. In addition to the loan described in the preceding paragraph, one single-family residential loan was modified as a TDR during the six months ended June 30, 2012 and included a reductionin the stated interest rate of the loan from 10% to 5%, a waiver of a portion of the accrued and unpaid interest, addition of the remaining accrued and unpaid interest to the principal balance and extension of the maturity date from 2034 to 2042. This modification involved a reduction in the stated interest rate of the loan for a period of 30 years.

There were no TDRs in payment default or that became nonperforming during the period ended June 30, 2013 and 2012.  A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms, at which time the loan is re-evaluated to determine whether an impairment loss should be recognized, so that the loan is reported, net, at the present value of estimated future cash flows, or at the fair value of collateral, less cost to sell, if repayment is expected solely from the collateral.

The terms of certain other loans were modified during the quarter ended June 30, 2013 and 2012 that did not meet the definition of a TDR. These loans had a total recorded investment of $6,350 and $5,448 as of June 30, 2013 and 2012, respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties, a delay in a payment that was considered to be insignificant or there were no concessions granted.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Nonaccrual loans include loans that were modified and identified as TDRs and the loans are not performing.  At June 30, 2013 and December 31, 2012, nonaccrual TDRs were as follows:

	June 30,		December 31,
	2013		2012
Commercial	$	478	$	528
Real estate:
Multi-family residential		2,006		2,082
Commercial:
Non-owner occupied		-		388
Owner occupied		265		288
Total	$	2,749	$	3,286

Nonaccrual loans at June 30, 2013 and December 31, 2012 do not include $3,848 and $3,684, respectively, of TDRs where customers have established a sustained period of repayment performance, generally six months, the loans are current according to their modified terms and repayment of the remaining contractual payments is expected. These loans are included in total impaired loans.

22

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.  Management analyzes loans individually by classifying the loans as to credit risk.  This analysis includes commercial, commercial real estate and multi-family residential real estate loans.  Internal loan reviews for these loan types are performed at least annually, and more often for loans with higher credit risk. Adjustments to loan risk ratings are made based on the reviews and at any time information is received that may affect risk ratings.  The following definitions are used for risk ratings:

Special Mention.  Loans classified as special mention have a potential weakness that deserves management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of CFBank’s credit position at some future date.

Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that there will be some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loans not meeting the criteria to be classified into one of the above categories are considered to be not rated or pass-rated loans.  Loans listed as not rated are primarily groups of homogeneous loans.  Past due information is the primary credit indicator for groups of homogenous loans.  Loans listed as pass-rated loans are loans that are subject to internal loan reviews and are determined not to meet the criteria required to be classified as special mention, substandard or doubtful. 

23

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The recorded investment in loans by risk category and by class of loans as of June 30, 2013 and based on the most recent analysis performed follows.  There were no loans rated doubtful at June 30, 2013 and December 31, 2012. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	250	$	22,952	$	3,150	$	1,259	$	27,611
Real estate:
Single-family residential		54,904		-		-		219		55,123
Multi-family residential		-		19,202		2,449		2,850		24,501
Commercial:
Non-owner occupied		176		25,341		2,354		4,692		32,563
Owner occupied		-		21,414		597		2,796		24,807
Land		112		1,363		433		2,964		4,872
Construction		-		1,701		-		-		1,701
Consumer:										-
Home equity lines of credit:										-
Originated for portfolio		11,781		-		-		102		11,883
Purchased for portfolio		1,501		-		425		-		1,926
Other		955		-		-		-		955
	$	69,679	$	91,973	$	9,408	$	14,882	$	185,942

The recorded investment in loans by risk category and by class of loans as of December 31, 2012 follows. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	285	$	21,013	$	2,637	$	1,473	$	25,408
Real estate:
Single-family residential		42,945		-		-		113		43,058
Multi-family residential		-		12,846		5,790		2,939		21,575
Commercial:
Non-owner occupied		322		21,147		2,995		5,486		29,950
Owner occupied		-		16,385		762		2,627		19,774
Land		119		987		434		3,028		4,568
Construction		-		14		-		-		14
Consumer:
Home equity lines of credit:
Originated for portfolio		10,719		-		-		-		10,719
Purchased for portfolio		1,800		-		435		9		2,244
Other		970		-		-		-		970
	$	57,160	$	72,392	$	13,053	$	15,675	$	158,280

24

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 5 - FAIR VALUE 

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value:

Securities available for sale:  The fair value of securities available for sale is determined using pricing models that vary based on asset class and include available trade, bid and other market information or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).

Loans held for sale, at fair value: Loans held for sale are carried at fair value, as determined by outstanding commitments from third party investors (Level 2).

Derivatives:  The fair value of derivatives is based on valuation models using observable market data as of the measurement date (Level 2).

Impaired loans: The fair value of impaired loans with specific allocations of the ALLL is generally based on recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and foreclosed assets are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by a third-party appraisal management company approved by the Board of Directors annually. Once received, the loan officer or a member of the credit department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are updated as needed based on facts and circumstances associated with the individual properties.  Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties.  Appraisers may make adjustments to the sales prices of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property.  Management applies an additional discount to real estate appraised values, typically to reflect changes in market conditions since the date of the appraisal and to cover disposition costs (including selling expenses) based on the intended disposition method of the property.

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

	Fair Value Measurements at June 30, 2013 Using
	Significant Other Observable Inputs(Level 2)
Financial Assets:
Securities available for sale:
Corporate debt	$	4,374
State and municipal		1,936
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,217
Collateralized mortgage obligations		4,628
Total securities available for sale	$	12,155
Loans held for sale		629
Yield maintenance provisions (embedded derivatives)	$	716
Interest rate lock commitments	$	28
Financial Liabilities:
Interest-rate swaps	$	716

25

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

	Fair Value Measurements at December 31, 2012 Using
	Significant Other Observable Inputs(Level 2)
Financial Assets:
Securities available for sale:
Corporate debt	$	4,365
State and municipal		1,986
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,486
Collateralized mortgage obligations		9,802
Total securities available for sale	$	17,639
Loans held for sale		623
Yield maintenance provisions (embedded derivatives)	$	990
Interest rate lock commitments	$	45
Financial Liabilities:
Interest-rate swaps	$	990

The Company had no assets or liabilities measured at fair value on a recurring basis that were measured using Level 1 or Level 3 inputs at June 30, 2013 or December 31, 2012.

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

Fair Value Measurements at June 30, 2013 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	121
Real Estate:
Single-family residential		368
Multi-family residential		1,342
Commercial:
Non-owner occupied		1,505
Owner occupied		1,159
Total impaired loans	$	4,495

26

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

Fair Value Measurements at December 31, 2012 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	121
Real Estate:
Single-family residential		57
Multi-family residential		2,070
Commercial:
Non-owner occupied		1,806
Owner occupied		1,244
Total impaired loans	$	5,298

The Company had no assets or liabilities, that were material, measured at fair value on a non-recurring basis that were measured using Level 1 or Level 2 inputs at June 30, 2013 or December 31, 2012. 

The Impaired loan servicing rights, which are carried at fair value at June 30, 2013 and December 31, 2012, are not material based on the value of the asset. 

Impaired loans carried at the fair value of the collateral for collateral dependent loans, had an unpaid principal balance of $5,748 with a valuation allowance of $1,253, at June 30, 2013. There were no write-downs of impaired collateral dependent loans during the three and six months ended June 30, 2013 and $401 and $1,266 during the three and six months ended June 30,2012, respectively.  Impaired loans carried at the fair value of collateral had an unpaid principal balance of $5,909, with a valuation allowance of $611 at December 31, 2012.

During the three and six months ended June 30, 2013, the Company did not have any significant transfers of assets or liabilities between those measured using Level 1, 2 or 3 inputs.  The Company recognizes transfers of assets and liabilities between Level 1 and 2 inputs based on the information relating to those assets and liabilities at the end of the reporting period.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2013:

		Fair Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted Average)
Impaired loans:
Commercial	$	121	Income approach	Adjustment for differences in net operating income expectations	-10.00%
Commercial real estate:
Single-family residential		368	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.30%
Multi-family residential		1,342	Comparable sales approach	Adjustment for differences between the comparable market transactions	-39.0% to -27.1%  (-32.7%)
Commercial:
Non-owner occupied		1,505	Comparable sales approach	Adjustment for differences between the comparable market transactions	-9.74% to 9.18%  (-1.25%)
Owner occupied		1,159	Comparable sales approach	Adjustment for differences between the comparable market transactions	-6.3% to 0.5%  (-0.8%)

27

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measures at fair value on a non-recurring basis at December 31, 2012:

		Fair Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted Average)
Impaired loans:
Commercial	$	121	Income approach	Adjustment for differences in net operating income expectations	-10.00%
Commercial real estate:
Single -family residential		57	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.30%
Multi-family residential		2,070	Comparable sales approach	Adjustment for differences between the comparable market transactions	-39.0% to -27.1% (-32.7%)
Commercial:
Non-owner occupied		1,806	Comparable sales approach	Adjustment for differences between the comparable market transactions	-12.2% to 16.7% (7.3%)
Owner occupied		1,244	Comparable sales approach	Adjustment for differences between the comparable market transactions	6.3% to 0.5% (-0.8%)

Financial Instruments Recorded Using Fair Value Option

The Company has elected the fair value option for loans held for sale.  These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans.  Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment.  None of these loans were 90 days or more past due or on nonaccrual as of June 30, 2013 or December 31, 2012. 

As of June 30, 2013 and December 31, 2012, the aggregate fair value, contractual balance (including accrued interest) and gain or loss were as follows:

		June 30, 2013		December 31, 2012
Aggregate fair value	$	629	$	623
Contractual balance		621		595
Gain (loss)		8		28

The total amount of gains and losses from changes in fair value included in earnings for the three and six months ended June 30, 2013 and 2012 for loans held for sale were:

28

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

	Three months ended June 30,				Six month ended June 30,
	2013		2012		2013		2012
Interest income	$	11	$	7	$	16	$	19
Interest expense		-		-		-		-
Change in fair value		(9)		13		(20)		4
Total change in fair value	$	2	$	20	$	(4)	$	23

29

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The carrying amounts and estimated fair values of financial instruments at June 30, 2013 were as follows:

	Fair Value Measurements at June 30, 2013 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	33,197	$	33,197	$	-	$	-	$	33,197
Interest-bearing deposits in other financial institutions		2,726		2,726		-		-		2,726
Securities available for sale		12,155		-		12,155		-		12,155
Loans held for sale		629		-		629		-		629
Loans, net		179,877		-		-		182,221		182,221
FHLB stock		1,942		-		-		-		n/a
Accrued interest receivable		69		11		59		-		70
Yield maintenance provisions (embedded derivatives)		716		-		716		-		716
Interest rate lock commitments		28		-		28		-		28
Financial liabilities
Deposits	$	(204,679)	$	(88,665)	$	(117,168)	$	-	$	(205,833)
FHLB advances		(10,000)		-		(10,187)		-		(10,187)
Subordinated debentures		(5,155)		-		(2,979)		-		(2,979)
Accrued interest payable		(202)		(1)		(201)		-		(202)
Interest-rate swaps		(716)		-		(716)		-		(716)

The carrying amounts and estimated fair values of financial instruments at December 31, 2012 were as follows:

	Fair Value Measurements at December 31, 2012 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	25,152	$	25,152	$	-	$	-	$	25,152
Interest-bearing deposits in other financial institutions		2,726		2,726				-		2,726
Securities available for sale		17,639		-		17,639		-		17,639
Loans held for sale		623		-		623		-		623
Loans, net		153,043		-		-		156,256		156,256
FHLB stock		1,942		-		-		-		n/a
Accrued interest receivable		105		10		95		-		105
Yield maintenance provisions (embedded derivatives)		990		-		990		-		990
Interest rate lock commitments		45		-		45		-		45
Financial liabilities
Deposits	$	(173,508)	$	(75,340)	$	(99,946)	$	-	$	(175,286)
FHLB advances		(10,000)		-		(10,338)		-		(10,338)
Subordinated debentures		(5,155)		-		(2,999)		-		(2,999)
Accrued interest payable		(98)		-		(98)		-		(98)
Interest-rate swaps		(990)		-		(990)		-		(990)

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and Cash Equivalents

30

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Interest-Bearing Deposits in Other Financial Institutions

The carrying amounts of interest bearing deposits in other financial institutions approximate fair values and are classified as Level 1.

FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability. 

Loans

Fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposits

The fair values disclosed for demand deposits (e.g., interest and noninterest bearing checking, passbook savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Other Borrowings

The fair values of the Company’s long-term FHLB advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.  The fair values of the commercial line of credit and FHLB short-term variable rate advance are equal to the carrying value due to their short-term nature.  The maturities on these outstanding borrowings would be less than 30 days.

The fair values of the Company’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable/Payable

The carrying amounts of accrued interest approximate fair value resulting in a Level 1 or 2 classification,consistent with the asset or liability with which they are associated.

Off-Balance-Sheet Instruments

The fair value of off-balance-sheet items is not considered material.

31

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 6 –FHLB ADVANCES

Variable and Fixed Rate Advances from the FHLB were as follows:

	Rate		June 30,2013		December 31, 2012
Fixed Rate Advances
Maturities:
January 2014	3.12%	$	5,000	$	5,000
May 2014	3.06%		5,000		5,000
Total		$	10,000	$	10,000

Each advance is payable at its maturity date, with a prepayment penalty for fixed-rate advances. 

The advances were collateralized as follows:

	June 30, 2013		December 31, 2012
Single-family mortgage loans	$	11,955	$	9,917
Multi-family mortgage loans		5,986		4,968
Commercial real estate loans		4,234		1,185
Securities		3,324		4,707
Cash		3,300		3,300
Total	$	28,799	$	24,077

Based on the collateral pledged to FHLB and CFBank’s holdings of FHLB stock, CFBank was eligible to borrow up to a total of $17,383from the FHLB at June 30, 2013.  In May 2011, CFBank was notified by the FHLB that, due to regulatory considerations, CFBank was only eligible for future advances with a maximum maturity of one year. CFBank was subsequently notified by the FHLB that the maximum maturity for future advances was further reduced to 180 days in November 2011 and 30 days in April 2012. On June 28, 2013, CFBank’s maximum maturity for future advances was increased to one year.

32

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 7 - OTHER BORROWINGS

There were no outstanding borrowings with the Federal Reserve Bank (the FRB) at June 30, 2013 or at December 31, 2012. 

Assets pledged as collateral with the FRB were as follows:

	June 30, 2013		December 31, 2012
Commercial Loans		12,887		9,352
Commercial Real Estate Loans		20,187		16,700
Total	$	33,074	$	26,052

Based on the collateral pledged, CFBank was eligible to borrow up to $21,988 from the FRB at June 30, 2013. 

CFBank had a $1.0 million line of credit with a commercial bank at both June 30, 2013 and December 31, 2012. There were no outstanding borrowings on this line of credit at June 30, 2013 and December 31, 2012.  Interest on this line accrues daily and is variable based on the commercial bank’s cost of funds and current market returns.

NOTE 8 – SUBORDINATED DEBENTURES

In December 2003, Central Federal Capital Trust I, a trust formed by the Holding Company, closed a pooled private offering of 5,000 trust preferred securities with a liquidation amount of $1 per security.  The Holding Company issued $5,155 of subordinated debentures to the trust in exchange for ownership of all of the common stock of the trust and the proceeds of the preferred securities sold by the trust.  The Holding Company is not considered the primary beneficiary of this trust (variable interest entity); therefore, the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability.  The Holding Company’s investment in the common stock of the trust was $155 and is included in other assets.

The Holding Company may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1, on or after December 30, 2008 at 100% of the principal amount, plus accrued and unpaid interest.  The subordinated debentures mature on December 30, 2033.  The subordinated debentures are also redeemable in whole or in part, from time to time, upon the occurrence of specific events defined within the trust indenture.  There are no required principal payments on the subordinated debentures over the next five years. The Holding Company has the option to defer interest payments on the subordinated debentures for a period not to exceed five consecutive years. The Company’s Board of Directors elected to defer interest payments on the subordinated debt in 2010.

Cumulative deferred interest payments through September 30, 2012 totalling $348 were paid current in December 2012 with the approval of the FED. Cumulative deferred payments subsequent to September 30, 2012 have been accrued and totaled $125 as of June  30, 2013. Cumulative deferred interest payments were $42 at December 31, 2012. Pursuant to

the Holding Company Order, the Holding Company may not, directly or indirectly, incur, issue, renew, rollover, or pay interest or principal on any debt (including the subordinated debentures) or commit to do so, increase any current lines of credit, or guarantee the debt of any entity, without prior written notice to and written non-objection from the FED.

The subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month London Interbank Offered Rate plus 2.85%, which was 3.13% at June 30,2013 and 3.21% at December 31, 2012.

33

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 9 – STOCK-BASED COMPENSATION

The Company has three stock-based compensation plans (the Plans), as described below.  Total compensation cost that was charged to income for those Plans totaled $29 and $50, respectively, for the three and six months ended June 30, 2013 and $4 and $10, respectively, for three and six months ended June 30, 2012.  The total income tax (expense) benefit was not material for the three or six months ended June 30, 2013 and 2012.

The Plans, which are stockholder-approved, provide for stock option grants and restricted stock awards to directors, officers and employees. The 1999 Stock-Based Incentive Plan, which expired July 13, 2009, provided 38,778 shares for stock option grants and 15,511 shares for restricted stock awards.  The 2003 Equity Compensation Plan (2003 Plan), as amended and restated, provided an aggregate of 100,000 shares for stock option grants and restricted stock awards, of which up to 30,000 shares could be awarded in the form of restricted stock awards.  The 2009 Equity Compensation Plan, which was approved by stockholders on May 21, 2009, replaced the 2003 Plan and provides 200,000 shares, plus any remaining shares available to grant or that are later forfeited or expire under the 2003 Plan, that may be issued as stock option grants, stock appreciation rights or restricted stock awards.  On May 16, 2013, stockholders approved the First Amendment to the 2009 Equity Compensation Plan to increase the number of shares of common stock reserved for awards thereunder to 1,500,000.

Stock Options

The Plans permit the grant of stock options to directors, officers and employees for up to 1,638,778 shares of common stock.  Option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant, generally have vesting periods ranging from one to three years, and are exercisable for ten years from the date of grant.  Unvested stock options immediately vest upon a change in control.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below.  Expected volatilities are based on historical volatilities of the Company’s common stock.  The Company uses historical data to estimate option exercise and post-vesting termination behavior.  Employee and management options are tracked separately.  The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable.  The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were no options granted during the three months ended June 30, 2013 and the three and six months ended June 30, 2012.  The fair value of the 30,000 options granted during the six months ended June 30, 2013 was determined using the following weighted‑average assumptions as of the grant dates as listed in the table below. 

	Three months ended	Six months ended
	June 30, 2013	June 30, 2013
Risk-free interest rate	1.32%	1.32%
Expected term (years)	7	7
Expected stock price volatility	80%	80%
Dividend yield	0%	0%

A summary of stock option activity in the Plans for the six months ended June 30, 2013 follows:

34

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	234,696	$	4.29
Granted	30,000		1.50
Exercised	-		-
Expired	-		-
Cancelled or Forfeited	(24,290)		18.21
Outstanding at end of period	240,406	$	2.53	9.2	$	-
Expected to vest	227,410	$	1.34	9.4	$	-
Exercisable at end of period	12,996	$	23.48	5.0	$	-

During the six months ended June 30, 2013, there were 24,290 stock options canceled or forfeited.  Previously recognized expense associated with nonvested forfeited shares is reversed.

	Six months ended June 30,
	2013		2012
Weighted average fair value of options granted	$	1.08	n/a

As of June 30, 2013, there was $122 of total unrecognized compensation cost related to nonvested stock options granted under the Plans.  The cost is expected to be recognized over a weighted-average period of 1.6 years.  Substantially all of the 227,410 nonvested stock options at June 30, 2013 are expected to vest.

Restricted Stock Awards

The Plans permit the grant of restricted stock awards to directors, officers and employees. Compensation is recognized over the vesting period of the awards based on the fair value of the stock at grant date.  The fair value of the stock is  determined using the closing share price on the date of grant and shares generally have vesting periods of one to three years.  There were 1,334,632 shares available to be issued, net of option awards under the Plans at June 30, 2013.  There were no shares of restricted stock issued during the three or six months ended June 30, 2013 and 2012.

A summary of changes in the Company’s nonvested restricted shares for the six months ended June 30, 2013 follows:

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2013	1,400	$	6.61
Granted	-		-
Vested	-		-
Forfeited	(1,000)		7.25
Nonvested at June 30, 2013	400	$	5.00

35

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

There were no shares forfeited during the three months ended June 30, 2013 and 1,000 shares forfeited during the six months ended June 30, 2013, which resulted in the reversal of previously recognized expense associated with the nonvested shares. As of June 30, 2013, the total unrecognized compensation cost related to nonvested restricted shares granted under the Plans was immaterial.  There were no shares vested during the three or six months ended, June 30, 2013 and 2012.

NOTE 10 – PREFERRED STOCK

On December 5, 2008, in connection with the Troubled Asset Relief Program (TARP) Capital Purchase Program, the Company issued to the U.S. Treasury 7,225 shares of Central Federal Corporation Fixed Rate Cumulative Perpetual Preferred Stock, Series A (Preferred Stock) for $7,225.  The Preferred Stock initially paid quarterly dividends at a five percent annual rate.

The Company’s Board of Directors elected to defer dividend payments on the Preferred Stock beginning with the dividend payable on November 15, 2010.

Pursuant to the Holding Company Order, as described in Note 2, the Holding Company may not declare, make, or pay any cash dividends (including dividends on the Preferred Stock, or the Holding Company’s common stock) or other capital distributions or purchase, repurchase or redeem or commit to purchase, repurchase, or redeem any Holding Company equity stock without the prior written non-objection of the FED.  On July 13, 2012, the Company received approval from the FRB of Cleveland of an agreement with U.S. Treasury to redeem the Preferred Stock, including all accrued but unpaid dividends and the common stock warrant issued in connection with the TARP Capital Purchase Program (together, the “TARP obligations”) using proceeds of the Holding Company’s common stock offering. On August 23, 2012, the Holding Company received regulatory non-objection from the OCC for redemption of the TARP obligations.

On September 26, 2012, pursuant to the agreement with U.S. Treasury, the Holding Company utilized $3,000 of the proceeds from its stock offering to redeem the TARP obligations including deferred dividends totaling $801.  The redemption included satisfaction of common stock warrants associated with the preferred stock. The redemption was completed at a discount and resulted in an increase in common stockholders’ equity of $4,960.  At June 30, 2013 and December 31, 2012, the preferred stock was fully redeemed. Preferred stock dividend and accretions totaled $0for the three and six months endedJune  30, 2013 and $111 and $221 for the three and six months endedJune 30, 2012.

NOTE 11 – REGULATORY CAPITAL MATTERS

CFBank is subject to regulatory capital requirements administered by federal banking agencies.  Prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off‑balance-sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action. 

Prompt corrective action regulations provide five classifications:  well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If adequately capitalized, regulatory approval is required to accept brokered deposits.  If

36

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

The CFBank Order required CFBank to have by September 30, 2011, and maintain thereafter, 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets. CFBank met the capital requirement at June 30, 2013 and December 31, 2012 as a result of a $13,500 capital contribution from the Holding Company using net proceeds of the stock offering. However, CFBank will not be considered “well-capitalized” under applicable regulatory capital standards as long as it is subject to individual minimum capital requirements under the CFBank Order.

37

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

Actual and required capital amounts and ratios of CFBank are presented below:

							To Be Well
							Capitalized Under			Required
				For Capital			Applicable Regulatory			By Terms Of
	Actual			Adequacy Purposes			Capital Standards			CFBank Order
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
June 30, 2013
Total Capital to risk
weighted assets	$	24,352	13.17%	$	14,793	8.00%	$	18,491	10.00%	$	22,189	12.00%
Tier 1 (Core) Capital to risk
weighted assets		21,994	11.89%		7,396	4.00%		11,094	6.00%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		21,994	9.19%		9,569	4.00%		11,961	5.00%		18,138	8.00%
Tangible Capital to
adjusted total assets		21,994	9.19%		3,588	1.50%		N/A	N/A		N/A	N/A

							To Be Well
							Capitalized Under			Required
				For Capital			Applicable Regulatory			By Terms Of
	Actual			Adequacy Purposes			Capital Standards			CFBank Order
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31,2012
Total Capital to risk
weighted assets	$	25,002	15.53%	$	12,878	8.00%	$	16,098	10.00%	$	19,317	12.00%
Tier 1 (Core) Capital to risk
weighted assets		22,950	14.26%		6,439	4.00%		9,659	6.00%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		22,950	10.97%		8,372	4.00%		10,465	5.00%		16,744	8.00%
Tangible Capital to
adjusted total assets		22,950	10.97%		3,139	1.50%		N/A	N/A		N/A	N/A

38

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

In July 2013, the Office of the Comptroller of the Currency and the other federal bank regulatory agencies issued a final rule that will revise their leverage and risk-based capital requirements and the method of calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the rule establishes a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirement unless a one-time opt-in or opt-out is exercised. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

The final rule becomes effective for the Bank on January 1, 2015.  The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective.

The Qualified Thrift Lender test requires at least 65% of assets be maintained in housing‑related finance and other specified areas.  If this test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or CFBank must convert to a commercial bank charter.  Management believes that this test has been met at June 30, 2013 and December 31, 2012.

CFBank converted from a mutual to a stock institution in 1998, and a “liquidation account” was established in the amount of $14,300, which was the net worth reported in the conversion prospectus.  The liquidation account represents a calculated amount for the purposes described below, and it does not represent actual funds included in the consolidated financial statements of the Company.  Eligible depositors who have maintained their accounts, less annual reductions to the extent they have reduced their deposits, would receive a distribution from this account if CFBank liquidated and its assets exceeded its liabilities.  Dividends may not reduce CFBank’s stockholder’s equity below the required liquidation account balance.

Dividend Restrictions

Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year's net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. Currently, CFBank must receive regulatory approval prior to any dividend payments.

39

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

NOTE 12 – DERIVATIVE INSTRUMENTS 

Interest-rate swaps:  CFBank utilizes interest-rate swaps as part of its asset/liability management strategy to help manage its interest rate risk position, and does not use derivatives for trading purposes.  The notional amount of the interest-rate swaps does not represent amounts exchanged by the parties.  The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest-rate swap agreements.  CFBank was party to interest-rate swaps with a combined notional amount of $7,644 at June 30, 2013 and $7,750 at December 31, 2012.

The objective of the interest-rate swaps is to protect the related fixed rate commercial real estate loans from changes in fair value due to changes in interest rates.  CFBank has a program whereby it lends to its borrowers at a fixed rate with the loan agreement containing a two-way yield maintenance provision, which will be invoked in the event of prepayment of the loan, and is expected to exactly offset the fair value of unwinding the swap.  The yield maintenance provision represents an embedded derivative which is bifurcated from the host loan contract and, as such, the swaps and embedded derivatives are not designated as hedges.  Accordingly, both instruments are carried at fair value and changes in fair value are reported in current period earnings. CFBank currently does not have any derivatives designated as hedges. 

Contingent Features:  The counterparty to CFBank’s interest-rate swaps is exposed to credit risk whenever the interest-rate swaps are in a liability position.  At June 30, 2013, CFBank had pledged $787 in securities as collateral for these derivatives.   Should the liability increase, CFBank will be required to pledge additional collateral. 

Additionally, CFBank’s interest-rate swap instruments contain provisions that require CFBank to remain well capitalized under regulatory capital standards. The interest-rate swaps could be called by the counterparty as a result of CFBank’s failure to maintain well-capitalized status under regulatory capital standards due to the CFBank Order.While the

counterparty has not requested payment at this time, it may elect to do so at any time while CFBank fails to qualify as “well capitalized” under regulatory capital standards. If the counterparty elected to request payment, CFBank would be required to remit $716 based on the June 30,2013 valuation of the interest-rate swaps. The yield maintenance provisions may not be unwound to offset the repayment of the interest-rate swaps, as they may only be invoked in the event of prepayment of the borrowers’ loans.  Should market interest rates decrease from June 30, 2013 levels, the payment may increase in the event the swaps are called.   In the event the interest-rate swaps are called and CFBank is unable to replace them, CFBank will be exposed to the market risk of the valuation of the yield maintenance provisions and, absent the borrowers prepaying the loans, as of June 30, 2013 would incur a net $716 expense, subject to valuation fluctuations, over the remaining lives of the related loans.

Summary information about the derivative instruments is as follows:

	30-Jun-13		31-Dec-12
Notional amount	$	7,644	$	7,750
Weighted average pay rate on interest-rate swaps		3.86%		3.86%
Weighted average receive rate on interest-rate swaps		0.22%		0.24%
Weighted average maturity (years)		4.1		4.6
Fair value of interest-rate swaps	$	(716)	$	(990)
Fair value of yield maintenance provisions		716		990

40

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

The fair value of the yield maintenance provisions and interest-rate swaps is recorded in other assets and other liabilities, respectively, in the consolidated balance sheet.  Changes in the fair value of the yield maintenance provisions and interest-rate swaps are reported currently in earnings, as other noninterest income in the consolidated statements of operations.  There were no net gains or losses recognized in earnings related to yield maintenance provisions or interest-rate swaps for the three or six months ended June 30, 2013 or 2012.

Mortgage banking derivatives: Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market are considered derivatives.  These mortgage banking derivatives are not designated in hedge relationships.  The Company had approximately $4,756 and $2,079 of interest rate lock commitments related to residential mortgage loans at June 30, 2013 and December 31, 2012, respectively.  The fair value of these mortgage banking derivatives was reflected by a derivative asset of $28 and $45 at June 30, 2013 and December 31, 2012, respectively, which was included in other assets in the consolidated balance sheet. Fair values were estimated based on anticipated gains on the sale of the underlying loans. Changes in the fair values of these mortgage banking derivatives are included in net gains on sales of loans. 

NOTE 13 – CONTINGENT LIABILITIES

CFBank participates in a multi-employer contributory trusteed pension plan.  On August 17, 2012, CFBank was notified by the trustees of the plan that, due to CFBank’s financial performance and the CFBank Order, it was required to make a contribution or provide a letter of credit in the amount of the funding shortfall plus estimated cost of annuitization of benefits in the plan, which was determined to be $908.   CFBank obtained a letter of credit from Comerica Bank for this amount.  The cost of obtaining the letter of credit was $9. CFBank may be required to make additional contributions or provide additional amounts via an expanded letter of credit if the funding shortfall increases in the future.  If CFBank’s financial condition should worsen in the future, the trustee may execute the letter of credit, resulting in a charge to CFBank. 

NOTE 14 – INCOME TAXES

The Company maintained a valuation allowance against deferred tax assets at June 30, 2013 and December 31, 2012, based on its estimate of future reversal and utilization. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information.  This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items. Based on these criteria, the Company determined that it was necessary to establish a full valuation allowance against the entire net deferred tax asset.

At year-end 2012, the Company had net operating loss carryforwards of $25,941, which expire at various dates from 2024 to 2032, and alternative minimum tax credit carryforwards of $60, which do not expire.  As a result of the change in stock ownership associated with the stock offering completed in August 2012, within the guidelines of Section 382 of the Internal Revenue Code of 1986, the Company incurred an ownership change. As a result, its ability to utilize carryforwards that arose before the stock offering closed is limited to $163 per year.  Due to this limitation, management determined it is more likely than not that $20,342 of net operating loss carryforwards will expire unutilized and, as required by accounting standards, reduced deferred tax assets and the valuation allowance by $6,916 to reflect this lost realizability as of December 31, 2012.

Federal income tax laws provided additional deductions, totaling $2,250, for thrift bad debt reserves established before 1988. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would total $765 at year-end 2012.  However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded.  Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its

41

CENTRAL FEDERAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank makes a distribution that reduces the amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

At June 30, 2013 and December 31, 2012, the Company had no unrecognized tax benefits.  The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months.  

The Company is subject to U.S. federal income tax and is no longer subject to federal examination for years prior to 2009.

NOTE 15- ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes within each classification of accumulated other comprehensive income, net of tax, for the three months ended June 30, 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

Changes in Accumulated Other Comprehensive Income by Component
For the Three and Six Months Ended June 30, 2013  (1)
			Three Months ended			Six Months ended
			June 30,2013			June 30,2013
				Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Available-for-Sale Securities
	Accumulated Other Comprehensive Income (Loss)		$	132		$	107
	Other comprehensive income (loss) before reclassifications			(35)			(10)
	Amount reclassified from accumulated other comprehensive income	(2)		-	(2)		-
	Net current-period other comprehensive income (loss)			(35)			(10)
	Accumulated Other Comprehensive Income at June 30, 2013		$	97		$	97
(1)	All amounts are net of tax. Amounts in parentheses indicate a reduction of other comprehensive income.
(2)	There no amounts reclassified out of other comprehensive income for the three and six months ended June, 2013

42

CENTRAL FEDERAL CORPORATION

PART 1. Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENTS

Statements in this quarterlyreport and in other communications by the Company that are not statements of historical fact are forward-looking statements which are made in good faith by us.Forward-looking statements include, but are not limited to: (1) projections of revenues, income or loss, earnings or loss per common share, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of Central Federal Corporation (the Holding Company) or CFBank; (3) statements regarding future events, actions or economic performance; and (4) statements of assumptions underlying such statements.  Words such as "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," "targeted," and the negative of these terms, or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  Various risks and uncertainties may cause actual results to differ materially from those indicated by our forward-looking statements.  The following factors could cause such differences:

· a continuation of current high unemployment rates and difficult economic conditions or adverse changes in general economic conditions and economic conditions in the markets we serve, any of which may affect, among other things, our level of nonperforming assets, charge-offs, and provision for loan loss expense;

· changes in interest rates that may reduce net interest margin and impact funding sources;

· our ability to maintain sufficient liquidity to continue to fund our operations;

· our ability to reduce our high level of nonperforming assets and operating expenses;

· changes in market rates and prices, including real estate values, which may adversely impact the value of financial products including securities, loans and deposits;

· the possibility of other-than-temporary impairment of securities held in our securities portfolio;

· results of examinations of the Holding Company and CFBank by the regulators, including the possibility that the regulators may, among other things, require CFBank to increase its allowance for loan losses or write-down assets;

· our ability to meet the requirements of the Orders, as defined below, under the section captioned “Cease and Desist Orders”;

· uncertainty related to the counterparty to call our interest-rate swaps;

· uncertainty related to our ability to continue to receive limited waivers from the FDIC allowing us to roll over or renew reciprocal CDARS deposits;

· our ability to generate profits in the future;

· changes in tax laws, rules and regulations;

· various monetary and fiscal policies and regulations, including those determined by the Board of Governors of the Federal Reserve System (FED), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC);

· competition with other local and regional commercial banks, savings banks, credit unions and other non-bank financial institutions;

43

CENTRAL FEDERAL CORPORATION

PART 1. Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

· our ability to grow our core businesses;

· technological factors which may affect our operations, pricing, products and services;

· unanticipated litigation, claims or assessments; and

· management's ability to manage these and other risks.

Forward-looking statements are not guarantees of performance or results.  A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement.  The Holding Company, including its subsidiaries, together referred to as “the Company,” believes it has chosen these assumptions or bases in good faith and that they are reasonable.  We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material.  The forward-looking statements included in this report speak only as of the date of the report.  We undertake no obligation to publicly release revisions to any forward-looking statements to reflect events or circumstances after the date of such statements, except to the extent required by law.  Our filings with the Securities and Exchange Commission (SEC) detail other risks, all of which are difficult to predict and many of which are beyond our control.

Business Overview

The Holding Company is a savings and loan holding company incorporated in Delaware in 1998.  Substantially all of our business is conducted through our principal subsidiary, CFBank, a federally chartered savings association formed in Ohio in 1892.  

CFBank is a community-oriented financial institution offering a variety of financial services to meet the needs of the communities we serve.  Our business model emphasizes personalized service, clients’ access to decision makers, solution-driven lending and quick execution, efficient use of technology and the convenience of online internet banking, mobile banking, remote deposit, corporate cash management and telephone banking.  We attract deposits from the general public and use the deposits, together with borrowings and other funds, primarily to originate commercial and commercial real estate loans, single-family and multi-family residential mortgage loans and home equity lines of credit.  The majority of our customers are small businesses, small business owners and consumers.

Our principal market area for loans and deposits includes the following Ohio counties: Summit County through our office in Fairlawn, Ohio; Franklin County through our office in Worthington, Ohio; and Columbiana County through our offices in Calcutta and Wellsville, Ohio.  We originate commercial and residential real estate loans and business loans primarily throughout Ohio. Lending activities are conducted through our offices.  Most of our deposits and loans come from our market area.  Because of CFBank’s concentration of business activities in Ohio, the Company’s financial condition and results of operations depend upon economic conditions in Ohio.

General

Our net income is dependent primarily on net interest income, which is the difference between the interest income earned on loans and securities and our cost of funds, consisting of interest paid on deposits and borrowed funds.  Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand, the level of nonperforming assets and deposit flows.

44

CENTRAL FEDERAL CORPORATION

PART 1. Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net income is also affected by, among other things, provisions for loan losses, loan fee income, service charges, gains on loan sales, operating expenses, and franchise and income taxes.  Operating expenses principally consist of employee compensation and benefits, occupancy, FDIC insurance premiums and other general and administrative expenses. In general, results of operations are significantly affected by general economic and competitive conditions, changes in market interest rates and real estate values, government policies and actions of regulatory authorities. Regulators have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our business, financial condition, results of operations and cash flows.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was signed into law.  The Dodd-Frank Act included numerous provisions designed to strengthen the financial industry, enhance consumer protection, expand disclosures and provide for transparency.  Some of these provisions included changes to FDIC insurance coverage, which included a permanent increase in the coverage to $250,000 per depositor. Additional provisions created a Bureau of Consumer Financial Protection, which is authorized to write rules on all consumer financial products. Still other provisions created a Financial Stability Oversight Council, which is not only empowered to determine the entities that are systemically significant and therefore require more stringent regulations, but which is also charged with reviewing and, when appropriate, submitting comments to the SEC and Financial Accounting Standards Board (FASB) with respect to existing or proposed accounting principles, standards or procedures. The aforementioned are only a few of the numerous provisions included in the Dodd-Frank Act. The overall impact of the entire Dodd-Frank Act will not be known until full implementation is completed, but the possibility of significant additional compliance costs exists, and the Dodd-Frank Act consequently may have a material adverse impact on our operations.

The disruption in capital, credit and financial markets which began in 2008 continued to have a detrimental effect on our national and local economies into 2013.  These effects have included lower real estate values; tightened availability of credit; increased loan delinquencies, foreclosures, personal and business bankruptcies and unemployment rates; decreased consumer confidence and spending; significant loan charge-offs and write-downs of asset values by financial institutions and government-sponsored agencies; and a reduction of manufacturing and service business activity and international trade.  We do not expect these difficult market conditions to improve in the short term, and a continuation or worsening of these conditions could increase their adverse effects.  Adverse effects of these conditions could include increases in loan delinquencies and charge-offs; increases in our loan loss reserves based on general economic factors; increases to our specific loan loss reserves due to the impact of these conditions on specific borrowers or the collateral for their loans; increases in the number of foreclosed assets; declines in the value of our foreclosed assets due to the impact of these conditions on property values; increases in our cost of funds due to increased competition and aggressive deposit pricing by local and national competitors with liquidity needs; attrition of our core deposits due to this aggressive deposit pricing and/or consumer concerns about the safety of their deposits; increases in regulatory and compliance costs; and declines in the trading price of our common stock. 

CEASE AND DESIST ORDERS

On May 25, 2011, the Holding Company and CFBank each consented to the issuance of an Order to Cease and Desist (the Holding Company Order and the CFBank Order, respectively, and collectively, the Orders) by the OTS, the primary regulator of the Holding Company and CFBank at the time the Orders were issued.  In July 2011, in accordance with the Dodd – Frank Act, the FED replaced the OTS as the primary regulator of the Holding Company and the OCC replaced the OTS as a primary regulator of CFBank. The requirements of the Orders will remain in effect until terminated, modified or suspended by regulators.  See Note 2 to theconsolidated financial statements included in this quarterlyreport for additional information regarding the Orders.

45

CENTRAL FEDERAL CORPORATION

PART 1. Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

The significant directives containedin the Orders, including requirements to reduce the level of our classified and criticized assets, growth and operating metrics in line with an approved business plan, restrictions on brokered deposits, restrictions on certain types of lending and restrictions on dividend payments,  may impede our ability to operate our business efficiently and to effectively compete in the markets we serve.  In addition, the regulators must approve any deviation from our business plan, which could limit our ability to make market responsive changes to our business quickly.  Certain provisions of the Orders that could have a negative impact on the financial condition and operating results of CFBank and the Holding Company are as follows: 

1. The CFBank Order requires CFBank to have 8% core capital and 12% total risk-based capital, and CFBank will not be considered well-capitalized under the prompt corrective action regulations so long as the CFBank Order remains in place, even if it meets or exceeds these capital levels. At June 30, 2013, CFBank had 9.19% core capital, 11.89% tier 1 risk-based capital and 13.17% total risk-based capital.

2. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies.  Pursuant to the CFBank Order, CFBank may not declare or pay dividends or make any other capital distributions without receiving prior written regulatory approval.  Future dividend payments by CFBank to the Holding Company would be based on future earnings and regulatory approval.  The payment of dividends from CFBank to the Holding Company is not likely to be approved by regulators while CFBank is suffering losses.  As a result of the current level of problem assets and the continuing slow economy, it is unlikely CFBank will be able to pay dividends to the Holding Company until such issues are resolved. The Holding Company, as a result of the 2012 stock offering and payoff of its TARP obligations with $3 million, has adequate operating capital for the foreseeable future.The Holding Company had $3.4 million in cash and cash equivalents at June 30, 2013.  The regulators have further required the Holding Company to develop a business plan, separate from the Bank,that enables it to significantly reduce its dependence on CFBank for dividends through alternative funding mechanisms.

3. Because CFBank is not considered well-capitalized as a result of the CFBank Order, it is prohibited from accepting or renewing brokered deposits without FDIC approval and is subject to market rate limitations published by the FDIC when offering deposits to the general public.  See the section titled “Financial Condition - Deposits” and the section titled “Liquidity and Capital Resources” for additional information regarding these regulatory restrictions.

On August 20, 2012, the Company announced the successful completion of its restructured registered common stock offering.  The Company sold 15.0 million shares of its common stock at $1.50 per share, resulting in gross proceeds of $22.5 million before expenses.  With the proceeds from the stock offering, the Company contributed $13.5 million to CFBank to improve its capital ratios and support future growth and expansion, bringing CFBank into compliance with the capital ratios required by the CFBank Order.  In addition, the Company used proceeds from the stock offering to redeem its TARP obligations on September 26, 2012.  The remaining proceeds from the restructured registered common stock offering have been retained by the Holding Company for general corporate purposes and are estimated to be sufficient to support the Holding Company’s cash requirements for the foreseeable future based on our current business plan.  See Note 2 to our consolidated financial statements included in this quarterlyreport for additional information regarding the stock offering.

We have taken such actions as we believe are necessary to comply with all requirements of the Orders which are currently effective, and we are continuing to work toward compliance with the provisions of the Orders having future compliance dates. 

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The Holding Company and CFBank have incurred, and expect to continue to incur, some additional regulatory compliance expense in connection with the Orders. It is possible that regulatory compliance expenses related to the Orders could have a material adverse impact on us in the future.

Management’s discussion and analysis represents a review of our consolidated financial condition and results of operations for the periods presented.  This review should be read in conjunction with our consolidated financial statements and related notes.

Financial Condition

General.Assets totaled $244.6 million at June 30, 2013 and increased $29.6 million, or 13.8%, from $215.0 million at December 31, 2012.  The increase was primarily due to a $26.8 million increase in net loan balances and a $8.0 million increase in cash and cash equivalents, partially offset by a $5.5 million decrease in securities.

Cash and cash equivalents.  Cash and cash equivalents totaled $33.2 million at June 30, 2013 and increased $8.0 million, or 32.0%, from $25.1 million at December 31, 2012. The increase in liquidity was a result of management's efforts to increase deposit activity though strategic initiatives in order to fund anticipated loan growth in the pipeline. 

Securities.Securities available for sale totaled $12.2 million at June 30, 2013 and decreased $5.5 million, or 31.1%, compared to $17.6 million at December 31, 2012.  The decrease was due to maturities and repayments.

Loans.Net loans totaled $179.9 million at June 30, 2013 and increased $26.8 million, or 17.5%, from $153.0 million at December 31, 2012. The increase was primarily due to higher commercial, multi-family residential, commercial real estate and single-family residential loan balances. A renewed lending focus after the successful capital raise was a key driver in growing earning assets.

On December 11, 2012, CFBank entered into a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation.  At June 30, 2013 and December 31, 2012, CFBank held $35,778 and $25,373, respectively, of such loans which are included in single family residential loan totals.  Through a participation agreement, CFBank agreed to purchase from Northpointe 80% interest in fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S. The participation agreement provides for CFBank to purchase individually (MERS registered) loans from Northpointe and hold them until funded by the end investor.  This process on average takes approximately 14 days.  Given the short term nature of each of these individual loans, common credit risks such as past due, impairment and trouble debt restructure (TDR), nonperforming, and nonaccrual classification are substantially reduced.  Accordingly, due to the low credit risk associated with these loans, there are minimal reserves allocated to these loans. During the three and six months ended period ended June 30, 2013, loan origination activity totaled $154,162 and $278,405, respectively, and payoffs for the same period totaled $145,831 and $268,000,  respectively.  At no point during the quarter did the total outstanding loan balances exceed the maximum aggregate purchase interest of $45,000. Northpointe maintains a 20% ownership interest in each loan it participates.  Interest income earned on these loans is based on a contractual interest rate, during the time the loans are outstanding, as opposed to being recorded as a gain on sale of loans.

Allowance for loan losses (ALLL).The ALLL totaled $6.1 million at June 30, 2013 and increased $0.8 million, or 15.8%, from $5.2 million at December 31, 2012.  The increase in the ALLL was due to a 17.5% increase in overall loan balances, partially offset by a 14.4% decrease in nonperforming assets, a  19.1% decrease in past due loans, and a 15.5% decrease in criticized and classified loans during the six months ended June 30, 2013. The ratio of the ALLL to total loans was 3.26% at June 30, 2013, compared to 3.31% at December 31, 2012. In addition, the ratio of the ALLL to nonperforming assets improved to 111.5% at June 30, 2013, compared to 82.4% at December 31, 2012.  

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The ALLL is a valuation allowance for probable incurred credit losses.  The ALLL methodology is designed as part of a thorough process that incorporates management’s current judgments about the credit quality of the loan portfolio into a determination of the ALLL in accordance with generally accepted accounting principles and supervisory guidance.  Management analyzes the adequacy of the ALLL quarterly through reviews of the loan portfolio, including the nature and volume of the loan portfolio and segments of the portfolio; industry and loan concentrations; historical loss experience; delinquency statistics and the level of nonperforming loans; specific problem loans; the ability of borrowers to meet loan terms; an evaluation of collateral securing loans and the market for various types of collateral; various collection strategies; current economic conditions, trends and outlook; and other factors that warrant recognition in providing for an adequate ALLL.  Based on the variables involved and the significant judgments management must make about outcomes that are uncertain, the determination of the ALLL is considered to be a critical accounting policy.  See the section titled “Critical Accounting policies” for additional discussion. 

The ALLL consists of specific and general components.  The specific component relates to loans that are individually classified as impaired.  A loan is impaired when, based on current information and events, it is probable that CFBank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans of all classes within the commercial, commercial real estate and multi-family residential loan segments, regardless of size, and loans of all other classes over $500,000, are individually evaluated for impairment when they are 90 days past due, or earlier than 90 days past due if information regarding the payment capacity of the borrower indicates that payment in full according to the loan terms is doubtful. If a loan is impaired, a portion of the ALLL is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s effective interest rate, or at the fair value of collateral, less costs to sell, if repayment is expected solely from the collateral.  Large groups of smaller balance loans, such as consumer and single-family residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.  Loans within any class for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and are classified as impaired.  See Note 4 to our consolidated financial statements included in this quarterly report for additional information regarding the ALLL. 

Individually impaired loans totaled $9.2 million at June 30, 2013 and decreased $605,000, or 6.1%, from $9.9 million at December 31, 2012.  The decrease was due to $636,000 in principal payoffs of four impaired loans, a $452,000 decrease in existing impaired loan balances, partially offset by a  $482,000 increase in two new impaired loans for the six months ended June 30, 2013. The amount of the ALLL specifically allocated to individually impaired loans totaled $1.6 million at

June 30, 2013 and $830,000 at December 31, 2012. The increase was due primarily to one large commercial relationship where an additional impairment reserve was allocated based on the Bank’s updated quarterly assessment of the property.

The specific reserve on impaired loans is based on management’s estimate of the present value of estimated future cash flows using the loan’s effective interest rate or the fair value of collateral, if repayment is expected solely from the collateral.  On at least a quarterly basis, management reviews each impaired loan to determine whether it should have a specific reserve or partial charge-off. Management relies on appraisals or internal evaluations to help make this determination.  Determination of whether to use an updated appraisal or internal evaluation is based on factors including, but not limited to, the age of the loan and the most recent appraisal, condition of the property and whether we expect the collateral to go through the foreclosure or liquidation process.  Management considers the need for a downward adjustment to the valuation based on current market conditions and on management’s analysis, judgment and experience. The amount ultimately charged-off for these loans may be different from the specific reserve, as the ultimate liquidation of the collateral and/or projected cash flows may be different from management’s estimates. 

Nonperforming loans, which are nonaccrual loans and loans at least 90 days past due but still accruing interest, decreased $916,000, or 14.4%, and totaled $5.4 million at June 30, 2013, compared to $6.4 million at December 31, 2012.  The decrease in nonperforming loans was due to loan payments and payoffs.The $774,000 decrease in

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nonperforming commercial real estate loans was primarily due to payoff of four commercial real estate loans. The ratio of nonperforming loans to total loans decreased to 2.9% at June 30, 2013 from 4.0% at December 31, 2012 primarily due to an increase in overall loan portfolio balances and a decrease in nonperforming loans.

Nonaccrual loans include some loans that were modified and identified as TDRs and the loans are not performing. TDRs included in nonaccrual loans totaled $2.7 million at June 30, 2013 and $3.3 million at December 31, 2012.  The decrease in TDRs included in nonaccrual loans was primarily due to loan repayments.

Nonaccrual loans at June 30, 2013 and December 31, 2012 do not include $3.8 million and $3.7 million, respectively, in TDRs where customers have established a sustained period of repayment performance, generally six months, loans are current according to their modified terms and repayment of the remaining contractual payments is expected. These loans are included in total impaired loans. 

See Note 4 to the consolidated financial statements included in this quarterly report for additional information regarding impaired loans and nonperforming loans.

The general component of the ALLL covers loans not classified as impaired and is based on historical loss experience, adjusted for current factors. Current factors considered include, but are not limited to: management’s oversight of the portfolio, including lending policies and procedures; nature, level and trend of the portfolio, including past due and nonperforming loans, loan concentrations, loan terms and other characteristics; current economic conditions and outlook; collateral values; and other items. The general ALLL is calculated based on CFBank’s loan balances and actual historical payment default rates for individual loans with payment defaults.  For loans with no actual payment default history, industry estimates of payment default rates are applied, based on the applicable property types in the state where the collateral is located. Results are then scaled based on CFBank’s internal loan risk ratings, increasing the probability of default on loans with higher risk ratings, and industry loss rates are applied based on loan type. Industry estimates of payment default rates and industry loss rates are based on information compiled by the FDIC.

Industry information is adjusted based on management’s judgment regarding items specific to CFBank and the current factors discussed previously.  The adjustment process is dynamic, as current experience adds to the historical information, and economic conditions and outlook migrate over time.  Specifically, industry information is adjusted by comparing the historical payment default rates (CFBank historical default rates and industry estimates of payment default rates) against the current rate of payment default to determine if the current level is high or low compared to historical rates, or rising or falling in light of the current economic outlook.  Industry information is adjusted by comparison to CFBank’s historical loss rates, including its one year loss rate, as well as the trend in those loss rates, past due, nonaccrual, criticized and classified loans.  This adjustment process is performed for each segment of the portfolio. The following portfolio segments have been identified:  commercial loans; single-family residential real estate loans; multi-family residential real estate loans; commercial real estate loans; construction loans; home equity lines of credit; and other consumer loans.  These individual segments are then further segregated by classes and internal loan risk ratings.  See Note 4 to our consolidated financial statements included in this quarterly report for additional information.

Management’s loan review process is an integral part of identifying problem loans and determining the ALLL. We maintain an internal credit rating system and loan review procedures specifically developed as the primary credit quality indicator to monitor credit risk for commercial, commercial real estate and multi-family residential real estate loans.  We analyze these loans individually and categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.  Credit reviews for these loan types are performed at least annually, and more often for loans with higher credit risk.  Loan officers maintain close contact with borrowers between reviews.  Adjustments to loan risk ratings are based on these reviews and at any time information is received that may affect risk ratings.  Additionally, an independent third party review of commercial, commercial real estate and multi-family residential loans is performed semi-annually.  Management uses the results of these reviews to help determine the

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effectiveness of the existing policies and procedures and to provide an independent assessment of our internal loan risk rating system.

We have incorporated the regulatory asset classifications as a part of our credit monitoring and internal loan risk rating system.  In accordance with regulations, problem loans are classified as special mention, substandard or doubtful, and the classifications are subject to review by the regulators.  Assets designated as special mention are considered criticized assets.  Assets designated as substandard or doubtful are considered classified assets. See Note 4 to our consolidated financial statements included in this quarterly report for additional information regarding descriptions of the regulatory asset classifications.   

The level of CFBank’s criticized and classified loans continues to be negatively impacted by the duration and lingering nature of the current recessionary economic environment and its continued detrimental effects on some of our borrowers, including deterioration in client business performance, declines in borrowers’ cash flows and lower collateral values. The levels of criticized and classified loans decreased during the six months ended June 30, 2013.  Loans designated as special mention decreased $3.6 million, or 27.9%, and totaled $9.4 million at June 30, 2013, compared to $13.1 million at December 31, 2012.  Loans classified as substandard decreased  $793,000, or 5.1%, and totaled $14.9 million at June 30, 2013, compared to $15.7 million at December 31, 2012.  No loans were classified as doubtful at June 30, 2013 and December 31, 2012. The decrease in criticized and classified loans was due to principal repayments and payoffs and two relationships that were upgraded.  See Note 4 to our consolidated financial statements included in this quarterly report for additional information regarding risk classification of loans.   

In addition to credit monitoring through our internal loan risk rating system, we also monitor past due information for all loan segments.  Loans that are not rated under our internal credit rating system include groups of homogenous loans, such as single-family residential real estate loans and consumer loans. The primary credit indicator for these groups of homogenous loans is past due information. 

Total past due loans decreased $607,000, or 19.1%, and totaled $2.6 million at June 30, 2013, compared to $3.2 million at December 31, 2012.  Past due loans totaled 1.4% of the loan portfolio at June 30, 2013, compared to 2.0% at December 31, 2012.  The decrease in the balance of past due loans was primarily due to lower delinquencies in the commercial real estate and residential and single-family loan segments,  partially offset by an increase in delinquencies in the consumer loan segment.  The decrease in the delinquency rate is primarily related to lower delinquencies offset by an increase in overall loan balances.  See Note 4 to our consolidated financial statements included in this quarterly report for additional information regarding loan delinquencies.

All lending activity involves risk of loss.  Certain types of loans, such as option adjustable rate mortgage (ARM) products, junior lien mortgages, high loan-to-value ratio mortgages, interest only loans, subprime loans and loans with initial teaser rates, can have a greater risk of non-collection than other loans.  CFBank has not engaged in subprime lending, used option ARM products or made loans with initial teaser rates. 

Loans that contain interest only payments may present a higher risk than those loans with an amortizing payment that includes periodic principal reductions. Interest only loans are primarily commercial lines of credit secured by business assets and inventory, and consumer home equity lines of credit secured by the borrower’s primary residence. Due to the fluctuations in business assets and inventory of our commercial borrowers, CFBank has increased risk due to a potential decline in collateral values without a corresponding decrease in the outstanding principal. Interest only commercial lines of credit totaled $12.5 million, or 45.4%, of the commercial portfolio at June 30, 2013 compared to $11.8 million, or 46.4%, at December 31, 2012. Given the recessionary effects of the economy, as previously discussed, the collateral that secures the home equity lines of credit may have experienced a deterioration in value since the loan was originated, increasing the risk to CFBank. Interest only home equity lines of credit totaled $11.7 million, or 78.1%, of the total home equity lines credit at June 30, 2013 compared to $10.4 million, or 70.0%, at December 31, 2012.

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We believe the ALLL is adequate to absorb probable incurred credit losses in the loan portfolio as of June 30, 2013;  however, future additions to the ALLL may be necessary based on factors including, but not limited to, further deterioration in client business performance, continued or deepening recessionary economic conditions, declines in borrowers’ cash flows and market conditions which result in lower real estate values.  Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the ALLL.  Such agencies may require additional provisions for loan losses based on judgments and estimates that differ from those used by management, or on information available at the time of their review.  Management continues to diligently monitor credit quality in the existing portfolio and analyze potential loan opportunities carefully in order to manage credit risk.  An increase in the ALLL and loan losses could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen or do not improve. 

Foreclosed assets.Foreclosed assets totaled $1.5 million at June 30, 2013, and remained relatively constant compared to $1.5 million at December 31, 2012. During the six months ended June 30, 2013, there was a sale of a single family residential property, a small recovery on acommercial property and a single family residential property transferred into REO.  Foreclosed assets at June 30, 2013 consisted of one multi-family property in Mansfield, Ohio and one single family residential property located in Wintersville, Ohio.

The level of foreclosed assets and charges to foreclosed assets expense may increase in the future as we increase our workout efforts related to foreclosed assets, nonperforming and other loans with credit issues.

Deposits.Deposits totaled $204.7 million at June 30, 2013 and increased $31.2 million, or 18.0%, from $173.5 million at December 31, 2012.  The increase was primarily due to increases in certificate of deposit, money market and checking accounts of $17.8 million, $6.8 million and $5.4 million, respectively. The increase in CD’s was offset by a  $4.7 million decrease in brokered deposits and CDARS balances, as discussed more fully below.

CFBank is a participant in the CDARS program, a network of banks that allows us to provide our customers with FDIC insurance coverage on certificate of deposit account balances up to $50 million.  CDARS balances are considered brokered deposits by regulation.  Brokered deposits,including CDARS balances, totaled $27.3 million at June 30, 2013 and decreased $4.7  million, or 14.7%, from $32.0 million at December 31, 2012. We expect brokered deposits to continue to decrease as a result of the prohibition on acceptance or renewal of brokered deposits contained in the CFBank Order. See the section titled “Liquidity and Capital Resources” for additional information regarding regulatory restrictions on brokered deposits.

Customer balances in the CDARS program totaled $3.6 million at June 30, 2103 and decreased $0.6 million, or 13.3%, from $4.2 million at December 31, 2012. Since receipt of the CFBank Order in May 2011, we are prohibited from accepting or renewing brokered deposits, including CDARS balances.  Customer balances in the CDARS program represented 13.21% of total brokered deposits at June 30, 2013 and 13.0% of total brokered deposits at December 31, 2012. CFBank received limited waivers from the prohibition on renewal of reciprocal CDARS deposits from the FDIC, including a current limited 90 day waiver which expires on September 11, 2013.  The current limited waiver allows CFBank to roll over or renew core deposits in the reciprocal CDARS program that have yet to mature or have matured and remained with CFBank between June 13, 2013and September 11, 2013. Management intends to submit additional requests for waivers in the future; however, there can be no assurance that the requests will be granted by the FDIC or that customers will roll over or renew their CDARS deposits even if CFBank is granted additional waivers.

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FHLB advances.Long-term FHLB advances totaled $10.0 million at June 30, 2013, and December 31, 2012. In April 2012, CFBank was notified by the FHLB that, due to regulatory considerations, CFBank was only eligible for future advances with a maximum maturity of 30 days. On June 28, 2013, CFBank’s maximum maturity for future advances was increased to one year. See the section titled “Liquidity and Capital Resources” for additional information regarding limitations on FHLB advances.

Subordinated debentures.Subordinated debentures totaled $5.2 million at both June 30, 2013 and December 31, 2012.  These debentures were issued in 2003 in exchange for the proceeds of a $5.0 million trust preferred securities offering issued by a trust formed by the Company.  The terms of the subordinated debentures allow for the Company to defer interest payments for a period not to exceed five years.  The Company’s Board of Directors elected to defer interest payments beginning with the quarterly interest payment due on December 30, 2010 in order to preserve cash at the Holding Company prior to completion of the stock offering.  Cumulative deferred interest payments through September 30, 2012, totaling $348,000,  were paid current in December 2012 with the approval of the Federal Reserve Bank.  Cumulative deferred interest payments subsequent to September 30, 2012, have been accrued and totaled $125,318 as of June 30, 2013. Cumulative deferred interest payments were $301,576 at June 30, 2012. Pursuant to the Holding Company Order, the Holding Company may not, directly or indirectly, incur, issue, renew, rollover or pay interest or principal on any debt (including the subordinated debentures) or commit to do so, increase any current lines of credit, or guarantee the debt of any entity, without prior written notice to and written non-objection from the Federal Reserve Bank.

Stockholders’ equity.Stockholders’ equity totaled $22.3 million at June 30, 2013 and decreased $1.3million, or 5.6%, from $23.6 million at December 31, 2012.  The decrease was primarily due to a net loss of $1.4 million during the six months ended June 30, 2013.

Management continues to proactively monitor capital levels and ratios in its on-going capital planning process and to ensure compliance with the order.  The Bank has been successful in effectively leveraging its capital to support quality balance sheet growth and driving increased net interest income.  The balance sheet growth has resulted in a decline in the Core Capital and Total Risk Based capital ratio, as was anticipated.    Management remains focused on preserving capital, and eventually growing capital though improving results from operations, however, should the need arise, the bank has additional sources of capital and alternatives it could utilize to remain in compliance with the order.

Currently, the Holding Company has excess cash to cover its expenses for the foreseeable future, and could inject capital into the bank if needed to remain in compliance with the capital ratios set forth in the order.  Also, the Bank has the flexibility to effectively manage its balance sheet size as a result of the short duration of the assets as discussed with the Northpointe mortgage program, as well as to deploy those assets into higher earning assets to improve net interest come as the opportunity presents itself. On August 20, 2012, the Company announced the successful completion of its common stock offering.  The Company sold 15.0 million shares of its common stock at $1.50 per share, resulting in gross proceeds of $22.5 million. See Note 2 to our consolidated financial statements included in this quarterly report for additional information regarding the common stock offering.

The Holding Company was a participant in the TARP Capital Purchase Program and issued $7.2 million of preferred stock to Treasury on December 5, 2008. In connection with the issuance of the preferred stock, the Holding Company also issued to Treasury a warrant to purchase 67,314 shares of the Company’s common stock at an exercise price of $16.10 per share. On September 26, 2012, pursuant to an agreement with the Treasury and upon receipt of regulatory approval, the Holding Company utilized $3.0 million of the proceeds from its common stock offering to redeem the TARP obligations.

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Comparison of the Results of Operations for the Three Months Ended June 30, 2013 and 2012

General.   Net loss attributable to common stockholders totaled $0.6 million, or $(0.04) per diluted common share, for the quarter ended June 30, 2013, compared to a net loss attributable to common stockholders of $0.8 million, or $(0.96) per diluted common share, for the quarter ended June 30, 2012.  For the three months ended June 30, 2012, preferred stock dividends and accretion of discount on the preferred stock increased the net loss attributable to the common stockholders by $111.  Due to the redemption of the TARP obligation on September 26, 2012, there will no longer be an impact related to the preferred stock dividends and accretion of discount on the net loss attributable to the common stockholders.   For the three months ended June 30, 2013 compared to June 30, 2012, the net loss decreased by $130 due primarily to a decrease in noninterest expense and improvement in net interest income, offset by a increase in provision expense and decrease in noninterest income.

Net interest income.Net interest income is a significant component of net income, and consists of the difference between interest income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities.  Net interest income is primarily affected by the volumes, interest rates and composition of interest-earning assets and interest-bearing liabilities.  The tables titled “Average Balances, Interest Rates and Yields” and “Rate/Volume Analysis of Net Interest Income” provide important information on factors impacting net interest income and should be read in conjunction with this discussion of net interest income.

Net interest income totaled $1.3 million for the quarter ended June 30, 2013 and increased $88,000 or 7.3%, compared to $1.2 million for the quarter ended June 30, 2012. The increase in net interest income was primarily due to a $143,000 decrease interest expense, which more than offset the $55,000 decrease in interest income. The decrease in interest expense was primarily attributed to a 23 bps decrease in average rates, as a result of lower deposit pricing and CD’s re-pricing in today’s lower rate environment, coupled with a decrease in higher rate brokered CD’s that are maturing and not being replaced. The decrease in interest income was attributed to a reduction in the yield on average interest earning assets, as loans continue to re-price at today’s lower interest rates, and the loan portfolio mix, which was partially offset by a favorable volume variance due to the increase in average loan balances.  The mix of earning assets continued to improve as well, as lower yielding assets were redeployed into higher yielding loans.

Interest income.  Interest income totaled $1.8 million and decreased $55,000, or 2.9%, for the quarter ended June 30, 2013, compared to $1.9 million for the quarter ended June 30, 2012. The decrease in interest income was primarily due to a decrease of 84 bps in loan yields, as loans continue to re-price at today’s lower interest rates, coupled with a shift in the mix of the loan portfolio; this decrease was partially offset by a favorable volume variance due to the increase in average loan balances from $136.0 million at June 30, 2012, to $159.1 million at June 30, 2013.

The decrease in loan yields is attributed to loans maturing and paying down at higher rates, and being replaced with loans   priced at today’s lower rate environment.  In addition, the increase in the Northpointe mortgage program balances has shifted the loan portfolio mix and impacted the overall loan yield since the average yield on these balances is lower than the commercial loan portfolio.  From an interest rate risk perspective, the bank’s balance sheet remains well positioned, due to the shorter duration of these assets.

Interest expense.Interest expense totaled $540,000 and decreased $143,000, or 21.0%, for the quarter ended June 30, 2013, compared to $683,000 for the quarter ended June 30, 2012.  The decrease in interest expense resulted from lower deposit costs due to a 23 bps decrease in average rates, as a result of deposit pricing and CD’s re-pricing in today’s lower rate environment, coupled with a decrease in brokered CD’s.

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Provision for loan losses.  The provision for loan losses totaled $324,000 for the quarter ended June 30, 2013 and increased $124,000, or 62.0%, compared to $200,000 for the quarter ended June 30, 2012.  The increase in the provision for loan losses for the quarter ended June 30, 2013 was primarily due to growth in the loan portfolio, an increase in reserve due to one large commercial relationship and one downgrade, offset by pay downs of substandard loans and two commercial loan relationships where the risk rating was upgraded. 

Net charge-offs decreased $475,000 due to the fact that there were recoveries of $59,000 for the quarter ended June 30, 2013, compared to net charge-offs totaling $416,000, or 1.18% of average loans on an annualized basis for the quarter ended June 30, 2012. The decrease in net charge-offs during the three months ended June 30, 2013 was primarily related to multi-family residential and commercial real estate loans resulting from our ongoing loan workout efforts.

The following table presents information regarding net charge-offs (recoveries) for the three months ended June 30, 2013 and 2012.

	For the three months ended June 30,
	2013		2012
		(Dollars in thousands)
Commercial	$	(9)	$	(164)
Single-family residential real estate		(1)		3
Multi-family residential real estate		(57)		18
Commercial real estate		(4)		494
Home equity lines of credit		14		33
Other consumer loans		(2)		32
Total	$	(59)	$	416

The level of loan charge-offs may increase in the future as we increase our workout efforts related to nonperforming and other loans with credit issues.

Noninterest income.Noninterest income for the quarter ended June 30, 2013 totaled $269,000 and decreased $71,000, or 20.9%, compared to $340,000 for the quarter ended June 30, 2012.The decrease was primarily due to the fact there were no sales of securities for the second quarter, compared to $143 gain on the sale of securities during the three months ended June 30, 2012, and a decline in loan servicing fees during the three months ended June 30, 2013. The decrease was partially offset by an increase in service charges on deposits. 

Noninterest expense.Noninterest expense decreased $237,000, or 11.7%, and totaled $1.8 million for the second quarter of 2013, compared to $2.0 million for the second quarter of 2012. The decrease in noninterest expense during the three months ended June 30, 2013 was primarily due to a decrease in expenses associated with foreclosed assets and a decrease in FDIC premiums, primarily as a result of a lower assessment rate.

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Income taxes.The Company recorded a deferred tax valuation allowance which reduced the deferred tax asset to zero beginning in 2009 and continuing through the quarter ended June 30, 2013.  As such, there was no income tax expense or benefit for the quarters ended June 30, 2013 or 2012.

Comparison of the Results of Operations for the Six Months Ended June 30, 2013 and 2012

General.   Net loss attributable to common stockholders totaled $1.4 million, or $(0.09) per diluted common share, for the six months ended June 30, 2013, compared to a net loss attributable to common stockholders of $1.6 million, or $(1.99) per diluted common share, for the six months ended June 30, 2012.  For the six months ended June 30, 2012, preferred stock dividends and accretion of discount on the preferred stock increased the net loss attributable to the common stockholders by $221.  Due to the redemption of the TARP obligation on September 26, 2012, there will no longer be animpact related to the preferred stock dividends and accretion of discount on the net loss attributable to the common stockholders.   For the six months ended June 30, 2013 compared to June 30, 2012, the net loss decreased by $59 due primarily to a decrease in noninterest expense and improvement in net interest income, offset by a increase in provision expense and decrease in noninterest income.

Net interest income.Net interest income totaled $2.5 million for the six months ended June 30, 2013 and slightly increased by $7,000, compared to $2.5 million for the six months ended June 30, 2012. The slight increase in net interest income was due to a favorable rate and volume variance on the deposit side, coupled with a favorable volume variance on earnings assets due to loan growth, which more than offset the unfavorable rate variance on the earning asset side as loan yields continued to re-price downwards in today’s rate environment.  The overall mix of the Bank’s earning assets continues to improve.

Interest income.  Interest income totaled $3.5 million and decreased $360,000, or 9.2%, for the six months ended June 30, 2013, compared to $3.9 million for the six months ended June 30, 2012. The decrease in interest income was primarily due to a decrease of 84 bps in loan yields, as loans continue to re-price at today’s lower interest rates, coupled with a mix shift in the loan portfolio due to increased volumes associated with the Northpointe Mortgage Program; this decline was partially offset by a favorable volume variance due to the increase in average loan balances from $140.4 million at June 30, 2012, to $152.4 million at June 30, 2013.

Interest expense.Interest expense totaled $1.1 million and decreased $367,000, or 25.6%, for the six months ended June 30, 2013, compared to $1.4 for the six months ended June 30,2012.  The decrease in interest expense resulted from lower deposit costs due to a 21 bps decrease in average rates, as a result of deposit pricing and CD’s re-pricing in today’s lower rate environment, coupled with a decrease in the average deposit base, primarily broker CD’s.

Provision for loan losses.  The provision for loan losses totaled $650,000 for the six months ended June 30, 2013 and increased $250,000, or 62.5%, compared to $400,000 for the six months ended June 30, 2012.  The increase in the provision for loan losses for the six months ended June 30, 2013 was primarily due to growth in the loan portfolio, an increase in reserve due to one large commercial relationship and one downgrade during the quarter, offset by pay downs of substandard loans and two commercial loan relationships where the risk rating was upgraded. 

Net charge-offs decreased $1.3 million due to the fact that there were recoveries of $178,000 for the six months ended June 30, 2013, compared to net charge-offs totaling $1.1 million, or 1.49% of average loans on an annualized basis for the six months ended June 30, 2012. The decrease in net charge-offs during the six months ended June 30, 2013 was

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primarily related to multi-familyresidential and commercial real estate loans resulting from our ongoing loan workout efforts.

The following table presents information regarding net charge-offs (recoveries) for the six months ended June 30, 2013 and 2012.

	For the Six months ended June 30,
	2013		2012
		(Dollars in thousands)
Commercial	$	(26)	$	(193)
Single-family residential real estate		(2)		1
Multi-family residential real estate		(86)		412
Commercial real estate		(58)		792
Home equity lines of credit		12		50
Other consumer loans		(18)		23
Total	$	(178)	$	1,085

The level of loan charge-offs may increase in the future as we increase our workout efforts related to nonperforming and other loans with credit issues.

Noninterest income. Noninterest income for the six months ended June 30, 2013 totaled $402,000 and decreased $96,000, or 19.3%, compared to $498,000 for the six months ended June 30, 2012. The decrease was primarily due to the fact there were no sales of securities in the current year to date results, compared to  a $143 gain on the sale of securities during the six months ended June 30, 2012, and declines in net gains on the sale loans and loan servicing fees during the six months ended June 30, 2013. The decrease was partially offset by an increase in service charges on deposits. 

Noninterest expense.Noninterest expense decreased $398,000, or 10.0%, and totaled $3.6 million for the six months ended June 30, 2013, compared to $4.0 million for the six months ended 2012. The decrease in noninterest expense during this period  was primarily due to a $224,000 decrease in expenses associated with foreclosed assets, a $151,000 decrease in FDIC premiums, primarily as a result of a lower assessment rate and lower compensation expense due to fewer positions and restructuring; this was partially offset by smaller increases in franchise taxes, data processing and occupancy costs.

Income taxes. The Company recorded a deferred tax valuation allowance which reduced the deferred tax asset to zero beginning in 2009 and continuing through the six months ended June 30, 2013.  As such, there was no income tax expense or benefit for the six months ended June 30, 2013 or 2012.

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Average Balances, Interest Rates and Yields.The following table presents, for the periods indicated, the total dollar amount of fully taxable equivalent interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed in both dollars and rates.Average balances are computed using month-end balances.

	For Three Months Ended June 30,
	2013						2012
	Average		Interest		Average		Average		Interest		Average
	Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/
	Balance		Paid		Rate		Balance		Paid		Rate
	(Dollars in thousands)
Interest-earning assets:
Securities (1) (2)	$	13,359	$	43		1.30%	$	16,908	$	58		1.41%
Loans and loans held for sale (3)		159,104		1,734		4.36%		135,960		1,769		5.20%
Other earning assets		38,654		37		0.38%		55,398		41		0.30%
FHLB stock		1,942		20		4.12%		1,942		21		4.33%
Total interest-earning assets		213,059		1,834		3.45%		210,208		1,889		3.60%
Noninterest-earning assets		22,557						19,476
Total assets	$	235,616					$	229,684
Interest-bearing liabilities:
Deposits	$	175,079		421		0.96%	$	185,675		557		1.20%
FHLB advances and other borrowings		15,301		119		3.11%		15,650		126		3.22%
Total interest-bearing liabilities		190,380		540		1.13%		201,325		683		1.36%
Noninterest-bearing liabilities		22,565						19,746
Total liabilities		212,945						221,071
Equity		22,671						8,613
Total liabilities and equity	$	235,616					$	229,684
Net interest-earning assets	$	22,679					$	8,883
Net interest income/interest rate spread			$	1,294		2.32%			$	1,206		2.24%
Net interest margin						2.44%						2.30%
Average interest-earning assets
to average interest-bearing liabilities		111.91%						104.41%

⁽¹⁾ Average balance is computed using the carrying value of securities.Average yield is computed using the historical amortized cost average balance for available for sale securities

⁽²⁾ Average yields and interest earned are stated on a fully taxable equivalent basis.

⁽³⁾ Average balance is computed using the recorded investment in loans net of the ALLL and includes nonperforming loans.

	For Six Months Ended June 30,
	2013						2012
	Average		Interest		Average		Average		Interest		Average
	Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/
	Balance		Paid		Rate		Balance		Paid		Rate
	(Dollars in thousands)
Interest-earning assets:
Securities (1) (2)	$	14,778	$	103		1.41%	$	17,443	$	121		1.42%
Loans and loans held for sale (3)		152,376		3,330		4.37%		140,408		3,660		5.21%
Other earning assets		35,484		71		0.40%		59,654		81		0.27%
FHLB stock		1,942		41		4.22%		1,942		43		4.43%
Total interest-earning assets		204,580		3,545		3.48%		219,447		3,905		3.57%
Noninterest-earning assets		21,292						17,014
Total assets	$	225,872					$	236,461
Interest-bearing liabilities:
Deposits	$	166,095		829		1.00%	$	188,655		1,150		1.22%
FHLB advances and other borrowings		15,397		236		3.07%		18,273		282		3.09%
Total interest-bearing liabilities		181,492		1,065		1.17%		206,928		1,432		1.38%
Noninterest-bearing liabilities		21,372						20,520
Total liabilities		202,864						227,448
Equity		23,008						9,013
Total liabilities and equity	$	225,872					$	236,461
Net interest-earning assets	$	23,088					$	12,519
Net interest income/interest rate spread			$	2,480		2.31%			$	2,473		2.19%
Net interest margin						2.43%						2.26%
Average interest-earning assets
to average interest-bearing liabilities		112.72%						106.05%

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⁽¹⁾ Average balance is computed using the carrying value of securities.Average yield is computed using the historical amortized cost average balance for available for sale securities

⁽²⁾ Average yields and interest earned are stated on a fully taxable equivalent basis.

⁽³⁾ Average balance is computed using the recorded investment in loans net of the ALLL and includes nonperforming loans.

Rate/Volume Analysis of Net Interest Income.  The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities.  It distinguishes between the increase and decrease related to changes in balances and/or changes in interest rates.  For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by the prior rate) and (ii) changes in rate (i.e., changes in rate multiplied by prior volume).  For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

	Three Months Ended						Six Months Ended
	June 30, 2013						June 30, 2013
	Compared to Three Months Ended						Compared to Six Months Ended
	June 30, 2012						June 30, 2012
	Increase (decrease)						Increase (decrease)
	due to						due to
	Rate		Volume		Net		Rate		Volume		Net
	(Dollars in thousands)						(Dollars in thousands)
Interest-earning assets:
Securities (1)	$	(4)	$	(11)	$	(15)	$	(1)	$	(17)	$	(18)
Loans and loans held for sale		(1,193)		1,158		(35)		(1,033)		703		(330)
Other earning assets		47		(51)		(4)		66		(76)		(10)
FHLB Stock		(1)		-		(1)		(2)		-		(2)
Total interest-earning assets		(1,151)		1,096		(55)		(970)		610		(360)
Interest-bearing liabilities:
Deposits		(106)		(30)		(136)		(193)		(128)		(321)
FHLB advances and other borrowings		(4)		(3)		(7)		(2)		(44)		(46)
Total interest-bearing liabilities		(110)		(33)		(143)		(195)		(172)		(367)
Net change in net interest income	$	(1,041)	$	1,129	$	88	$	(775)	$	782	$	7

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⁽¹⁾ Securities amounts are presented on a fully taxable equivalent basis.

Critical Accounting Policies

We follow financial accounting and reporting policies that are in accordance with GAAP and conform to general practices within the banking industry.  These policies are presented in Note 1 to our audited consolidated financial statements in our 2012 Annual Report to Stockholders incorporated by reference into our 2012 Annual Report on Form 10-K.  Some of these accounting policies are considered to be critical accounting policies, which are those policies that are both most important to the portrayal of the Company’s financial condition and results of operation, and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.  Application of assumptions different than those used by management could result in material changes in our financial position or results of operations.  These policies, current assumptions and estimates utilized, and the related disclosure of this process, are determined by management and routinely reviewed with the Audit Committee of the Board of Directors.  We believe that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements were appropriate given the factual circumstances at the time.

We have identified accounting policies that are critical accounting policies, and an understanding of these policies is necessary to understand our financial statements.  The following discussion details the critical accounting policies and the nature of the estimates made by management.

Determination of the ALLL.  The ALLL represents management’s estimate of probable incurred credit losses in the loan portfolio at each balance sheet date. The allowance consists of general and specific components.  The general component covers loans not classified as impaired and is based on historical loss experience, adjusted for current factors.

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Current factors considered include, but are not limited to, management’s oversight of the portfolio, including lending policies and procedures; nature, level and trend of the portfolio, including past due and nonperforming loans, loan concentrations, loan terms and other characteristics; current economic conditions and outlook; collateral values; and other items. The specific component of the ALLL relates to loans that are individually classified as impaired. Loans exceeding policy thresholds are regularly reviewed to identify impairment. A loan is impaired when, based on current information and events, it is probable that CFBank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered TDRs and classified as impaired.  Determining whether a loan is impaired and whether there is an impairment loss requires judgment and estimates, and the eventual outcomes may differ from estimates made by management. The determination of whether a loan is impaired includes: review of historical data; judgments regarding the ability of the borrower to meet the terms of the loan; an evaluation of the collateral securing the loan and estimation of its value, net of selling expenses, if applicable; various collection strategies; and other factors relevant to the loan or loans.  Impairment is measured based on the fair value of collateral, less costs to sell, if the loan is collateral dependent, or alternatively, the present value of expected future cash flows discounted at the loan’s effective rate, if the loan is not collateral dependent. When the selected measure is less than the recorded investment in the loan, an impairment loss is recorded. As a result, determining the appropriate level for the ALLL involves not only evaluating the current financial situation of individual borrowers or groups of borrowers, but also current predictions about future events that could change before an actual loss is determined.  Based on the variables involved and the fact that management must make judgments about outcomes that are inherently uncertain, the determination of the ALLL is considered to be a critical accounting policy. Additional information regarding this policy is included in the previous section titled “Financial Condition - Allowance for loan losses”, in Note 4 to the consolidated financial statements included in this quarterly report and in Notes 1, 4 and 6 to the consolidated financial statements in our 2012 Annual Report to Stockholders incorporated by reference into our 2012 Annual Report on Form 10-K.

Valuation of the deferred tax asset.At year-end 2012, the Company had net operating loss carryforwards of $25.9 million, which expire at various dates from 2024 to 2032, and alternative minimum tax credit carryforwards of $60,000, which do not expire.As a result of the change in stock ownership associated with the stock offering completed in August 2012, within the guidelines of Section 382 of the Internal Revenue Code of 1986, the Company incurred an ownership change. As a result, its ability to utilize carryforwards that arose before the stock offering closed is limited to $163,000 per year.  Due to this limitation, management determined it is more likely than not that $20.3 million of net operating loss carryforwards will expire unutilized and, as required by accounting standards, reduced deferred tax assets and the valuation allowance by $6.9 million to reflect this lost realizability.

The Company maintained a valuation allowance against deferred tax assets at June 30, 2013 and December 31, 2012, based on its estimate of future reversal and utilization. When determining the amount of deferred tax assets that are more-likely- than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items. Based on these criteria, the Company determined that it was necessary to establish a full valuation allowance against the entire net deferred tax asset.

Federal income tax laws provided additional deductions, totaling $2.3 million,  for thrift bad debt reserves established before 1988. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would total $765 at year-end 2012. However, if CFBank were wholly or partially liquidated or otherwise ceases to be abank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its

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bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank makes a distribution that reduces the amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve. At December 31, 2012 and 2011, the Company had no unrecognized tax benefits recorded. The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months. At June 30, 2013, the valuation allowance totaled $3.7 million, compared to $3.1 million at December 31, 2012. Additional information is included in Notes 1 and 14 to our consolidated financial statements.

Fair value of financial instruments.  Another critical accounting policy relates to fair value of financial instruments, which are estimated using relevant market information and other assumptions.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or in market conditions could significantly affect the estimates.  Additional information is included in Note 5to the consolidated financial statements included in this quarterly report and in Notes 1 and 6 to the consolidated financial statements in our 2012 Annual Report to Stockholders incorporated by reference into our 2012 Annual Report on Form 10-K.

Fair value of foreclosed assets.Another critical accounting policy relates to fair value of foreclosed assets, which are estimated based on real estate appraisals which may use a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant, and changes in assumptions or market conditions could significantly affect the values.  Additional information is included in Note 5 to the consolidated financial statements included in this quarterly report and in Notes 1, 5 and 6 to the consolidated financial statements in our 2012 Annual Report to Stockholders incorporated by reference into our 2012 Annual Report on Form 10-K.

Liquidity and Capital Resources

In general terms, liquidity is a measurement of an enterprise’s ability to meet cash needs.  The primary objective in liquidity management is to maintain the ability to meet loan commitments and to repay deposits and other liabilities in accordance with their terms without an adverse impact on current or future earnings.  Principal sources of funds are deposits; amortization and prepayments of loans; maturities, sales and principal receipts of securities available for sale; borrowings; and operations.  While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition.

CFBank is required by regulation to maintain sufficient liquidity to ensure its safe and sound operation. Thus, adequate liquidity may vary depending on CFBank’s overall asset/liability structure, market conditions, the activities of competitors, the requirements of our own deposit and loan customers and regulatory considerations.  Management believes that CFBank’s liquidity is sufficient.

Liquidity management is both a daily and long-term responsibility of management.  We adjust our investments in liquid assets, primarily cash, short-term investments and other assets that are widely traded in the secondary market, based on our ongoing assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities and the objective of our asset/liability management program.  In addition to liquid assets, we have other

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sources of liquidity available including, but not limited to, access to advances from the FHLB, borrowings from the FRB and borrowing from Comerica.

The following table summarizes CFBank’s cash available from liquid assets and borrowing capacity at June 30, 2013 and December 31, 2012.

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Cash, unpledged securities and deposits in other financial institutions	$	37,047	$	32,396
Additional borrowing capacity at the FHLB		7,383		7,460
Additional borrowing capacity at the FRB		21,801		14,859
Unused commercial bank line of credit		1,000		1,000
Total	$	67,231	$	55,715

Cash available from liquid assets and borrowing capacity increased $11.5 million, or 20.7%, to $67.2 million at June 30, 2013 from $55.7 million at December 31, 2012.  In addition, Cash, unpledged securities and deposits in other financial institutions increased $4.7 million, or 14.4%, during 2013.The increase in cash is a result of management’s efforts to improve liquidity and increase deposit levels in order to fund future anticipated loan growth.

CFBank’s additional borrowing capacity with the FHLB decreased slightly to $ 7.4 million at June 30, 2013 from $7.5 million at December 31, 2012 primarily due to a decrease in the balances of eligible loans pledged as collateral for advances. In June 2013, CFBank became eligible for future advances with a maximum maturity of 365 days, compared to the previous agreement in which Advances were limited to a maximum maturity of 30 days.

CFBank’s  additional borrowing capacity  at  the FRB  increasedto$21.8millionat  June 30, 2013, up from$14.9  millionat December 31,2012.In addition, CFBank isonceagain eligible forparticipating  in  the FRB’s primarycredit program, providing  CFBank  access  toshort-termfunds  at  any  time,  for  any reason, based  on  the  collateral  pledged.

CFBank’s  borrowingcapacitywith  boththeFHLBand FRBmaybe negativelyimpactedbychanges suchas,  butnotlimited  to,further  tighteningof creditpoliciesby  theFHLBor FRB,deterioration  inthecreditperformance of  CFBank’s loan portfolioor  CFBank’sfinancialperformance, or adecrease  inthebalanceofpledged  collateral.

Deposits  are obtained  predominantly  from the  areas  in which  CFBank offices arelocated.Werely primarily on awillingness topay  market-competitive interest  rates  toattract  andretainretail deposits.  As aresultofthe CFBank Order,we  are prohibitedfromofferingabove-market interest rates andare  subject  tomarketratespublishedby  theFDIC  whenoffering deposits  to  thegeneralpublic.  Accordingly,rates  offered  bycompetingfinancial  institutionsmay  affect our  ability  toattract and retain deposits.Liquidity  couldbe significantly impactedbythe limitations  onrateswe  canoffer  ondeposits  to  the generalpublic.

Prior  to  receipt  of  the CFBank  Order  in  May2011,CFBankusedbrokereddeposits as anelement of adiversifiedfunding strategy and  an  alternative  to  borrowings.Asa resultof the CFBankOrder,we are  prohibited  fromacceptingor renewingbrokered depositswithout FDIC  approval.Wehave the ability  toseek wholesaledeposits  that  are  not considered  brokereddeposits. At June 30, 2013, CFBank had$27.3million  in  brokered  deposits with  maturity  dates  fromAugust 2013  through August  2016.

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Theprohibitionon brokereddeposits  limits  CFBank’s  ability  toparticipate  inthe CDARS  programandimpacts our  liquidity management.Although  CFBankcustomers participate  in  the CDARS  program,  CDARSdeposits  are considered brokered depositsbyregulation.We expect brokereddeposits, includingcustomer deposits  in  theCDARS  program,tocontinue to decrease  asa result  of  the prohibition  onbrokereddepositscontainedinthe  CFBank Order  and due toCFBank’sfocuson lower  cost  retail deposits.

CFBank relieson  competitive interest rates,  customer  service,and relationships with  customers  toretain deposits.To  promote andstabilize liquidity  inthebankingandfinancialservices  sector,  the FDIC,  as  included  in  the Dodd-Frank  Act  as previouslydiscussed,permanently  increaseddeposit  insurance coverage  from$100,000to$250,000perdepositor.CFBank is a participantintheFDIC’sprogramwhich  provides  unlimited deposit  insurance coverage, throughJune 30,2013,for noninterest bearing  transaction accounts.Based  onourhistoricalexperience withdepositretention,currentretention strategies  andparticipationin  programs offeringadditionalFDICinsurance  protection,  we believe  that,althoughit  isnot possible  to  predict  future  terms  andconditions upon renewal, asignificant portion of  existing non-brokereddepositsmay  remainwithCFBank.Deposit  retention may benegatively impactedby otherfactors,  including, butnot  limitedto, additional  restrictions  orpenalties  imposedby regulatorspursuanttotheOrders.

The  Holding  Company, as asavings and  loanholdingcompany,has  more limited sources  of  liquidity than CFBank.In general,  inadditiontoits  existingliquid  assets,  sourcesofliquidity  include fundsraised  in  the securitiesmarkets  throughdebt or equity offerings,dividendsreceived fromits subsidiariesor the saleofassets.  Pursuant  to  the  HoldingCompany Order, the Holding  Companymaynot,  directlyor indirectly,  incur,  issue,renew,  rollover,  orpay  interest  orprincipalonanydebtor commit  todo  so, increase  anycurrent linesof  credit,or  guarantee  thedebtof  any entity,  withoutpriorwritten  notice  toand written  non-objection fromthe  FED.Inaddition, theHolding  Companymay notdeclare,  make,  orpay  any cashdividendsor other capitaldistributions  or  purchase,repurchaseorredeem  or  commit  topurchase,repurchase,orredeemany  Holding  Company equity  stock without  the priorwrittennon-objection of  the Federal Reserve Bank.TheHolding  Company Orderdoes  notrestrict  the HoldingCompany’s  ability  toraisefunds inthe securitiesmarkets  throughequity  offerings.See  the sectiontitled“Financial Condition–Stockholders’equity”  for adiscussionof  theregisteredcommonstockofferingcompletedby  the Company in August 2012.

The Holding  Company  at  June 30, 2013,  as aresult of  the securities offering, has  adequate  funds to  meet its operating expensesfor several years.TheHolding Company’s currentcash requirements includeoperating expenses and  exclude interest  onsubordinateddebentures,  which havebeendeferred, asdiscussedbelow:

Annualdebtservice  onthesubordinateddebentures is  currentlyapproximately$165,000.Thesubordinated debentureshave a variablerateof  interest,  reset quarterly,  equal  tothe three-month LIBORplus  2.85%.The totalrate  ineffectwas3.13% at June 30, 2013 and 3.21% at December 31,2012.An increase in the three-month LIBOR would  increase  the  debt  service  requirement of  the subordinated debentures.Cumulative deferred payments subsequent to September 30, 2012 have been accrued and totaled $125 as of June 30, 2013 and $42 at December 31, 2012.

Bankingregulations limit  the amountofdividends  thatcanbepaidtotheHolding  CompanybyCFBankwithoutprior regulatory approval. Generally,  financial  institutions  may  pay dividends without prior  approvalas  long  as  the dividend  is  not more  than  the total  of  the current  calendar  year-to-date earningsplus anyearnings  fromthe previous two  years notalready paid  out  individends,  and  aslongas  the financial  institution remains well  capitalizedafter  the dividendpayment.  

Asof June 30, 2013,  CFBank may  pay  no  dividends  to  the Holding  Company  without  receiving  the prior  written  approval of the OCC.Pursuanttothe  CFBank  Order,  CFBankmaynotdeclare  orpaydividendsor  make anyother capitaldistributions  without receiving  prior written  approval  oftheOCC.Futuredividendpayments by CFBank  to  the Holding  Company  would bebasedon  futureearnings andregulatoryapproval.  Thepaymentofdividends  fromCFBank  totheHolding  Company  is  not likely  tobe approved bytheOCC  while  CFBank  is  suffering losses. 

63

CENTRAL FEDERAL CORPORATION

PART 1. Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

Aportionof the  proceedsfrom  the completed  common stockofferinghasbeenretainedby  the  Holding  Company  forgeneral corporatepurposes  andis  estimatedtobe  sufficient  tosupporttheHolding  Company’s cashrequirements  for several  years.  The Holding Company had $3.4 million in cash and cash equivalents at June 30, 2013.

64

CENTRAL FEDERAL CORPORATION

PART 1. Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Management believes there has been no material change in the Company’s market risk from the information contained in the Company’s Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2012.

65

CENTRAL FEDERAL CORPORATION

PART 1. Item 4

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.  We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 (Exchange Act) reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.  Management, with the participation of our principal executive and financial officers, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.  Based on such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q.

Changes in internal control over financial reporting.  We made no changes in our internal controls over financial reporting (as defined in Rule 13a – 15(f) under the Exchange Act) for the three month and six month period ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

66

CENTRAL FEDERAL CORPORATION

PART II. Item 4

OTHER INFORMATION

Item 1. Legal Proceedings

There are no pending legal proceedings to which the Holding Company or any of its subsidiaries is a party or to which any of their property is subject, except for routine legal proceedings to which CFBank is a party incidental to its banking business.  We consider none of those proceedings to be material.

Item 1A.  Risk Factors

There were no material changes to the risk factors as presented in the Company’s Form 10-K for the year ended December 31, 2012. 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not applicable.

(c) No repurchases of the Holding Company’s common shares were made by or on behalf of the Holding Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act during the second quarter of 2013. Pursuant to the Holding Company Order, the Holding Company may not declare, make, or pay any cash dividends or other capital distributions or purchase, repurchase or redeem or commit to purchase, repurchase, or redeem any Holding Company equity stock without the prior written non-objection of the Federal Reserve Bank.

Item 3.  Defaults upon Senior Securities

Not applicable.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

Not applicable.

Item 6.  Exhibits.

See Exhibit Index at page 69 of this report on Form 10-Q

67

CENTRAL FEDERAL CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CENTRAL FEDERAL CORPORATION

v
Dated:  August 7, 2013	By:/s/ Timothy T O’Dell
	Timothy T. O’Dell
	Chief Executive Officer

Chief Financial Officer
Dated:  August 7, 2013	By:/s/ John W. Helmsdoerfer
	John W. Helmsdoerfer, CPA
	Chief Financial Officer

68

CENTRAL FEDERAL CORPORATION

Exhibit Number	Description of Exhibit
3.1	Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form SB-2 (File No. 333-64089), filed with the Commission on September 23, 1998)
3.2	Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-2 (File No. 333-129315), filed with the Commission on October 28, 2005)
3.3	Second Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.3 to the registrant’s Form 10-K for the fiscal year ended December 31, 2007, filed with the Commission on March 27, 2008 (File No. 0-25045))
3.4	Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.4 to the registrant’s Form 10-Q for the quarter ended June 30, 2009, filed with the Commission on August 14, 2009 (File No. 0-25045))
3.5	Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.5 to the registrant’s Form 10-Q for the quarter ended September 30, 2011, filed with the Commission on November 10, 2011 (File No. 0-25045))
3.6	Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.5 to the registrant’s Post-Effective Amendment to the Registration Statement on Form S-1 (File No. 333-177434), filed with the Commission on May 4, 2012)
4.1	Form of Stock Certificate of Central Federal Corporation (incorporated by reference to Exhibit 4.0 to the registrant’s Registration Statement on Form SB-2 (File No. 333-64089), filed with the Commission on September 23, 1998)
11.1	Statement Re: Computation of Per Share Earnings
31.1	Rule 13a-14(a) Certifications of the Chief Executive Officer
31.2	Rule 13a-14(a) Certifications of the Chief Financial Officer
32.1	Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer
101.1	Interactive Data File (XBRL)

69

EX-11.1

CENTRAL FEDERAL CORPORATION

Exhibit 11.1

Computation of Per Share Earnings

The information regarding Computation of Per Share Earnings is contained in Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in this report on Form 10-Q.

EX-31.1

CENTRAL FEDERAL CORPORATION

Exhibit 31.1

Rule 13a-14(a) Certifications of the Chief Executive Officer

I, Timothy T. O’Dell, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 of Central Federal Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Dated:                    August 7, 2013	/s/ Timothy T. O’Dell
	Timothy T. O’Dell
	Chief Executive Officer

EX-31.2

CENTRAL FEDERAL CORPORATION

Exhibit 31.2

Rule 13a-14(a) Certifications of the Chief Financial Officer

I, John W. Helmsdoerfer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, of Central Federal Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Dated:                    August 7, 2013	/s/ John W. Helmsdoerfer
	John W. Helmsdoerfer, CPA
	Chief Financial Officer

EX-32.1

CENTRAL FEDERAL CORPORATION

Exhibit 32.1

Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer

In connection with the Quarterly Report of Central Federal Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), the undersigned, Timothy T. O’Dell, Chief Executive Officer of the Company, and John W. Helmsdoerfer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as added by 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 this Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company and its subsidiaries as of and for the period covered by this Report.

Dated:                    August 7, 2013	By:	/s/ Timothy T. O’Dell
		Timothy T. O’Dell
		Chief Executive Officer

Dated:                    August 7, 2013	By:	/s/ John W. Helmsdoerfer
		John W. Helmsdoerfer, CPA
		Treasurer and Chief Financial Officer

XML

Derivative Instruments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 7,644	$ 7,750
Interest-rate swaps	787
Fair value of interest-rate swaps	(716)	(990)
Fair value of yield maintenance provisions	716	990
Interest Rate Lock Commitments [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	4,756	2,079
Fair value of interest-rate swaps	$ 28	$ 45

XML

Contingent Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Aug. 17, 2012
Contingent Liabilities [Abstract]
Cost of annuitization of benefits	$ 908
Cost of obtaining the letter of credit	$ 9

XML

Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 9 – STOCK-BASED COMPENSATION

The Company has three stock-based compensation plans (the Plans), as described below.  Total compensation cost that was charged to income for those Plans totaled $29 and $50, respectively, for the three and six months ended June 30, 2013 and $4 and $10, respectively, for three and six months ended June 30, 2012.  The total income tax (expense) benefit was not material for the three or six months ended June 30, 2013 and 2012.

The Plans, which are stockholder-approved, provide for stock option grants and restricted stock awards to directors, officers and employees. The 1999 Stock-Based Incentive Plan, which expired July 13, 2009, provided 38,778 shares for stock option grants and 15,511 shares for restricted stock awards.  The 2003 Equity Compensation Plan (2003 Plan), as amended and restated, provided an aggregate of 100,000 shares for stock option grants and restricted stock awards, of which up to 30,000 shares could be awarded in the form of restricted stock awards.  The 2009 Equity Compensation Plan, which was approved by stockholders on May 21, 2009, replaced the 2003 Plan and provides 200,000 shares, plus any remaining shares available to grant or that are later forfeited or expire under the 2003 Plan, that may be issued as stock option grants, stock appreciation rights or restricted stock awards.  On May 16, 2013, stockholders approved the First Amendment to the 2009 Equity Compensation Plan to increase the number of shares of common stock reserved for awards thereunder to 1,500,000.

Stock Options

The Plans permit the grant of stock options to directors, officers and employees for up to 1,638,778 shares of common stock.  Option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant, generally have vesting periods ranging from one to three years, and are exercisable for ten years from the date of grant.  Unvested stock options immediately vest upon a change in control.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below.  Expected volatilities are based on historical volatilities of the Company’s common stock.  The Company uses historical data to estimate option exercise and post-vesting termination behavior.  Employee and management options are tracked separately.  The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable.  The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were no options granted during the three months ended June 30, 2013 and the three and six months ended June 30, 2012.  The fair value of the 30,000 options granted during the six months ended June 30, 2013 was determined using the following weighted‑average assumptions as of the grant dates as listed in the table below. 

	Three months ended	Six months ended
	June 30, 2013	June 30, 2013
Risk-free interest rate	1.32%	1.32%
Expected term (years)	7	7
Expected stock price volatility	80%	80%
Dividend yield	0%	0%

A summary of stock option activity in the Plans for the six months ended June 30, 2013 follows:

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	234,696	$	4.29
Granted	30,000		1.50
Exercised	-		-
Expired	-		-
Cancelled or Forfeited	(24,290)		18.21
Outstanding at end of period	240,406	$	2.53	9.2	$	-
Expected to vest	227,410	$	1.34	9.4	$	-
Exercisable at end of period	12,996	$	23.48	5.0	$	-

During the six months ended June 30, 2013, there were 24,290 stock options canceled or forfeited.  Previously recognized expense associated with nonvested forfeited shares is reversed.

	Six months ended June 30,
	2013		2012
Weighted average fair value of options granted	$	1.08	n/a

As of June 30, 2013, there was $122 of total unrecognized compensation cost related to nonvested stock options granted under the Plans.  The cost is expected to be recognized over a weighted-average period of 1.6 years.  Substantially all of the 227,410 nonvested stock options at June 30, 2013 are expected to vest.

Restricted Stock Awards

The Plans permit the grant of restricted stock awards to directors, officers and employees. Compensation is recognized over the vesting period of the awards based on the fair value of the stock at grant date.  The fair value of the stock is determined using the closing share price on the date of grant and shares generally have vesting periods of one to three years.  There were 1,334,632 shares available to be issued, net of option awards under the Plans at June 30, 2013.  There were no shares of restricted stock issued during the three or six months ended June 30, 2013 and 2012.

A summary of changes in the Company’s nonvested restricted shares for the six months ended June 30, 2013 follows:

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2013	1,400	$	6.61
Granted	-		-
Vested	-		-
Forfeited	(1,000)		7.25
Nonvested at June 30, 2013	400	$	5.00

There were no shares forfeited during the three months ended June 30, 2013 and 1,000 shares forfeited during the six months ended June 30, 2013, which resulted in the reversal of previously recognized expense associated with the nonvested shares. As of June 30, 2013, the total unrecognized compensation cost related to nonvested restricted shares granted under the Plans was immaterial.  There were no shares vested during the three or six months ended, June 30, 2013 and 2012.

XML

Loans (Schedule Of Debtor Troubled Debt Restructuring, Subsequent Periods) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total	$ 2,749	$ 3,286
Commercial Segment [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total	478	528
Multi-family residential [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total	2,006	2,082
Non-owner occupied [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total		388
Owner occupied [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total	$ 265	$ 288

XML

Consolidated Statements Of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest and dividend income
Loans, including fees	$ 1,734	$ 1,769	$ 3,330	$ 3,660
Securities	43	58	103	121
FHLB stock dividends	20	21	41	43
Federal funds sold and other	37	41	71	81
Total interest and dividend income	1,834	1,889	3,545	3,905
Interest expense
Deposits	421	557	829	1,150
Long-term FHLB advances and other debt	77	81	153	190
Subordinated debentures	42	45	83	92
Total interest expense	540	683	1,065	1,432
Net interest income	1,294	1,206	2,480	2,473
Provision for loan losses	324	200	650	400
Net interest income after provision for loan losses	970	1,006	1,830	2,073
Noninterest income
Service charges on deposit accounts	83	58	156	117
Net gains on sales of loans	107	92	113	135
Loan servicing fees, net		5		13
Net gain on sales of securitites		143		143
Earnings on bank owned life insurance	33	32	65	65
Other	46	10	68	25
Total noninterest income	269	340	402	498
Noninterest expense
Salaries and employee benefits	961	953	1,853	1,944
Occupancy and equipment	84	59	159	133
Data processing	143	137	306	279
Franchise taxes	85	46	170	101
Professional fees	175	199	387	417
Director fees	3	46	8	91
Postage, printing and supplies	69	56	127	104
Advertising and promotion	6	4	12	7
Telephone	21	16	37	33
Loan expenses	9	23	26	31
Foreclosed assets, net	1	188	(18)	206
Depreciation	53	62	107	129
FDIC premiums	36	142	147	298
Amortization of intangibles	10	10	19	20
Regulatory assessment	39	21	78	66
Other insurance	36	38	73	80
Other	62	30	105	55
Total non-interest expense	1,793	2,030	3,596	3,994
Income (loss) before incomes taxes	(554)	(684)	(1,364)	(1,423)
Income tax expense (benefit)
Net loss	(554)	(684)	(1,364)	(1,423)
Preferred stock dividends and accretion of discount on preferred stock		(111)		(221)
Earnings (loss) attributable to common stockholders	$ (554)	$ (795)	$ (1,364)	$ (1,644)
Earnings (loss) per common share:
Basic	$ (0.04)	$ (0.96)	$ (0.09)	$ (1.99)
Diluted	$ (0.04)	$ (0.96)	$ (0.09)	$ (1.99)

XML

Regulatory Order Considerations

6 Months Ended

Jun. 30, 2013

Regulatory Order Considarations [Abstract]

REGULATORY ORDER CONSIDERATIONS

NOTE 2- REGULATORY ORDER CONSIDERATIONS

Regulatory Order Considerations: On May 25, 2011, the Holding Company and CFBank each consented to the issuance of an Order to Cease and Desist (the Holding Company Order and the CFBank Order, respectively, and collectively, the Orders) by the Office of Thrift Supervision (OTS), the primary regulator of the Holding Company and CFBank at the time the Orders were issued.  In July 2011, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the Federal Reserve Bank replaced the OTS as the primary regulator of the Holding Company and the Office of the Comptroller of the Currency (OCC) replaced the OTS as the primary regulator of CFBank.

The Holding Company Order requires it, among other things, to: (i) submit by every December 31 a capital plan to regulators that establishes a minimum tangible capital ratio commensurate with the Holding Company’s consolidated risk profile, reduces the risk from current debt levels and addresses the Holding Company’s cash flow needs; (ii) not pay cash dividends, redeem stock or make any other capital distributions without prior regulatory approval; (iii) not pay interest or principal on any debt or increase any Holding Company debt or guarantee the debt of any entity without prior regulatory approval; (iv) obtain prior regulatory approval for changes in directors and senior executive officers; and (v) not enter into any new contractual arrangement related to compensation or benefits with any director or senior executive officer without prior notification to regulators.

The CFBank Order requires it, among other things, to: (i) maintain 8% core capital and 12% total risk-based capital, after establishing an adequate allowance for loan and lease losses; (ii) submit by every December 31 a capital and business plan to regulators that describes strategies to meet these required capital ratios and contains operating strategies to achieve realistic core earnings; (iii) raise capital to reach the required levels; (iv) not originate, participate in or acquire any nonresidential real estate loans or commercial loans not in line with agreed Board approval conditions, loan policies and credit administration procedures; (v) adopt a revised credit administration policy, problem asset reduction plan, management succession plan and liquidity management policy; (vi) limit asset growth in line with CFBank’sbusiness plan absent prior regulatory approval for additional growth; (vii) not pay cash dividends or make any other capital distributions without prior regulatory approval; (viii) obtain prior regulatory approval for changes in directors and senior executive officers; (ix) not enter into any new contractual arrangement related to compensation or benefits with any director or senior executive officer without prior notification to regulators; (x) not enter into any significant arrangement or contract with a third party service provider without prior regulatory approval; and (xi) comply with the Federal Deposit Insurance Corporation (FDIC) limits on brokered deposits.  As a result of the CFBank Order, we are prohibited from offering above-market interest rates and are subject to market rates published by the FDIC when offering deposits to the general public.  In addition,CFBank is considered “adequately capitalized” for regulatory purposes and will not be considered “well-capitalized” so long as the CFBank Order remains in effect.  If CFBank’s capital falls below the levels to be considered adequately capitalized, it may be subject to substantially greater regulatory scrutiny, including the imposition of additional restrictions on our operations. 

The Company has been unprofitable for the past three years.  If we do not generate profits in the future, our capital levels will be negatively impacted and the regulators could take additional enforcement action against us, including the imposition of further operating restrictions.

Because CFBank is under a regulatory order, it is prohibited from accepting or renewing brokered deposits, including reciprocal deposits in the Certificate of Deposit Account Registry Service (CDARS) program, without FDIC approval.  CFBank received limited waivers from the prohibition on renewal of reciprocal CDARS deposits from the FDIC, each for 90 day periods, commencing in June, 2011, through the current 90-day waiver period which runs through September 11, 2013.  Management intends to submit additional requests for waivers in the future; however, there can be no assurance that the additional requests will be granted by the FDIC or that customers will roll over their CDARS deposits even if CFBank is granted additional waivers.

The prohibition on brokered deposits significantly limits CFBank’s ability to participate in the CDARS program and impacts CFBank’s liquidity management.  The Company monitors on-balance-sheet liquidity to deal with scheduled brokered deposit maturities and the potential impact of other regulatory restrictions on liquidity.  At June 30, 2013, CFBank had $27,272 in brokered deposits, which included $3.6 million in reciprocal CDARS deposits in the program,with maturity dates from August 2013 through August 2016. At June 30, 2013, cash, unpledged securities and deposits in other financial institutions totaled $37,047.  

Brokered deposit maturities over the next four years are as follows:

June 30, 2014	$	17,214
June 30,2015		3,427
June 30, 2016		6,432
June 30, 2017		199
		27,272

Pursuant to the CFBank Order, CFBank may not declare or pay dividends or make any other capital distributions without receiving the prior written approval of the OCC.  Future dividend payments by CFBank to the Holding Company would be based on future earnings and the approval of the OCC. The payment of dividends from CFBank to the Holding Company is not likely to be approved by the OCC while CFBank is suffering losses.

The directives contained in the Orders, including higher capital requirements, requirements to reduce the level of our classified and criticized assets and various operating restrictions, may impede our full ability to operate our business and compete effectively in our markets.

We have taken such actions as we believe are necessary to comply with all requirements of the Orders which are currently effective and we are continuing to work toward compliance with the provisions of the Orders having future compliance dates.

We have received or provided all required approvals, non-objections, notifications and waivers with regard to the Orders.  Details of these items are disclosed in Note 2- Regulatory Order Considerations to the Consolidated Financial Statements contained in the Company’s 2012 Annual Report that was filed as Exhibit 13.1 to the Company’s Form 10-K for the year ended December 31, 2012.

The requirements of the Orders will remain in effect until terminated, modified or suspended by our regulators.

Capital Raise: The Company announced the terms of a registered common stock offering on August 9, 2011.  In April 2012, the Company suspended this offering and returned all subscriptions received.  The Company subsequently modified the terms of the offering and filed post-effective amendments to its registration statement with the SEC, and the amended registration statement was declared effective on June 14, 2012.

The restructured registered common stock offering consisted of a rights offering of up to $18,000 and a $4,500 offering to a group of standby purchasers, as well as a public offering of any unsold shares.  Under the terms of the rights offering, all holders of the Company’s common stock as of the record date, June 14, 2012, received, at no charge, one subscription right for each share of common stock held as of the record date, which was after the 1 for 5 reverse stock split effective May 4, 2012.  Each subscription right entitled the holder of the right to purchase 14.5329 shares of Company common stock (post-split) at a subscription price of $1.50 per share (post-split).  The rights offering period expired on July 16, 2012, and unsubscribed shares were made available to the public beginning on July 17, 2012, at $1.50 per share. The public offering of unsubscribed shares of common stock ended on August 14, 2012.  The Company separately entered into a series of standby purchase agreements with a group of investors led by Timothy T. O’Dell, Thad R. Perry and Robert E. Hoeweler.  Under the standby purchase agreements, the standby purchasers agreed to purchase 3.0 million shares of Company common stock at a price of $1.50 per share. The standby purchasers had conditioned their purchase of shares of common stock upon the receipt by the Company of at least $13,500 in net proceeds from the rights offering and public offering.

On August 20, 2012, the Company announced the successful completion of its restructured registered common stock offering.  The Company sold 15.0 million shares of its common stock (including shares sold to the standby purchasers) at $1.50 per share, resulting in gross proceeds of $22,500 before expenses of $2,279.  

A portion of the proceeds from the restructured registered common stock offering was retained by the Holding Company for general corporate purposes and is estimated to be sufficient to support the Holding Company’s cash requirements for the foreseeable future based on its current business plan.Holding Company cash provided from net proceeds of the stock offering was reduced by $3,000 for redemption of the Company’s TARP obligations from the U.S. Treasury and a $13,500 capital contribution to CFBank to improve its capital ratios and support future growth and expansion, bringing CFBank into compliance with the capital ratios required by the CFBank Order. See Note 10 – Preferred Stock for additional information on redemption of the TARP obligations.  The Holding Company’s current cash requirements include debt service on the subordinated debentures and operating expenses.  See Note 8–  Subordinated Debentures for additional information on debt service requirements of the subordinated debentures.  Management believes the Holding Company’s liquidity is sufficient at June 30, 2013. 

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Summary Of Significant Accounting Policies (Policy)

6 Months Ended

Jun. 30, 2013

Summary Of Significant Accounting Policies [Abstract]

Basis of Presentation:

Basis of Presentation: 

The consolidated financial statements include Central Federal Corporation (the Holding Company) and its wholly owned subsidiaries, CFBank, Ghent Road, Inc., and Smith Ghent LLC (together with the Holding Company referred to as the Company).  The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and in compliance with U.S. generally accepted accounting principles (GAAP).  Because this report is based on an interim period, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

In the opinion of the management of the Company, the accompanying unaudited interim consolidated financial statements include all adjustments necessary for a fair presentation of the Company’s financial condition and the results of operations for the periods presented.  These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The financial performance reported for the Company for the three and six months ended June 30, 2013 is not necessarily indicative of the results that may be expected for the full year.  This information should be read in conjunction with the Company’s latest Annual Report to Stockholders and Form 10-K. Reference is made to the accounting policies of the Company described in Note 1 of the Notes to Consolidated Financial Statements contained in the Company’s 2012 Annual Report that was filed as Exhibit 13.1 to the Company’s Form 10-K for the year ended December 31, 2012.  The Company has consistently followed those policies in preparing this Form 10-Q.

Reclassifications and Reverse Stock Split:

Reclassifications and Reverse Stock Split:  Some items in the prior period financial statements were reclassified to conform to the current presentation.  Reclassifications did not impact prior period net loss or total stockholders' equity.  On May 4, 2012, the Company completed a 1-for-5 reverse stock split, whereby every 5 shares of the Company’s common stock were reclassified into one share of common stock. All share and per share amounts for all periods presented have been adjusted to reflect the reverse split as though it had occurred prior to the earliest period presented.

Earnings (Loss) Per Common Share:

Earnings (Loss) Per Common Share: The two-class method is used in the calculation of basic and diluted earnings per share.  Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities (unvested share-based payment awards) according to dividends declared (or accumulated) and participation rights in undistributed earnings.  The factors used in the earnings per share computation follow:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Basic
Net loss	$	(554)	$	(684)	$	(1,364)	$	(1,423)
Less: Preferred dividends and accretion of discount on preferred stock		-		(111)		-		(221)
Less: Net loss allocated to unvested share-based payment awards		-		3		-		6
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding including unvested share-based payment awards		15,823,677		825,491		15,823,869		825,469
Less: Unvested share-based payment awards		(133)		(2,700)		(299)		(3,000)
Average shares		15,823,544		822,791		15,823,570		822,469
Basic loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)
Diluted
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding for basic loss per common share		15,823,544		822,791		15,823,570		822,469
Add:  Dilutive effects of assumed exercises of stock options		-		-		-		-
Add:  Dilutive effects of assumed exercises of stock warrant		-		-		-		-
Average shares and dilutive potential common shares		15,823,544		822,791		15,823,570		822,469
Diluted loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)

The following stock options and warrant were not considered in computing diluted earnings (loss) per common share because the options or warrant were anti-dilutive or the Company reported a net loss for the periods presented.

	Three months ended June 30,		Six months ended June 30,
	2013	2012	2013	2012
Stock options	240,406	42,116	240,406	42,116
Stock warrant	-	67,314	-	67,314

Adoption of New Accounting Standards:

Adoption of New Accounting Standards:

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220); Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The objective of this Update is to improve the reporting of reclassifications out of accumulated other comprehensive income.  The amendments in this Update require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S.GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012.  The adoption of this ASU did not have a material impact on the Company, however, disclosures have been presented as part of notes to the financial statements.

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Subordinated Debentures (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2003	Jun. 30, 2013	Sep. 30, 2012	Dec. 31, 2008
Subordinated Debentures [Abstract]
Holding Company, closed a pooled private offering		5,000
Trust preferred securities with a liquidation amount		$ 1
Subordinated debentures	$ 5,155	$ 5,155	$ 5,155
Holding Company's investment in the common stock		155
Holding Company may redeem the subordinated debentures in a principal amount with integral multiples					$ 1
Percentage in which holding company redeem subordinated debentures					100.00%
Maturity date of subordinated debentures	Dec. 30, 2033
Cumulative deferred interest payments	$ 42		$ 125	$ 348
Trust preferred securities and subordinated debentures have a variable rate of interest			2.85%
Trust preferred securities and subordinated debentures have a stated percentage	3.21%		3.13%

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Fair Value (Assets And Liabilities Measured At Fair Value On A Recurring Basis, Including Financial Assets And Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial Assets:
Total securities available for sale	$ 12,155	$ 17,639
Loans held for sale	629	623
Yield maintenance provisions (embedded derivatives)	716	990
Interest rate lock commitments	28	45
Financial Liabilities:
Interest-rate swaps	716	990
Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	12,155	17,639
Loans held for sale	629	623
Yield maintenance provisions (embedded derivatives)	716	990
Interest rate lock commitments	28	45
Financial Liabilities:
Interest-rate swaps	716	990
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	12,155	17,639
Loans held for sale	629	623
Fair Value, Measurements, Recurring [Member] | Corporate Debt [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	4,374	4,365
Fair Value, Measurements, Recurring [Member] | State and Municipal [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	1,936	1,986
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities - Residential [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	1,217	1,486
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	4,628	9,802
Fair Value, Measurements, Recurring [Member] | Yield maintenance provisions (embedded derivatives) [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Yield maintenance provisions (embedded derivatives)	716	990
Fair Value, Measurements, Recurring [Member] | Interest Rate Lock Commitments [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Interest rate lock commitments	28	45
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Interest-rate swaps	$ 716	$ 990

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Preferred Stock

6 Months Ended

Jun. 30, 2013

Preferred Stock [Abstract]

PREFERRED STOCK

NOTE 10 – PREFERRED STOCK

On December 5, 2008, in connection with the Troubled Asset Relief Program (TARP) Capital Purchase Program, the Company issued to the U.S. Treasury 7,225 shares of Central Federal Corporation Fixed Rate Cumulative Perpetual Preferred Stock, Series A (Preferred Stock) for $7,225.  The Preferred Stock initially paid quarterly dividends at a five percent annual rate.

The Company’s Board of Directors elected to defer dividend payments on the Preferred Stock beginning with the dividend payable on November 15, 2010.

Pursuant to the Holding Company Order, as described in Note 2, the Holding Company may not declare, make, or pay any cash dividends (including dividends on the Preferred Stock, or the Holding Company’s common stock) or other capital distributions or purchase, repurchase or redeem or commit to purchase, repurchase, or redeem any Holding Company equity stock without the prior written non-objection of the FED.  On July 13, 2012, the Company received approval from the FRB of Cleveland of an agreement with U.S. Treasury to redeem the Preferred Stock, including all accrued but unpaid dividends and the common stock warrant issued in connection with the TARP Capital Purchase Program (together, the “TARP obligations”) using proceeds of the Holding Company’s common stock offering. On August 23, 2012, the Holding Company received regulatory non-objection from the OCC for redemption of the TARP obligations.

On September 26, 2012, pursuant to the agreement with U.S. Treasury, the Holding Company utilized $3,000 of the proceeds from its stock offering to redeem the TARP obligations including deferred dividends totaling $801.  The redemption included satisfaction of common stock warrants associated with the preferred stock. The redemption was completed at a discount and resulted in an increase in common stockholders’ equity of $4,960.  At June 30, 2013 and December 31, 2012, the preferred stock was fully redeemed. Preferred stock dividend and accretions totaled $0 for the three and six months ended June 30, 2013 and $111 and $221 for the three and six months ended June 30, 2012.

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Loans (Activity In ALLL By Portfolio Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 5,682	$ 5,641	$ 5,237	$ 6,110
Addition to (reduction in) provision for loan losses	324	200	650	400
Charge-offs	(17)	(679)	(17)	(1,564)
Recoveries	76	263	195	479
Reclass of ALLL on loan related commitments				9
Ending balance	6,065	5,434	6,065	5,434
Commercial Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	1,409	1,802	1,311	2,281
Addition to (reduction in) provision for loan losses	31	(589)	112	(1,097)
Charge-offs		(84)		(99)
Recoveries	9	248	26	292
Reclass of ALLL on loan related commitments				9
Ending balance	1,449	1,386	1,449	1,386
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	1
Addition to (reduction in) provision for loan losses	18		19
Ending balance	19		19
Real Estate [Member] | Commercial Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,197	1,912	1,946	1,863
Addition to (reduction in) provision for loan losses	(44)	712	153	1,059
Charge-offs		(496)		(930)
Recoveries	4	2	58	138
Ending balance	2,157	2,130	2,157	2,130
Real Estate [Member] | Single-family residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	239	190	332	207
Addition to (reduction in) provision for loan losses	128	58	34	39
Charge-offs		(7)		(7)
Recoveries	1	4	2	6
Ending balance	368	245	368	245
Real Estate [Member] | Multi-family residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	1,604	1,446	1,396	1,470
Addition to (reduction in) provision for loan losses	69	(58)	248	312
Charge-offs		(18)		(434)
Recoveries	57		86	22
Ending balance	1,730	1,370	1,730	1,370
Consumer [Member] | Home equity lines of credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	220	274	241	272
Addition to (reduction in) provision for loan losses	125	45	102	64
Charge-offs	(17)	(40)	(17)	(60)
Recoveries	3	7	5	10
Ending balance	331	286	331	286
Consumer [Member] | Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	12	17	11	17
Addition to (reduction in) provision for loan losses	(3)	32	(18)	23
Charge-offs		(34)		(34)
Recoveries	2	2	18	11
Ending balance	$ 11	$ 17	$ 11	$ 17

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012	Mar. 31, 2012	Jun. 30, 2013		Jun. 30, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning Balance					$ 107
Total other comprehensive income (loss)	(35)		(162)	(55)	(10)		(55)
Accumulated Other Comprehensive Income (Loss), Net of Tax, Ending Balance	97				97
Unrealized Gains and Losses on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning Balance	132	[1]			107	[1]
Other comprehensive income before reclassifications	(35)	[1]			(10)	[1]
Amount reclassified from accumulated other comprehensive income		[1],[2]				[1],[2]
Total other comprehensive income (loss)	(35)	[1]			(10)	[1]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Ending Balance	$ 97	[1]			$ 97	[1]

[1] (1)All amounts are net of tax. Amounts in parentheses indicate a reduction of other comprehensive income.

[2] (2)There no amounts reclassified out of other comprehensive income for the three and six months ended June, 2013

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Fair Value (Assets And Liabilities Measured At Fair Value On A Non-Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Impaired loans:
Total impaired loans	$ 11,047	$ 11,792
Foreclosed assets
Foreclosed assets, net	1,538	1,525
Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans:
Total impaired loans	4,495	5,298
Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member] | Single-family residential [Member]
Impaired loans:
Total impaired loans	368	57
Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member] | Multi-family residential [Member]
Impaired loans:
Total impaired loans	1,342	2,070
Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member] | Non-owner occupied [Member]
Impaired loans:
Total impaired loans	1,505	1,806
Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member] | Owner occupied [Member]
Impaired loans:
Total impaired loans	1,159	1,244
Financial instruments measured at fair value on a non-recurring basis [Member] | Commercial Segment [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans:
Total impaired loans	$ 121	$ 121

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Regulatory Order Considerations (Narrative) (Details) (USD $)	1 Months Ended	6 Months Ended	12 Months Ended
	Aug. 20, 2012	Jun. 30, 2013	Dec. 31, 2012
Regulatory Order Considarations [Abstract]
Core capital		8.00%
Risk-based capital		12.00%	12.00%
Brokered Deposits		$ 27,272,000
CDARS deposits		3,600,000
Unpledged securities and deposits in other financial institutions		37,047,000
Rights offering		18,000,000
Offering to a group of standby purchasers		4,500,000
Description of reverse stock split		Under the terms of the rights offering, all holders of the Company's common stock as of the record date, June 14, 2012, received, at no charge, one subscription right for each share of common stock held as of the record date, which was after the 1 for 5 reverse stock split effective May 4, 2012.
Number of shares the holder has the right to purchase		14.5329
Common stock, subscription price		1.50
Rights offering available to the public, price		$ 1.50
Rights offering expiration date		Jul. 16, 2012
Unsubscribed shares issuing beginning date		Jul. 17, 2012
Amount of shares standby purchasers agreed to purchase		3,000,000
Price per share of shares standby purchasers agreed to purchase		$ 1.50
Purchase of shares of common stock upon the receipt, minimum		13,500,000
Sales of common stock	15,000,000	15,935,417	15,936,417
Common stock price per share	$ 1.50
Proceeds from sale of common stock	22,500,000	(11,000)
Expenses for issuance of stock	2,279,000
Redemption of the TARP obligations		3,000,000
Capital contribution		$ 13,500,000

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Securities (Tables)

6 Months Ended

Jun. 30, 2013

Securities [Abstract]

Amortized cost and fair value of available-for-sale securities portfolio

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
June 30, 2013
Corporate debt	$	4,394	$	1	$	21	$	4,374
State and municipal		1,941		2		7		1,936
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,159		58		-		1,217
Collateralized mortgage obligations		4,564		64		-		4,628
Total	$	12,058	$	125	$	28	$	12,155

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2012
Corporate debt	$	4,429	$	-	$	64	$	4,365
State and municipal		2,006		-		20		1,986
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,399		87		-		1,486
Collateralized mortgage obligations		9,698		117		13		9,802
Total	$	17,532	$	204	$	97	$	17,639

Proceeds From The Sales Of Securities

		Three months ended				Six months ended
		June 30,				June 30,
	2013		2012		2013		2012
Proceeds	$	-	$	2,144	$	-	$	2,144
Gross gains		-		143		-		143
Gross losses		-		-		-		-
Tax effect-expense	$	-	$	-	$	-	$	-

Securities classified by maturity date

		June 30, 2013				December 31, 2012
		Amortized		Fair		Amortized		Fair
		Cost		Value		Cost		Value
Due in one year or less	$	-	$	-	$	50	$	50
Due from one to five years		6,336		6,310		6,385		6,301
Mortgage-backed securities		1,159		1,217		1,399		1,486
Collateralized mortgage obligations		4,564		4,628		9,698		9,802
Total	$	12,059	$	12,155	$	17,532	$	17,639

Fair value of securities pledged

	June 30,		December 31,
	2013		2012
Pledged as collateral for:
FHLB advances	$	3,324	$	4,707
Public deposits		1,713		2,199
Interest-rate swaps		787		1,511
Total	$	5,824	$	8,417

Securities with unrealized losses

June 30, 2013	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate debt	$	3,873	$	22	$	-	$	-	$	3,873	$	22
State and municipal		909		7		-		-		909		7
Issued by U.S. government-sponsored entities and agencies:
Collateralized mortgage obligations		-		-		-		-		-		-
Total temporarily impaired	$	4,782	$	29	$	-	$	-	$	4,782	$	29

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Regulatory Order Considerations (Tables)

6 Months Ended

Jun. 30, 2013

Regulatory Order Considarations [Abstract]

Brokered Deposit Maturities Table [Text Block]

June 30, 2014	$	17,214
June 30,2015		3,427
June 30, 2016		6,432
June 30, 2017		199
		27,272

Brokered Deposit Maturities

June 30, 2014	$	17,214
June 30,2015		3,427
June 30, 2016		6,432
June 30, 2017		199
		27,272

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Loans (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Debt Instrument [Line Items]
Commercial loans	$ 179,877,000		$ 179,877,000		$ 153,043,000
Percent of participation agreement interest	80.00%		80.00%
Ownership interest in each loan is participates			20.00%
Cash payments of interest	57,000	50,000	114,000	118,000
Aggregate purchase price of loans, maximum			45,000,000
Percent of loans risk rated for capital adequacy			100.00%
Allocated specific reserves to modified TDRs	1,600,000		1,600,000		830,000
Total TDR's	6,600,000		6,600,000		7,000,000
Recorded investment	6,350,000	5,448,000	6,350,000	5,448,000
Principal repayment at the date of modification	50,000		50,000
Maturity date start			May 31, 2012
Maturity date end			Sep. 30, 2012
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum			3.50%
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum			6.50%
Number of days of default payment			90 days
Accruing TDR's	3,848,000		3,848,000		3,684,000
Commercial Lines Of Credit [Member]
Debt Instrument [Line Items]
Commercial loans	12,538,000		12,538,000		11,782,000
Home Equity Line of Credit, Other [Member]
Debt Instrument [Line Items]
Commercial loans	11,658,000		11,658,000		10,447,000
Single-family residential [Member]
Debt Instrument [Line Items]
Mortgage loans	$ 35,763,000		$ 35,763,000		$ 25,373,000
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum				5.00%
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum				10.00%
Previous maturity date of Receivables				2034
Maturity date of Receivables				2042
Reduction in stated interest rate of loan				30 years

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments [Abstract]

Summary of derivative instruments

	30-Jun-13		31-Dec-12
Notional amount	$	7,644	$	7,750
Weighted average pay rate on interest-rate swaps		3.86%		3.86%
Weighted average receive rate on interest-rate swaps		0.22%		0.24%
Weighted average maturity (years)		4.1		4.6
Fair value of interest-rate swaps	$	(716)	$	(990)
Fair value of yield maintenance provisions		716		990

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Securities (Narrative) (Details) (Issued by U.S. Government-Sponsored Entities and Agencies [Member])	Jun. 30, 2013	Dec. 31, 2012
Issued by U.S. Government-Sponsored Entities and Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Minimum percentage of securities hold	10.00%	10.00%

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Loans (Balance In ALLL And Recorded Investment In Loans By Portfolio Segment And Based On Impairment Method) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	$ 1,559		$ 830
Collectively evaluated for impairment	4,506		4,407
Total ending allowance balance	6,065	5,682	5,237	5,434	5,641	6,110
Individually evaluated for impairment	9,249		9,854
Collectively evaluated for impairment	176,693		148,426
Subtotal	185,942		158,280
Commercial Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	632		609
Collectively evaluated for impairment	817		702
Total ending allowance balance	1,449	1,409	1,311	1,386	1,802	2,281
Individually evaluated for impairment	1,092		1,091
Collectively evaluated for impairment	26,519		24,317
Subtotal	27,611		25,408
Construction Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment	19
Total ending allowance balance	19
Collectively evaluated for impairment	1,701		14
Subtotal	1,701		14
Real Estate [Member] | Commercial Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	143		126
Collectively evaluated for impairment	2,014		1,820
Total ending allowance balance	2,157	2,197	1,946	2,130	1,912	1,863
Individually evaluated for impairment	5,610		6,467
Collectively evaluated for impairment	56,632		47,824
Subtotal	62,242		54,291
Real Estate [Member] | Single-family residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	111		71
Collectively evaluated for impairment	257		261
Total ending allowance balance	368	239	332	245	190	207
Individually evaluated for impairment	479		129
Collectively evaluated for impairment	54,644		42,929
Subtotal	55,123		43,058
Real Estate [Member] | Multi-family residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	673		24
Collectively evaluated for impairment	1,057		1,372
Total ending allowance balance	1,730	1,604	1,396	1,370	1,446	1,470
Individually evaluated for impairment	2,068		2,167
Collectively evaluated for impairment	22,433		19,409
Subtotal	24,501		21,576
Consumer [Member] | Home equity lines of credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment	331		241
Total ending allowance balance	331	220	241	286	274	272
Collectively evaluated for impairment	13,809		12,963
Subtotal	13,809		12,963
Consumer [Member] | Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment	11		11
Total ending allowance balance	11	12	11	17	17	17
Collectively evaluated for impairment	955		970
Subtotal	$ 955		$ 970

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Other Borrowings (Tables)

6 Months Ended

Jun. 30, 2013

Other Borrowings [Abstract]

Assets pledged as collateral with FRB

	June 30, 2013		December 31, 2012
Commercial Loans		12,887		9,352
Commercial Real Estate Loans		20,187		16,700
Total	$	33,074	$	26,052

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FHLB Advances (Schedule Of Federal Home Loan Advances Pledged By Assets) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateralized advances	$ 28,799	$ 24,077
Single-family mortgage loans [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateralized advances	11,955	9,917
Multi-family residential [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateralized advances	5,986	4,968
Commercial Real Estate [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateralized advances	4,234	1,185
Securities [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateralized advances	3,324	4,707
Cash [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateralized advances	$ 3,300	$ 3,300

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Stock-Based Compensation (Summary Of Changes In Company's Nonvested Restricted Shares) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Stock-Based Compensation [Abstract]
Shares, Nonvested at January 1, 2013	1,400
Shares, Forfeited	(1,000)
Shares, Nonvested at June 30, 2013	400
Weighted Average Grant date Fair Value, Nonvested at January 1, 2013	$ 6.61
Weighted Average Grant date Fair Value, Forfeited	$ 7.25
Weighted Average Grant date Fair Value, Nonvested at June 30, 2013	$ 5.00

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FHLB Advances (Advances From FHLB) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Total FHLB advances	$ 10,000	$ 10,000
January 2014 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Fixed interest rate	3.12%
Fixed interest rate due within one year	5,000	5,000
May 2014 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Fixed interest rate	3.06%
Fixed interest rate due within one year	$ 5,000	$ 5,000

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Securities (Amortized Cost and Fair Value of Debt Securities by Contractual Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Due in one year or less, Amortized Cost		$ 50
Due from one to five years, Amortized Cost	6,336	6,385
Amortized Cost	12,059	17,532
Due in one year or less, Fair Value		50
Due from one to five years, Fair Value	6,310	6,301
Fair Value	12,155	17,639
Mortgage-Backed Securities - Residential [Member]
Amortized Cost	1,159	1,399
Fair Value	1,217	1,486
Collateralized Mortgage Obligations [Member]
Amortized Cost	4,564	9,698
Fair Value	$ 4,628	$ 9,802

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Stock-Based Compensation (Fair Value Of Options Granted, Determined, Using Weighted-Average Assumptions) (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Stock-Based Compensation [Abstract]
Risk-free interest rate	1.32%	1.32%
Expected term (years)	7 years	7 years
Expected stock price volatility	80.00%	80.00%
Dividend yield	0.00%	0.00%

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Summary Of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2013

Summary Of Significant Accounting Policies [Abstract]

Earnings (Loss) Per Common Share

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Basic
Net loss	$	(554)	$	(684)	$	(1,364)	$	(1,423)
Less: Preferred dividends and accretion of discount on preferred stock		-		(111)		-		(221)
Less: Net loss allocated to unvested share-based payment awards		-		3		-		6
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding including unvested share-based payment awards		15,823,677		825,491		15,823,869		825,469
Less: Unvested share-based payment awards		(133)		(2,700)		(299)		(3,000)
Average shares		15,823,544		822,791		15,823,570		822,469
Basic loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)
Diluted
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding for basic loss per common share		15,823,544		822,791		15,823,570		822,469
Add:  Dilutive effects of assumed exercises of stock options		-		-		-		-
Add:  Dilutive effects of assumed exercises of stock warrant		-		-		-		-
Average shares and dilutive potential common shares		15,823,544		822,791		15,823,570		822,469
Diluted loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)

Anti-dilutive Average Common Shares

	Three months ended June 30,		Six months ended June 30,
	2013	2012	2013	2012
Stock options	240,406	42,116	240,406	42,116
Stock warrant	-	67,314	-	67,314

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Consolidated Statements Of Changes In Stockholders' Equity (Unaudited) (USD $) In Thousands	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Treasury Stock	Total
Balance at Dec. 31, 2011	$ 7,120	$ 9	$ 27,837	$ (22,163)	$ 386	$ (3,245)	$ 9,944
Net loss				(1,423)			(1,423)
Other comprehensive income (loss)					(55)		(55)
Accretion of discount on preferred stock	27			(27)
Release of stock-based incentive plan shares, net of forfeitures			7				7
Stock option expense, net of forfeitures			3				3
Preferred stock dividends				(194)			(194)
Balance at Mar. 31, 2012	7,147	9	27,847	(23,807)	331	(3,245)	8,282
Balance at Dec. 31, 2012		159	47,919	(21,297)	107	(3,245)	23,643
Net loss				(1,364)			(1,364)
Other comprehensive income (loss)					(10)		(10)
Release of stock-based incentive plan shares, net of forfeitures			(6)				(6)
Stock option expense, net of forfeitures			56				56
Offering costs associated with issuance			(11)				(11)
Balance at Jun. 30, 2013		$ 159	$ 47,958	$ (22,661)	$ 97	$ (3,245)	$ 22,308

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Consolidated Statements Of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Statement Of Cash Flows [Abstract]
Net loss	$ (1,364)	$ (1,423)
Adjustments to reconcile net loss to net cash from operating activities:
Provision for loan losses	650	400
Provision for losses on foreclosed assets		182
Valuation (gain) loss on mortgage servicing rights		(1)
Depreciation	107	129
Amortization, net	244	357
Net gain on sales of securitites		(143)
Originations of loans held for sale	(13,965)	(11,697)
Proceeds from sale of loans held for sale	14,071	11,360
Net gains on sales of loans	(113)	(135)
Loss on disposal of premises and equipment		4
Gain on sale of foreclosed assets	(21)
Earnings on bank owned life insurance	(65)	(65)
Stock-based compensation expense	50	10
Net change in:
Accrued interest receivable and other assets	(190)	(667)
Accrued interest payable and other liabilities	(202)	705
Net cash from (used by) operating activities	(798)	(984)
Available-for-sale securities:
Sales		2,144
Maturities, prepayments and calls	5,298	5,854
Purchases		(7,000)
Loan originations and payments, net	(27,572)	18,338
Additions to premises and equipment	(42)	(22)
Proceeds from the sale of foreclosed assets	68
Proceeds from mortgage insurance on foreclosed assets	14	29
Net cash from (used by) investing activities	(22,234)	19,343
Cash flows from financing activities
Net change in deposits	31,142	(18,740)
Net change in short-term borrowings from the FHLB and other debt		(5,742)
Net change in advances by borrowers for taxes and insurance	(54)	(104)
Cost associated with issuance of common stock	(11)
Net cash from (used by) financing activities	31,077	(24,586)
Net change in cash and cash equivalents	8,045	(6,227)
Beginning cash and cash equivalents	25,152	61,436
Ending cash and cash equivalents	33,197	55,209
Supplemental cash flow information:
Interest paid	961	1,344
Supplemental noncash disclosures:
Transfers from loans to repossessed assets	74	186
Loans transferred from held for sale to portfolio		$ (109)

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Securities

6 Months Ended

Jun. 30, 2013

Securities [Abstract]

SECURITIES

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at June 30, 2013 and December 31, 2012 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
June 30, 2013
Corporate debt	$	4,394	$	1	$	21	$	4,374
State and municipal		1,941		2		7		1,936
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,159		58		-		1,217
Collateralized mortgage obligations		4,564		64		-		4,628
Total	$	12,058	$	125	$	28	$	12,155

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2012
Corporate debt	$	4,429	$	-	$	64	$	4,365
State and municipal		2,006		-		20		1,986
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,399		87		-		1,486
Collateralized mortgage obligations		9,698		117		13		9,802
Total	$	17,532	$	204	$	97	$	17,639

There was no other-than-temporary impairment recognized in accumulated other comprehensive income (loss) for securities available for sale at June 30, 2013 or December 31, 2012.

The proceeds from the sales of securities for the three and six months ended June 30, 2012 are listed below. 

		Three months ended				Six months ended
		June 30,				June 30,
	2013		2012		2013		2012
Proceeds	$	-	$	2,144	$	-	$	2,144
Gross gains		-		143		-		143
Gross losses		-		-		-		-
Tax effect-expense	$	-	$	-	$	-	$	-

The amortized cost and fair value of debt securities at June 30, 2013 are shown by contractual maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date are shown separately.

		June 30, 2013				December 31, 2012
		Amortized		Fair		Amortized		Fair
		Cost		Value		Cost		Value
Due in one year or less	$	-	$	-	$	50	$	50
Due from one to five years		6,336		6,310		6,385		6,301
Mortgage-backed securities		1,159		1,217		1,399		1,486
Collateralized mortgage obligations		4,564		4,628		9,698		9,802
Total	$	12,059	$	12,155	$	17,532	$	17,639

Fair value of securities pledged was as follows:

	June 30,		December 31,
	2013		2012
Pledged as collateral for:
FHLB advances	$	3,324	$	4,707
Public deposits		1,713		2,199
Interest-rate swaps		787		1,511
Total	$	5,824	$	8,417

At June 30, 2013 and December 31, 2012, there were no holdings of securities of any one issuer, other than U.S. government-sponsored entities and agencies, in an amount greater than 10% of stockholders’ equity.

The following table summarizes securities with unrealized losses at June 30, 2013 and December 31, 2012 aggregated by major security type and length of time in a continuous unrealized loss position.

June 30, 2013	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate debt	$	3,873	$	22	$	-	$	-	$	3,873	$	22
State and municipal		909		7		-		-		909		7
Issued by U.S. government-sponsored entities and agencies:
Collateralized mortgage obligations		-		-		-		-		-		-
Total temporarily impaired	$	4,782	$	29	$	-	$	-	$	4,782	$	29

December 31, 2012	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate debt	$	4,365	$	64	$	-	$	-	$	4,365	$	64
State and municipal		1,936		20		-		-		1,936		20
Issued by U.S. government-sponsored entities and agencies:
Collateralized mortgage obligations		1,673		13		-		-		1,673		13
Total temporarily impaired	$	7,974	$	97	$	-	$	-	$	7,974	$	97

The unrealized losses inCorporate  debt and State and Municipal Securities at June  30, 2013 and December 31, 2012, are related to multiple securities.  Because the decline in fair value is attributable to changes in market conditions, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be

required to sell these securities before their anticipated recovery, the Company did not consider these securities to be other-than-temporarily impaired at June 30, 2013 and December 31, 2012.

There was no unrealized loss in Collateralized Mortgage Obligations at June 30, 2013.  The unrealized loss at December 31, 2012 is related to one Ginnie Mae collateralized mortgage obligation. This security carries the full faith and credit guarantee of the U.S. government.   Because the decline in fair value is attributable to changes in market conditions, and not credit quality, and because the Company does not have the intent to sell this security and it is likely that it will not be required to sell this security before their anticipated recovery, the Company did not consider this security  to be other-than-temporarily impaired at December 31, 2012.

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Preferred Stock (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended
	Dec. 05, 2008	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Preferred Stock [Abstract]
Issuance of Preferred stock	7,225
Preferred stock value	$ 7,225
Dividend rate	5.00%
Proceeds from the stock offering			3,000
Deferred dividends totaling			801
Increase in common stockholders equity			4,960
Preferred stock dividend and accretions		$ 111	$ 0	$ 221	$ 0

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Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Summary Of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: 

The consolidated financial statements include Central Federal Corporation (the Holding Company) and its wholly owned subsidiaries, CFBank, Ghent Road, Inc., and Smith Ghent LLC (together with the Holding Company referred to as the Company).  The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and in compliance with U.S. generally accepted accounting principles (GAAP).  Because this report is based on an interim period, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

In the opinion of the management of the Company, the accompanying unaudited interim consolidated financial statements include all adjustments necessary for a fair presentation of the Company’s financial condition and the results of operations for the periods presented.  These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The financial performance reported for the Company for the three and six months ended June 30, 2013 is not necessarily indicative of the results that may be expected for the full year.  This information should be read in conjunction with the Company’s latest Annual Report to Stockholders and Form 10-K. Reference is made to the accounting policies of the Company described in Note 1 of the Notes to Consolidated Financial Statements contained in the Company’s 2012 Annual Report that was filed as Exhibit 13.1 to the Company’s Form 10-K for the year ended December 31, 2012.  The Company has consistently followed those policies in preparing this Form 10-Q.

Reclassifications and Reverse Stock Split:  Some items in the prior period financial statements were reclassified to conform to the current presentation.  Reclassifications did not impact prior period net loss or total stockholders' equity.  On May 4, 2012, the Company completed a 1-for-5 reverse stock split, whereby every 5 shares of the Company’s common stock were reclassified into one share of common stock. All share and per share amounts for all periods presented have been adjusted to reflect the reverse split as though it had occurred prior to the earliest period presented.

Earnings (Loss) Per Common Share: The two-class method is used in the calculation of basic and diluted earnings per share.  Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities (unvested share-based payment awards) according to dividends declared (or accumulated) and participation rights in undistributed earnings.  The factors used in the earnings per share computation follow:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Basic
Net loss	$	(554)	$	(684)	$	(1,364)	$	(1,423)
Less: Preferred dividends and accretion of discount on preferred stock		-		(111)		-		(221)
Less: Net loss allocated to unvested share-based payment awards		-		3		-		6
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding including unvested share-based payment awards		15,823,677		825,491		15,823,869		825,469
Less: Unvested share-based payment awards		(133)		(2,700)		(299)		(3,000)
Average shares		15,823,544		822,791		15,823,570		822,469
Basic loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)
Diluted
Net loss allocated to common stockholders	$	(554)	$	(792)	$	(1,364)	$	(1,638)
Weighted average common shares outstanding for basic loss per common share		15,823,544		822,791		15,823,570		822,469
Add:  Dilutive effects of assumed exercises of stock options		-		-		-		-
Add:  Dilutive effects of assumed exercises of stock warrant		-		-		-		-
Average shares and dilutive potential common shares		15,823,544		822,791		15,823,570		822,469
Diluted loss per common share	$	(0.04)	$	(0.96)	$	(0.09)	$	(1.99)

The following stock options and warrant were not considered in computing diluted earnings (loss) per common share because the options or warrant were anti-dilutive or the Company reported a net loss for the periods presented.

	Three months ended June 30,		Six months ended June 30,
	2013	2012	2013	2012
Stock options	240,406	42,116	240,406	42,116
Stock warrant	-	67,314	-	67,314

Adoption of New Accounting Standards:

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220); Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The objective of this Update is to improve the reporting of reclassifications out of accumulated other comprehensive income.  The amendments in this Update require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S.GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012.  The adoption of this ASU did not have a material impact on the Company, however, disclosures have been presented as part of notes to the financial statements.

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Securities (Amortized Cost And Fair Value Of Available-For-Sale Securities Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 12,058	$ 17,532
Gross Unrealized Gains	125	204
Gross Unrealized Losses	28	97
Fair Value	12,155	17,639
Corporate Debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,394	4,429
Gross Unrealized Gains	1
Gross Unrealized Losses	21	64
Fair Value	4,374	4,365
State and Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,941	2,006
Gross Unrealized Gains	2
Gross Unrealized Losses	7	20
Fair Value	1,936	1,986
Mortgage-Backed Securities - Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,159	1,399
Gross Unrealized Gains	58	87
Fair Value	1,217	1,486
Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,564	9,698
Gross Unrealized Gains	64	117
Gross Unrealized Losses		13
Fair Value	$ 4,628	$ 9,802

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Loans (Tables)

6 Months Ended

Jun. 30, 2013

Loans [Abstract]

Recorded investment in loans by portfolio segment

	June 30,		December 31,
	2013		2012
Commercial	$	27,611	$	25,408
Real estate:
Single-family residential		55,123		43,058
Multi-family residential		24,501		21,576
Commercial		62,242		54,291
Construction		1,701		14
Consumer:
Home equity lines of credit		13,809		12,963
Other		955		970
Subtotal		185,942		158,280
Less: ALLL		(6,065)		(5,237)
Loans, net	$	179,877	$	153,043

Activity in ALLL by portfolio segment

	Three months ended June 30, 2013
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,409	$	239	$	1,604	$	2,197	$	1	$	220	$	12	$	5,682
Addition to (reduction in) provision for loan losses		31		128		69		(44)		18		125		(3)		324
Charge-offs		-		-		-		-		-		(17)		-		(17)
Recoveries		9		1		57		4		-		3		2		76
Ending balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065

	Six months ended June 30, 2013
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,311	$	332	$	1,396	$	1,946	$	-	$	241	$	11	$	5,237
Addition to (reduction in) provision for loan losses		112		34		248		153		19		102		(18)		650
Charge-offs		-		-		-		-		-		(17)		-		(17)
Recoveries		26		2		86		58		-		5		18		195
Ending balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065

The following tables present the activity in the ALLL by portfolio segment for the three and six months ended June 30, 2012:

	Three months ended June 30, 2012
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,802	$	190	$	1,446	$	1,912	$	-	$	274	$	17	$	5,641
Addition to (reduction in) provision for loan losses		(589)		58		(58)		712		-		45		32		200
Charge-offs		(84)		(7)		(18)		(496)		-		(40)		(34)		(679)
Recoveries		248		4		-		2		-		7		2		263
Reclass of ALLL on loan -related commitments (1)		9		-		-		-		-		-		-		9
Ending balance	$	1,386	$	245	$	1,370	$	2,130	$	-	$	286	$	17	$	5,434

Balance in ALLL and recorded investment in loans by portfolio segment and based on impairment method

The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on the impairment method as of June 30, 2013:

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	632	$	111	$	673	$	143	$	-	$	-	$	-	$	1,559
Collectively evaluated for impairment		817		257		1,057		2,014		19		331		11		4,506
Total ending allowance balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065
Loans:
Individually evaluated for impairment	$	1,092	$	479	$	2,068	$	5,610	$	-	$	-	$	-	$	9,249
Collectively evaluated for impairment		26,519		54,644		22,433		56,632		1,701		13,809		955		176,693
Total ending loan balance	$	27,611	$	55,123	$	24,501	$	62,242	$	1,701	$	13,809	$	955	$	185,942

The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on the impairment method as of December 31, 2012: 

Individually evaluated for impairment by class of loans

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	609	$	71	$	24	$	126	$	-	$	-	$	-	$	830
Collectively evaluated for impairment		702		261		1,372		1,820		-		241		11		4,407
Total ending allowance balance	$	1,311	$	332	$	1,396	$	1,946	$	-	$	241	$	11	$	5,237
Loans:
Individually evaluated for impairment		1,091		129		2,167		6,467		-		-		-		9,854
Collectively evaluated for impairment		24,317		42,929		19,409		47,824		14		12,963		970		148,426
Total ending loan balance	$	25,408	$	43,058	$	21,576	$	54,291	$	14	$	12,963	$	970	$	158,280

The following table presents loans individually evaluated for impairment by class of loans at June 30, 2013.  The unpaid principal balance is the contractual principal balance outstanding.  The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs and includes accrued interest. The table presents accrual basis interest income recognized during the three and six months ended June 30, 2013.  Cash payments of interest during the three and six months ended June 30, 2013 totaled $57 and $114, respectively.

	As of June 30, 2013						Three months ended June 30, 2013				Six  months ended June 30, 2013
	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	135	$	121	$	-	$	165	$	-	$	169	$	-
Real estate:
Single-family residential		-		-		-		-		-		-		-
Multi-family residential		185		185		-		188		-		192		-
Commercial:
Non-owner occupied		2,172		1,505		-		1,510		-		1,913		-
Owner occupied		2,110		1,159		-		1,174		-		1,197		-
Land		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other												-		-
Total with no allowance recorded		4,602		2,970		-		3,037		-		3,471		-
With an allowance recorded:
Commercial		971		971		632		849		5		866		11
Real estate:
Single-family residential		479		479		111		127		3		127		5
Multi-family residential		2,005		1,883		673		1,900		1		1,922		2
Commercial:
Non-owner occupied		2,186		2,187		124		2,191		34		2,211		69
Owner occupied		388		388		7		390		6		392		12
Land		416		371		12		377		6		381		11
Construction
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total with an allowance recorded		6,445		6,279		1,559		5,834		55		5,899		110
Total	$	11,047	$	9,249	$	1,559	$	8,871	$	55	$	9,370	$	110

The following table presents loans individually evaluated for impairment by class of loans at December 31, 2012.  The unpaid principal balance is the contractual principal balance outstanding.  The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs and includes accrued interest. The table presents accrual basis interest income recognized during the three and six months ended June 30, 2012.  Cash payments of interest during the three and six months ended June 30, 2012 totaled $50 and $118, respectively

	As of December 31, 2012						Three months ended June 30, 2012				Six  months ended June 30, 2012
	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	136	$	121	$	-	$	133	$	-	$	89	$	-
Real estate:
Single-family residential		-		-		-		-		-		-		-
Multi-family residential		2,001		1,879		-		3,955		29		4,099		39
Commercial:
Non-owner occupied		3,000		2,195		-		1,909		-		1,571		-
Owner occupied		2,195		1,244		-		413		-		422		-
Land		-		-		-		-		-		-		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Total with no allowance recorded		7,332		5,439		-		6,410		29		6,181		39
With an allowance recorded:
Commercial		970		970		609		679		9		687		22
Real estate:
Single-family residential		129		129		71		131		-		111		-
Multi-family residential		288		288		24		90		2		91		3
Commercial:
Non-owner occupied		2,239		2,239		105		2,411		36		2,404		87
Owner occupied		396		396		7		406		6		407		12
Land		438		393		14		438		6		461		13
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Total with an allowance recorded		4,460		4,415		830		4,155		59		4,161		137
Total	$	11,792	$	9,854	$	830	$	10,565	$	88	$	10,342	$	176

Recorded investment in nonaccrual loans by class of loans

	June 30,		December 31,
	2013		2012
Nonaccrual loans:
Commercial	$	599	$	714
Real estate:
Single-family residential		171		113
Multi-family residential		2,006		2,082
Commercial:
Non-owner occupied		1,505		2,195
Owner occupied		1,159		1,243
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-
Purchased for portfolio		-		9
Total nonaccrual and nonperforming loans	$	5,440	$	6,356

Aging of recorded investment in past due loans by class of loans

The following table presents the aging of the recorded investment in past due loans by class of loans as of June 30, 2013:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	-	$	121	$	121	$	27,490	$	478
Real estate:
Single-family residential		1,059		110		149		1,318		53,805		22
Multi-family residential		-		-		-		-		24,501		2,006
Commercial:
Non-owner occupied		-		-		949		949		31,614		556
Owner occupied		-		-		-		-		24,807		1,159
Land		-		-		-		-		4,872		-
Construction		-		-		-		-		1,701		-
Consumer:
Home equity lines of credit:
Originated for portfolio				61		-		61		11,822		-
Purchased for portfolio		126		-		-		126		1,800		-
Other		3		-		-		3		952		-
Total	$	1,188	$	171	$	1,219	$	2,578	$	183,364	$	4,221

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2012:

Schedule of Debtor Troubled Debt Restructuring, Subsequent Periods

	June 30,		December 31,
	2013		2012
Commercial	$	478	$	528
Real estate:
Multi-family residential		2,006		2,082
Commercial:
Non-owner occupied		-		388
Owner occupied		265		288
Total	$	2,749	$	3,286

Financing Receivable Credit Quality Indicators

The recorded investment in loans by risk category and by class of loans as of June 30, 2013 and based on the most recent analysis performed follows.  There were no loans rated doubtful at June 30, 2013 and December 31, 2012. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	250	$	22,952	$	3,150	$	1,259	$	27,611
Real estate:
Single-family residential		54,904		-		-		219		55,123
Multi-family residential		-		19,202		2,449		2,850		24,501
Commercial:
Non-owner occupied		176		25,341		2,354		4,692		32,563
Owner occupied		-		21,414		597		2,796		24,807
Land		112		1,363		433		2,964		4,872
Construction		-		1,701		-		-		1,701
Consumer:										-
Home equity lines of credit:										-
Originated for portfolio		11,781		-		-		102		11,883
Purchased for portfolio		1,501		-		425		-		1,926
Other		955		-		-		-		955
	$	69,679	$	91,973	$	9,408	$	14,882	$	185,942

The recorded investment in loans by risk category and by class of loans as of December 31, 2012 follows. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	285	$	21,013	$	2,637	$	1,473	$	25,408
Real estate:
Single-family residential		42,945		-		-		113		43,058
Multi-family residential		-		12,846		5,790		2,939		21,575
Commercial:
Non-owner occupied		322		21,147		2,995		5,486		29,950
Owner occupied		-		16,385		762		2,627		19,774
Land		119		987		434		3,028		4,568
Construction		-		14		-		-		14
Consumer:
Home equity lines of credit:
Originated for portfolio		10,719		-		-		-		10,719
Purchased for portfolio		1,800		-		435		9		2,244
Other		970		-		-		-		970
	$	57,160	$	72,392	$	13,053	$	15,675	$	158,280

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation [Abstract]

Fair value of the options granted, determined, using weighted-average assumption

	Three months ended	Six months ended
	June 30, 2013	June 30, 2013
Risk-free interest rate	1.32%	1.32%
Expected term (years)	7	7
Expected stock price volatility	80%	80%
Dividend yield	0%	0%

Summary of stock option activity in the Plans

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	234,696	$	4.29
Granted	30,000		1.50
Exercised	-		-
Expired	-		-
Cancelled or Forfeited	(24,290)		18.21
Outstanding at end of period	240,406	$	2.53	9.2	$	-
Expected to vest	227,410	$	1.34	9.4	$	-
Exercisable at end of period	12,996	$	23.48	5.0	$	-

Information related to the Plans

	Six months ended June 30,
	2013		2012
Weighted average fair value of options granted	$	1.08	n/a

Summary of changes in the Company's nonvested restricted shares

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2013	1,400	$	6.61
Granted	-		-
Vested	-		-
Forfeited	(1,000)		7.25
Nonvested at June 30, 2013	400	$	5.00

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Stock-Based Compensation (Information Related To Plans) (Details) (USD $)	6 Months Ended
	Jun. 30, 2013
Stock-Based Compensation [Abstract]
Weighted average fair value of options granted	$ 1.08

XML

Summary Of Significant Accounting Policies (Anti Dilutive Average Common Shares) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options	240,406	42,116	240,406	42,116
Stock Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options		67,314		67,314

XML

Stock-Based Compensation (Summary Of Stock Option Activity) (Details) (USD $)	6 Months Ended
	Jun. 30, 2013
Stock-Based Compensation [Abstract]
Shares, Outstanding at beginning of year	234,696
Shares Granted	30,000
Shares Exercised
Shares expired
Shares cancelled or forfeited	(24,290)
Shares, Outstanding at end of year	240,406
Shares, Expected to vest	227,410
Shares, Exercisable at end of period	12,996
Weighted Average Exercise Price, Beginning Balance	$ 4.29
Weighted Average Exercise Price, Granted	$ 1.50
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Cancelled or Forfeited	$ 18.21
Weighted Average Exercise Price, Ending Balance	$ 2.53
Weighted Average Exercise Price, Expected to Vest	$ 1.34
Weighted Average Exercise Price, Exercisable at end of period	$ 23.48
Outstanding at end of period	9 years 2 months 12 days
Expected to vest	9 years 4 months 24 days
Exercisable at end of period	5 years
Intrinsic value, Outstanding at end of year
Intrinsic value, Expected to vest
Intrinsic Value Exercisable at end of period

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Fair Value (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2013	Dec. 31, 2012
Fair Value [Abstract]
Unpaid principal balance of impairment loan at collateral			$ 5,748	$ 5,909
Valuation allowance			1,253	611
Amount of charge-offs on loans	$ 401	$ 1,266

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Loans (Individually Evaluated For Impairment By Class Of Loans) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	$ 4,602		$ 4,602		$ 7,332
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	6,445		6,445		4,460
Impaired Financing Receivable, Unpaid Principal Balance, Total	11,047		11,047		11,792
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	2,970		2,970		5,439
Impaired Financing Receivable, with Related Allowance, Recorded Investment	6,279		6,279		4,415
Impaired Financing Receivable, Recorded Investment, Total	9,249		9,249		9,854
Impaired Financing Receivable, Allocated Loans and Leases	1,559		1,559		830
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	3,037	6,410	3,471	6,181
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	5,834	4,155	5,899	4,161
Impaired Financing Receivable, Average Recorded Investment, Total	8,871	10,565	9,370	10,342
Impaired Financing Receivable, with no Related Allowance, Interest Income, Accrual Method		29		39
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	55	59	110	137
Impaired Financing Receivable, Interest Income, Accrual Method, Total	55	88	110	176
Non-owner occupied [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	2,172		2,172		3,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,186		2,186		2,239
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,505		1,505		2,195
Impaired Financing Receivable, with Related Allowance, Recorded Investment	2,187		2,187		2,239
Impaired Financing Receivable, Allocated Loans and Leases	124		124		105
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	1,510	1,909	1,913	1,571
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	2,191	2,411	2,211	2,404
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	34	36	69	87
Owner occupied [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	2,110		2,110		2,195
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	388		388		396
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,159		1,159		1,244
Impaired Financing Receivable, with Related Allowance, Recorded Investment	388		388		396
Impaired Financing Receivable, Allocated Loans and Leases	7		7		7
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	1,174	413	1,197	422
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	390	406	392	407
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	6	6	12	12
Land [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	416		416		438
Impaired Financing Receivable, with Related Allowance, Recorded Investment	371		371		393
Impaired Financing Receivable, Allocated Loans and Leases	12		12		14
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	377	438	381	461
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	6	6	11	13
Commercial Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	135		135		136
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	971		971		970
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	121		121		121
Impaired Financing Receivable, with Related Allowance, Recorded Investment	971		971		970
Impaired Financing Receivable, Allocated Loans and Leases	632		632		609
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	165	133	169	89
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	849	679	866	687
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	5	9	11	22
Multi-family residential [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	185		185		2,001
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,005		2,005		288
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	185		185		1,879
Impaired Financing Receivable, with Related Allowance, Recorded Investment	1,883		1,883		288
Impaired Financing Receivable, Allocated Loans and Leases	673		673		24
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	188	3,955	192	4,099
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	1,900	90	1,922	91
Impaired Financing Receivable, with no Related Allowance, Interest Income, Accrual Method		29		39
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	1	2	2	3
Single-family residential [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	479		479		129
Impaired Financing Receivable, with Related Allowance, Recorded Investment	479		479		129
Impaired Financing Receivable, Allocated Loans and Leases	111		111		71
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	127	131	127	111
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	$ 3		$ 5

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Securities (Securities With Unrealized Losses) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	$ 4,782	$ 7,974
Less than Twelve Months, Unrealized Loss	29	97
Twelve Months or More, Fair Value
Twelve Months or More, Unrealized Loss
Total, Fair Value	4,782	7,974
Total, Unrealized Loss	29	97
Corporate Debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	3,873	4,365
Less than Twelve Months, Unrealized Loss	22	64
Twelve Months or More, Fair Value
Twelve Months or More, Unrealized Loss
Total, Fair Value	3,873	4,365
Total, Unrealized Loss	22	64
State and Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	909	1,936
Less than Twelve Months, Unrealized Loss	7	20
Twelve Months or More, Fair Value
Twelve Months or More, Unrealized Loss
Total, Fair Value	909	1,936
Total, Unrealized Loss	7	20
Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value		1,673
Less than Twelve Months, Unrealized Loss		13
Twelve Months or More, Fair Value
Twelve Months or More, Unrealized Loss
Total, Fair Value		1,673
Total, Unrealized Loss		$ 13

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Consolidated Balance Sheets [Abstract]
Allowance for loans	$ 6,065	$ 5,237
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	15,935,417	15,936,417
Treasury stock, shares	111,707	111,707

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FHLB Advances

6 Months Ended

Jun. 30, 2013

FHLB Advances [Abstract]

FHLB ADVANCES

NOTE 6 –FHLB ADVANCES

Variable and Fixed Rate Advances from the FHLB were as follows:

	Rate		June 30,2013		December 31, 2012
Fixed Rate Advances
Maturities:
January 2014	3.12%	$	5,000	$	5,000
May 2014	3.06%		5,000		5,000
Total		$	10,000	$	10,000

Each advance is payable at its maturity date, with a prepayment penalty for fixed-rate advances. 

The advances were collateralized as follows:

	June 30, 2013		December 31, 2012
Single-family mortgage loans	$	11,955	$	9,917
Multi-family mortgage loans		5,986		4,968
Commercial real estate loans		4,234		1,185
Securities		3,324		4,707
Cash		3,300		3,300
Total	$	28,799	$	24,077

Based on the collateral pledged to FHLB and CFBank’s holdings of FHLB stock, CFBank was eligible to borrow up to a total of $17,383from the FHLB at June 30, 2013.  In May 2011, CFBank was notified by the FHLB that, due to regulatory considerations, CFBank was only eligible for future advances with a maximum maturity of one year. CFBank was subsequently notified by the FHLB that the maximum maturity for future advances was further reduced to 180 days in November 2011 and 30 days in April 2012. On June 28, 2013, CFBank’s maximum maturity for future advances was increased to one year.

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Consolidates Statements Of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ (554)	$ (684)	$ (1,364)	$ (1,423)
Other comprehensive income (loss):
Change in unrealized holding gains (losses) on securities available for sale	(35)	(305)	(10)	(198)
Reclassification adjustment for gains realized in income		143		143
Net change in unrealized gains (losses)	(35)	(162)	(10)	(55)
Tax effect
Total other comprehensive income (loss)	(35)	(162)	(10)	(55)
Comprehensive income (loss)	$ (589)	$ (846)	$ (1,374)	$ (1,478)

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Fair Value (Financial Instruments Measured At Fair Value On A Non-Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Single-family residential [Member]
Impaired loans:
Impaired loans at Fair Value	$ 368	$ 57
Impaired loans:
Valuation Technique(s)	Comparable sales approach	Comparable sales approach
Fair Value Inputs, Adjustment for differences between the comparable market transactions	2.30%	2.30%
Multi-family residential [Member]
Impaired loans:
Impaired loans at Fair Value	1,342	2,070
Impaired loans:
Valuation Technique(s)	Comparable sales approach	Comparable sales approach
Fair Value Inputs, Adjustment for differences between the comparable market transactions	(32.70%)	(32.70%)
Non-owner occupied [Member]
Impaired loans:
Impaired loans at Fair Value	1,505	1,806
Impaired loans:
Valuation Technique(s)	Comparable sales approach	Comparable sales approach
Fair Value Inputs, Adjustment for differences between the comparable market transactions	(1.25%)	(7.30%)
Owner occupied [Member]
Impaired loans:
Impaired loans at Fair Value	1,159	1,244
Impaired loans:
Valuation Technique(s)	Comparable sales approach	Comparable sales approach
Fair Value Inputs, Adjustment for differences between the comparable market transactions	(0.80%)	(0.80%)
Commercial Segment [Member]
Impaired loans:
Impaired loans at Fair Value	$ 121	$ 121
Impaired loans:
Valuation Technique(s)	Income approach	Income approach
Fair Value Inputs, Adjustment for differences in net operating income expectations	(10.00%)	(10.00%)
Minimum [Member] | Multi-family residential [Member]
Impaired loans:
Fair Value Inputs, Adjustment for differences between the comparable market transactions	(39.00%)	(39.00%)
Minimum [Member] | Non-owner occupied [Member]
Impaired loans:
Fair Value Inputs, Adjustment for differences between the comparable market transactions	(9.74%)	(12.20%)
Minimum [Member] | Owner occupied [Member]
Impaired loans:
Fair Value Inputs, Adjustment for differences between the comparable market transactions	(6.30%)	0.50%
Maximum [Member] | Multi-family residential [Member]
Impaired loans:
Fair Value Inputs, Adjustment for differences between the comparable market transactions	(27.10%)	(27.10%)
Maximum [Member] | Non-owner occupied [Member]
Impaired loans:
Fair Value Inputs, Adjustment for differences between the comparable market transactions	9.18%	16.70%
Maximum [Member] | Owner occupied [Member]
Impaired loans:
Fair Value Inputs, Adjustment for differences between the comparable market transactions	0.50%	6.30%

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 33,197	$ 25,152
Interest-bearing deposits in other financial institutions	2,726	2,726
Securities available for sale	12,155	17,639
Loans held for sale	629	623
Loans, net of allowance of $6,065 and $5,237	179,877	153,043
FHLB stock	1,942	1,942
Foreclosed assets, net	1,538	1,525
Premises and equipment, net	5,252	5,317
Assets held for sale	167	167
Other intangible assets	30	49
Bank owned life insurance	4,470	4,405
Accrued interest receivable and other assets	2,631	2,447
Total assets	244,614	215,035
Deposits
Noninterest bearing	23,536	18,008
Interest bearing	181,143	155,500
Total deposits	204,679	173,508
FHLB advances	10,000	10,000
Advances by borrowers for taxes and insurance	187	241
Accrued interest payable and other liabilities	2,285	2,488
Subordinated debentures	5,155	5,155
Total liabilities	222,306	191,392
Stockholders' equity
Common stock, $.01 par value, shares authorized; 50,000,000 shares issued; 15,935,417 in 2013 and 15,936,417 in 2012	159	159
Additional paid-in capital	47,958	47,919
Accumulated deficit	(22,661)	(21,297)
Accumulated other comprehensive income	97	107
Treasury stock, at cost; 111,707 shares	(3,245)	(3,245)
Total stockholders' equity	22,308	23,643
Total liabilities and stockholder's equity	$ 244,614	$ 215,035

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Loans (Recorded Investment In Nonaccrual Loans By Class Of Loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	$ 5,440	$ 6,356
Real Estate [Member] | Non-owner occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	1,505	2,195
Real Estate [Member] | Owner occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	1,159	1,243
Commercial Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	599	714
Single-family residential [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	171	113
Multi-family residential [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	2,006	2,082
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans
Home equity lines of credit [Member] | Consumer [Member] | Purchased for portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans		$ 9

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Income Taxes [Abstract]
Carryforwards utilize limit before the stock offering closed		$ 163
Unutilized operating loss carryforwards that will expire		20,342
Reduced deferred tax assets and valuation allowance		6,916
Additional bad debt deductions provided by Federal income tax laws	2,250
Deferred tax liability not recorded	$ 765
Corporate income tax rate	34.00%
Significant change in unrecognized tax benefits not expected, period	twelve months

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Regulatory Capital Matters (Actual And Required Capital Amounts And Ratios Of CFBank) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Regulatory Capital Matters [Abstract]
Total Capital to risk weighted assets, Actual Amount	$ 24,352	$ 25,002
Tier 1 (Core) Capital to risk weighted assets, Actual Amount	21,994	22,950
Tier 1 (Core) Capital to adjusted total assets, Actual Amount	21,994	22,950
Tangible Capital to adjusted total assets, Actual Amount	21,994	22,950
Total Capital to risk weighted assets, Actual Ratio	13.17%	15.53%
Tier 1 (Core) Capital to risk weighted assets, Actual Ratio	11.89%	14.26%
Tier 1 (Core) Capital to adjusted total assets, Actual Ratio	9.19%	10.97%
Tangible Capital to adjusted total assets, Actual Ratio	9.19%	10.97%
Total Capital to risk weighted assets, For Capital Adequacy Purposes Amount	14,793	12,878
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Amount	7,396	6,439
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Amount	9,569	8,372
Tangible Capital to adjusted total assets, For Capital Adequacy Purposes Amount	3,588	3,139
Total Capital to risk weighted assets, For Capital Adequacy Purposes Ratio	8.00%	8.00%
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Ratio	4.00%	4.00%
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Ratio	4.00%	4.00%
Tangible Capital to adjusted total assets, For Capital Adequacy Purposes Ratio	1.50%	1.50%
Capital Required to be Well Capitalized	18,491	16,098
Tier One Risk Based Capital Required to be Well Capitalized	11,094	9,659
Tier One Leverage Capital Required to be Well Capitalized	11,961	10,465
Tangible Capital to adjusted total assets, To Be Well Capitalized Under Prompt Corrective Action Regulations, Amount
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	6.00%	6.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%
Tangible Capital to adjusted total assets, To Be Well Capitalized Under Prompt Corrective Action Regulations
Total Capital to risk weighted assets, Required By Terms Of CFBank Order Amount	22,189	19,317
Tier 1 (Core) Capital to risk weighted assets, Required By Terms Of CFBank Order Amount
Tier 1 (Core) Capital to adjusted total assets, Required By Terms Of CFBank Order Amount	18,138	16,744
Tangible Capital to adjusted total assets, Required By Terms Of CFBank Order Amount
Capital Required By Terms Of Cf Bank Order, Ratio	12.00%	12.00%
Tier 1 (Core) Capital to risk weighted assets, Required By Terms Of CFBank Order Ratio
Tier One Leverage Capital To Average Assets, Required By Terms Of CFBank Order, Ratio	8.00%	8.00%
Tangible Capital to adjusted total assets, Required By Terms Of CFBank Order Ratio

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value [Abstract]

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities

	Fair Value Measurements at June 30, 2013 Using
	Significant Other Observable Inputs(Level 2)
Financial Assets:
Securities available for sale:
Corporate debt	$	4,374
State and municipal		1,936
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,217
Collateralized mortgage obligations		4,628
Total securities available for sale	$	12,155
Loans held for sale		629
Yield maintenance provisions (embedded derivatives)	$	716
Interest rate lock commitments	$	28
Financial Liabilities:
Interest-rate swaps	$	716

Assets and liabilities measured at fair value on a non-recurring basis

Fair Value Measurements at June 30, 2013 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	121
Real Estate:
Single-family residential		368
Multi-family residential		1,342
Commercial:
Non-owner occupied		1,505
Owner occupied		1,159
Total impaired loans	$	4,495

Financial instruments measured at fair value on a non-recurring basis

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2013:

		Fair Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted Average)
Impaired loans:
Commercial	$	121	Income approach	Adjustment for differences in net operating income expectations	-10.00%
Commercial real estate:
Single-family residential		368	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.30%
Multi-family residential		1,342	Comparable sales approach	Adjustment for differences between the comparable market transactions	-39.0% to -27.1%(-32.7%)
Commercial:
Non-owner occupied		1,505	Comparable sales approach	Adjustment for differences between the comparable market transactions	-9.74% to 9.18%(-1.25%)
Owner occupied		1,159	Comparable sales approach	Adjustment for differences between the comparable market transactions	-6.3% to 0.5%(-0.8%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measures at fair value on a non-recurring basis at December 31, 2012:

		Fair Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted Average)
Impaired loans:
Commercial	$	121	Income approach	Adjustment for differences in net operating income expectations	-10.00%
Commercial real estate:
Single -family residential		57	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.30%
Multi-family residential		2,070	Comparable sales approach	Adjustment for differences between the comparable market transactions	-39.0% to -27.1%(-32.7%)
Commercial:
Non-owner occupied		1,806	Comparable sales approach	Adjustment for differences between the comparable market transactions	-12.2% to 16.7%(7.3%)
Owner occupied		1,244	Comparable sales approach	Adjustment for differences between the comparable market transactions	6.3% to 0.5%(-0.8%)

Aggregate fair value, contractual balance (including accrued interest) and gain or loss

		June 30, 2013		December 31, 2012
Aggregate fair value	$	629	$	623
Contractual balance		621		595
Gain (loss)		8		28

Amount of gains and losses from changes in fair value included in earnings

	Three months ended June 30,				Six month ended June 30,
	2013		2012		2013		2012
Interest income	$	11	$	7	$	16	$	19
Interest expense		-		-		-		-
Change in fair value		(9)		13		(20)		4
Total change in fair value	$	2	$	20	$	(4)	$	23

Carrying amounts and estimated fair values of financial instruments

The carrying amounts and estimated fair values of financial instruments at June 30, 2013 were as follows:

	Fair Value Measurements at June 30, 2013 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	33,197	$	33,197	$	-	$	-	$	33,197
Interest-bearing deposits in other financial institutions		2,726		2,726		-		-		2,726
Securities available for sale		12,155		-		12,155		-		12,155
Loans held for sale		629		-		629		-		629
Loans, net		179,877		-		-		182,221		182,221
FHLB stock		1,942		-		-		-		n/a
Accrued interest receivable		69		11		59		-		70
Yield maintenance provisions (embedded derivatives)		716		-		716		-		716
Interest rate lock commitments		28		-		28		-		28
Financial liabilities
Deposits	$	(204,679)	$	(88,665)	$	(117,168)	$	-	$	(205,833)
FHLB advances		(10,000)		-		(10,187)		-		(10,187)
Subordinated debentures		(5,155)		-		(2,979)		-		(2,979)
Accrued interest payable		(202)		(1)		(201)		-		(202)
Interest-rate swaps		(716)		-		(716)		-		(716)

The carrying amounts and estimated fair values of financial instruments at December 31, 2012 were as follows:

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income

NOTE 15- ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes within each classification of accumulated other comprehensive income, net of tax, for the three months ended June 30, 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

Changes in Accumulated Other Comprehensive Income by Component
For the Three and Six Months Ended June 30, 2013  (1)
			Three Months ended			Six Months ended
			June 30,2013			June 30,2013
				Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Available-for-Sale Securities
	Accumulated Other Comprehensive Income (Loss)		$	132		$	107
	Other comprehensive income (loss) before reclassifications			(35)			(10)
	Amount reclassified from accumulated other comprehensive income	(2)		-	(2)		-
	Net current-period other comprehensive income (loss)			(35)			(10)
	Accumulated Other Comprehensive Income at June 30, 2013		$	97		$	97
(1)	All amounts are net of tax. Amounts in parentheses indicate a reduction of other comprehensive income.
(2)	There no amounts reclassified out of other comprehensive income for the three and six months ended June, 2013

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Securities (Fair value Of Securities Pledged) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Pledged as collateral for:
FHLB advances	$ 3,324	$ 4,707
Public deposits	1,713	2,199
Interest-rate swaps	787	1,511
Total	$ 5,824	$ 8,417

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Derivative Instruments (Summary Of Derivative Instruments) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Derivative Instruments [Abstract]
Notional amount	$ 7,644	$ 7,750
Weighted average pay rate on interest-rate swaps	3.86%	3.86%
Weighted average receive rate on interest-rate swaps	0.22%	0.24%
Weighted average maturity (years)	4 years 1 month 6 days	4 years 7 months 6 days
Fair value of interest-rate swaps	(716)	(990)
Fair value of yield maintenance provisions	$ 716	$ 990

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Loans (Financing Receivables Credit Quality Indicators) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	$ 185,942	$ 158,280
Non-owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	32,563	29,950
Owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	24,807	19,774
Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	4,872	4,568
Originated for portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	11,883	10,719
Purchased for portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	1,926	2,244
Commercial Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	27,611	25,408
Single-family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	55,123	43,058
Multi-family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	24,501	21,575
Other consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	955	970
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	1,701	14
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	69,679	57,160
Not Rated [Member] | Non-owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	176	322
Not Rated [Member] | Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	112	119
Not Rated [Member] | Originated for portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	11,781	10,719
Not Rated [Member] | Purchased for portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	1,501	1,800
Not Rated [Member] | Commercial Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	250	285
Not Rated [Member] | Single-family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	54,904	42,945
Not Rated [Member] | Other consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	955	970
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	91,973	72,392
Pass [Member] | Non-owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	25,341	21,147
Pass [Member] | Owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	21,414	16,385
Pass [Member] | Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	1,363	987
Pass [Member] | Commercial Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	22,952	21,013
Pass [Member] | Multi-family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	19,202	12,846
Pass [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	1,701	14
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	9,408	13,053
Special Mention [Member] | Non-owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	2,354	2,995
Special Mention [Member] | Owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	597	762
Special Mention [Member] | Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	433	434
Special Mention [Member] | Purchased for portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	425	435
Special Mention [Member] | Commercial Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	3,150	2,637
Special Mention [Member] | Multi-family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	2,449	5,790
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	14,882	15,675
Substandard [Member] | Non-owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	4,692	5,486
Substandard [Member] | Owner occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	2,796	2,627
Substandard [Member] | Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	2,964	3,028
Substandard [Member] | Originated for portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	102
Substandard [Member] | Purchased for portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total		9
Substandard [Member] | Commercial Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	1,259	1,473
Substandard [Member] | Single-family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	219	113
Substandard [Member] | Multi-family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Total	$ 2,850	$ 2,939

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Other Borrowings (Assets Pledged As Collateral With FRB) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Assets pledged as collateral with the FRB	$ 33,074	$ 26,052
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Assets pledged as collateral with the FRB	12,887	9,352
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Assets pledged as collateral with the FRB	$ 20,187	$ 16,700

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Regulatory Order Considerations (Brokered Deposit Maturities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Regulatory Order Considarations [Abstract]
June 30, 2014	$ 17,214
June 30, 2015	3,427
June 30, 2016	6,432
June 30, 2017	199
Brokered deposit	$ 27,272

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income by Component
For the Three and Six Months Ended June 30, 2013  (1)
			Three Months ended			Six Months ended
			June 30,2013			June 30,2013
				Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Available-for-Sale Securities
	Accumulated Other Comprehensive Income (Loss)		$	132		$	107
	Other comprehensive income (loss) before reclassifications			(35)			(10)
	Amount reclassified from accumulated other comprehensive income	(2)		-	(2)		-
	Net current-period other comprehensive income (loss)			(35)			(10)
	Accumulated Other Comprehensive Income at June 30, 2013		$	97		$	97
(1)	All amounts are net of tax. Amounts in parentheses indicate a reduction of other comprehensive income.
(2)	There no amounts reclassified out of other comprehensive income for the three and six months ended June, 2013

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Summary Of Significant Accounting Policies (Earnings (Loss) Per Common Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended			6 Months Ended
	Apr. 12, 2012 security	Jun. 30, 2013	Jun. 30, 2012	Mar. 31, 2012	Jun. 30, 2013	Jun. 30, 2012
Basic
Net loss		$ (554)	$ (684)	$ (1,423)	$ (1,364)	$ (1,423)
Less: Preferred dividends and accretion of discount on preferred stock			(111)			(221)
Less: Net loss allocated to unvested share-based payment awards			3			6
Net loss allocated to common stockholders		$ (554)	$ (792)		$ (1,364)	$ (1,638)
Weighted average common shares outstanding including unvested share-based payment awards		15,823,677	825,491		15,823,869	825,469
Less: Unvested share-based payment awards		(133)	(2,700)		(299)	(3,000)
Average shares		15,823,544	822,791		15,823,570	822,469
Basic earnings (loss) per common share		$ (0.04)	$ (0.96)		$ (0.09)	$ (1.99)
Diluted
Average shares		15,823,544	822,791		15,823,570	822,469
Add: Dilutive effects of assumed exercises of stock options
Add: Dilutive effects of assumed exercises of stock warrant
Average shares and dilutive potential common shares		15,823,544	822,791		15,823,570	822,469
Diluted loss per common share		$ (0.04)	$ (0.96)		$ (0.09)	$ (1.99)
Reverse stock split ratio	0.2

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Fair Value

6 Months Ended

Jun. 30, 2013

Fair Value [Abstract]

FAIR VALUE

NOTE 5 - FAIR VALUE 

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value:

Securities available for sale:  The fair value of securities available for sale is determined using pricing models that vary based on asset class and include available trade, bid and other market information or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).

Loans held for sale, at fair value: Loans held for sale are carried at fair value, as determined by outstanding commitments from third party investors (Level 2).

Derivatives:  The fair value of derivatives is based on valuation models using observable market data as of the measurement date (Level 2).

Impaired loans: The fair value of impaired loans with specific allocations of the ALLL is generally based on recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and foreclosed assets are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by a third-party appraisal management company approved by the Board of Directors annually. Once received, the loan officer or a member of the credit department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are updated as needed based on facts and circumstances associated with the individual properties.  Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties.  Appraisers may make adjustments to the sales prices of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property.  Management applies an additional discount to real estate appraised values, typically to reflect changes in market conditions since the date of the appraisal and to cover disposition costs (including selling expenses) based on the intended disposition method of the property.

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

	Fair Value Measurements at June 30, 2013 Using
	Significant Other Observable Inputs(Level 2)
Financial Assets:
Securities available for sale:
Corporate debt	$	4,374
State and municipal		1,936
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,217
Collateralized mortgage obligations		4,628
Total securities available for sale	$	12,155
Loans held for sale		629
Yield maintenance provisions (embedded derivatives)	$	716
Interest rate lock commitments	$	28
Financial Liabilities:
Interest-rate swaps	$	716

	Fair Value Measurements at December 31, 2012 Using
	Significant Other Observable Inputs(Level 2)
Financial Assets:
Securities available for sale:
Corporate debt	$	4,365
State and municipal		1,986
Issued by U.S. government-sponsored entities and agencies:
Mortgage-backed securities - residential		1,486
Collateralized mortgage obligations		9,802
Total securities available for sale	$	17,639
Loans held for sale		623
Yield maintenance provisions (embedded derivatives)	$	990
Interest rate lock commitments	$	45
Financial Liabilities:
Interest-rate swaps	$	990

The Company had no assets or liabilities measured at fair value on a recurring basis that were measured using Level 1 or Level 3 inputs at June 30, 2013 or December 31, 2012.

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

Fair Value Measurements at June 30, 2013 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	121
Real Estate:
Single-family residential		368
Multi-family residential		1,342
Commercial:
Non-owner occupied		1,505
Owner occupied		1,159
Total impaired loans	$	4,495

Fair Value Measurements at December 31, 2012 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	121
Real Estate:
Single-family residential		57
Multi-family residential		2,070
Commercial:
Non-owner occupied		1,806
Owner occupied		1,244
Total impaired loans	$	5,298

The Company had no assets or liabilities, that were material, measured at fair value on a non-recurring basis that were measured using Level 1 or Level 2 inputs at June 30, 2013 or December 31, 2012. 

The Impaired loan servicing rights, which are carried at fair value at June 30, 2013 and December 31, 2012, are not material based on the value of the asset. 

Impaired loans carried at the fair value of the collateral for collateral dependent loans, had an unpaid principal balance of $5,748 with a valuation allowance of $1,253, at June 30, 2013. There were no write-downs of impaired collateral dependent loans during the three and six months ended June 30, 2013 and $401 and $1,266 during the three and six months ended June 30,2012, respectively.  Impaired loans carried at the fair value of collateral had an unpaid principal balance of $5,909, with a valuation allowance of $611 at December 31, 2012.

During the three and six months ended June 30, 2013, the Company did not have any significant transfers of assets or liabilities between those measured using Level 1, 2 or 3 inputs.  The Company recognizes transfers of assets and liabilities between Level 1 and 2 inputs based on the information relating to those assets and liabilities at the end of the reporting period.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2013:

		Fair Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted Average)
Impaired loans:
Commercial	$	121	Income approach	Adjustment for differences in net operating income expectations	-10.00%
Commercial real estate:
Single-family residential		368	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.30%
Multi-family residential		1,342	Comparable sales approach	Adjustment for differences between the comparable market transactions	-39.0% to -27.1%(-32.7%)
Commercial:
Non-owner occupied		1,505	Comparable sales approach	Adjustment for differences between the comparable market transactions	-9.74% to 9.18%(-1.25%)
Owner occupied		1,159	Comparable sales approach	Adjustment for differences between the comparable market transactions	-6.3% to 0.5%(-0.8%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measures at fair value on a non-recurring basis at December 31, 2012:

		Fair Value	Valuation Technique(s)	Unobservable Inputs	Range (Weighted Average)
Impaired loans:
Commercial	$	121	Income approach	Adjustment for differences in net operating income expectations	-10.00%
Commercial real estate:
Single -family residential		57	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.30%
Multi-family residential		2,070	Comparable sales approach	Adjustment for differences between the comparable market transactions	-39.0% to -27.1%(-32.7%)
Commercial:
Non-owner occupied		1,806	Comparable sales approach	Adjustment for differences between the comparable market transactions	-12.2% to 16.7%(7.3%)
Owner occupied		1,244	Comparable sales approach	Adjustment for differences between the comparable market transactions	6.3% to 0.5%(-0.8%)

Financial Instruments Recorded Using Fair Value Option

The Company has elected the fair value option for loans held for sale.  These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans.  Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment.  None of these loans were 90 days or more past due or on nonaccrual as of June 30, 2013 or December 31, 2012. 

As of June 30, 2013 and December 31, 2012, the aggregate fair value, contractual balance (including accrued interest) and gain or loss were as follows:

		June 30, 2013		December 31, 2012
Aggregate fair value	$	629	$	623
Contractual balance		621		595
Gain (loss)		8		28

The total amount of gains and losses from changes in fair value included in earnings for the three and six months ended June 30, 2013 and 2012 for loans held for sale were:

	Three months ended June 30,				Six month ended June 30,
	2013		2012		2013		2012
Interest income	$	11	$	7	$	16	$	19
Interest expense		-		-		-		-
Change in fair value		(9)		13		(20)		4
Total change in fair value	$	2	$	20	$	(4)	$	23

The carrying amounts and estimated fair values of financial instruments at June 30, 2013 were as follows:

	Fair Value Measurements at June 30, 2013 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	33,197	$	33,197	$	-	$	-	$	33,197
Interest-bearing deposits in other financial institutions		2,726		2,726		-		-		2,726
Securities available for sale		12,155		-		12,155		-		12,155
Loans held for sale		629		-		629		-		629
Loans, net		179,877		-		-		182,221		182,221
FHLB stock		1,942		-		-		-		n/a
Accrued interest receivable		69		11		59		-		70
Yield maintenance provisions (embedded derivatives)		716		-		716		-		716
Interest rate lock commitments		28		-		28		-		28
Financial liabilities
Deposits	$	(204,679)	$	(88,665)	$	(117,168)	$	-	$	(205,833)
FHLB advances		(10,000)		-		(10,187)		-		(10,187)
Subordinated debentures		(5,155)		-		(2,979)		-		(2,979)
Accrued interest payable		(202)		(1)		(201)		-		(202)
Interest-rate swaps		(716)		-		(716)		-		(716)

The carrying amounts and estimated fair values of financial instruments at December 31, 2012 were as follows:

	Fair Value Measurements at December 31, 2012 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	25,152	$	25,152	$	-	$	-	$	25,152
Interest-bearing deposits in other financial institutions		2,726		2,726				-		2,726
Securities available for sale		17,639		-		17,639		-		17,639
Loans held for sale		623		-		623		-		623
Loans, net		153,043		-		-		156,256		156,256
FHLB stock		1,942		-		-		-		n/a
Accrued interest receivable		105		10		95		-		105
Yield maintenance provisions (embedded derivatives)		990		-		990		-		990
Interest rate lock commitments		45		-		45		-		45
Financial liabilities
Deposits	$	(173,508)	$	(75,340)	$	(99,946)	$	-	$	(175,286)
FHLB advances		(10,000)		-		(10,338)		-		(10,338)
Subordinated debentures		(5,155)		-		(2,999)		-		(2,999)
Accrued interest payable		(98)		-		(98)		-		(98)
Interest-rate swaps		(990)		-		(990)		-		(990)

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Interest-Bearing Deposits in Other Financial Institutions

The carrying amounts of interest bearing deposits in other financial institutions approximate fair values and are classified as Level 1.

FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability. 

Loans

Fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposits

The fair values disclosed for demand deposits (e.g., interest and noninterest bearing checking, passbook savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Other Borrowings

The fair values of the Company’s long-term FHLB advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.  The fair values of the commercial line of credit and FHLB short-term variable rate advance are equal to the carrying value due to their short-term nature.  The maturities on these outstanding borrowings would be less than 30 days.

The fair values of the Company’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable/Payable

The carrying amounts of accrued interest approximate fair value resulting in a Level 1 or 2 classification,consistent with the asset or liability with which they are associated.

Off-Balance-Sheet Instruments

The fair value of off-balance-sheet items is not considered material.

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FHLB Advances (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended
	May 31, 2011	Jun. 30, 2013	Apr. 30, 2012	Nov. 30, 2011
FHLB Advances [Abstract]
Amount available of FHLB		$ 17,383
Maximum maturity of future advances	1 year
Reduced maturity of future advances			30 days	180 days

XML

FHLB Advances (Tables)

6 Months Ended

Jun. 30, 2013

FHLB Advances [Abstract]

Advances from the FHLB

	Rate		June 30,2013		December 31, 2012
Fixed Rate Advances
Maturities:
January 2014	3.12%	$	5,000	$	5,000
May 2014	3.06%		5,000		5,000
Total		$	10,000	$	10,000

Schedule of federal home loan advances pledged by assets

	June 30, 2013		December 31, 2012
Single-family mortgage loans	$	11,955	$	9,917
Multi-family mortgage loans		5,986		4,968
Commercial real estate loans		4,234		1,185
Securities		3,324		4,707
Cash		3,300		3,300
Total	$	28,799	$	24,077

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Securities (Proceeds From The Sales Of Securities) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Securities [Abstract]
Proceeds	$ 2,144	$ 2,144
Gross gains	$ 143	$ 143

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Subordinated Debentures

6 Months Ended

Jun. 30, 2013

Subordinated Debentures [Abstract]

SUBORDINATED DEBENTURES

NOTE 8 – SUBORDINATED DEBENTURES

In December 2003, Central Federal Capital Trust I, a trust formed by the Holding Company, closed a pooled private offering of 5,000 trust preferred securities with a liquidation amount of $1 per security.  The Holding Company issued $5,155 of subordinated debentures to the trust in exchange for ownership of all of the common stock of the trust and the proceeds of the preferred securities sold by the trust.  The Holding Company is not considered the primary beneficiary of this trust (variable interest entity); therefore, the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability.  The Holding Company’s investment in the common stock of the trust was $155 and is included in other assets.

The Holding Company may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1, on or after December 30, 2008 at 100% of the principal amount, plus accrued and unpaid interest.  The subordinated debentures mature on December 30, 2033.  The subordinated debentures are also redeemable in whole or in part, from time to time, upon the occurrence of specific events defined within the trust indenture.  There are no required principal payments on the subordinated debentures over the next five years. The Holding Company has the option to defer interest payments on the subordinated debentures for a period not to exceed five consecutive years. The Company’s Board of Directors elected to defer interest payments on the subordinated debt in 2010.

Cumulative deferred interest payments through September 30, 2012 totalling $348 were paid current in December 2012 with the approval of the FED. Cumulative deferred payments subsequent to September 30, 2012 have been accrued and totaled $125 as of June  30, 2013. Cumulative deferred interest payments were $42 at December 31, 2012. Pursuant to

the Holding Company Order, the Holding Company may not, directly or indirectly, incur, issue, renew, rollover, or pay interest or principal on any debt (including the subordinated debentures) or commit to do so, increase any current lines of credit, or guarantee the debt of any entity, without prior written notice to and written non-objection from the FED.

The subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month London Interbank Offered Rate plus 2.85%, which was 3.13% at June 30,2013 and 3.21% at December 31, 2012.

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Regulatory Capital Matters (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Tier One Leverage Capital To Average Assets, Required By Terms Of CFBank Order, Ratio	8.00%	8.00%
Capital Required By Terms Of Cf Bank Order, Ratio	12.00%	12.00%
Total Capital to risk weighted assets as required by CF Bank Orders
Capital contribution from Holding Company	$ 13,500
Tier 1 minimum capital requirement, risk-weighted assets	(4.50%)
Tier 1 minimum capital requirement, risk-weighted assets, risk rate 90 days past due	(150.00%)
Tier 1 minimum capital requirement of common equity, risk-weighted assets	2.50%
Percent of Qualified Thrift Lender test requires	65.00%
Opening Balance in Liquidation Account	$ 14,300
Minimum [Member]
Tier 1 minimum capital requirement, risk-weighted assets	4.00%
Maximum [Member]
Tier 1 minimum capital requirement, risk-weighted assets	6.00%

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Loans

6 Months Ended

Jun. 30, 2013

Loans [Abstract]

LOANS

NOTE 4 – LOANS

The following table presents the recorded investment in loans by portfolio segment.  The recorded investment in loans includes the principal balance outstanding adjusted for purchase premiums and discounts, deferred loan fees and costs and includes accrued interest.

	June 30,		December 31,
	2013		2012
Commercial	$	27,611	$	25,408
Real estate:
Single-family residential		55,123		43,058
Multi-family residential		24,501		21,576
Commercial		62,242		54,291
Construction		1,701		14
Consumer:
Home equity lines of credit		13,809		12,963
Other		955		970
Subtotal		185,942		158,280
Less: ALLL		(6,065)		(5,237)
Loans, net	$	179,877	$	153,043

Commercial loans included $12,538 and$11,782, respectively, of commercial lines of credit which required interest only payments at June 30, 2013 and December 31, 2012.

Home equity lines of credit included $11,658 and $10,447, respectively, of loans which required interest only payments at June 30, 2013 and December 31, 2012.

Mortgage Purchase Program

On December 11, 2012, CFBank entered into a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation.  At June 30, 2013 and December 31,2012, CFBank held $35,763 and $25,373, respectively, of such loans which have been included in single family residential loan totals above.  Through a participation agreement, CFBank agreed to purchase from Northpointe an 80% interest in fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S. The participation agreement provides for CFBank to purchase individually (MERS registered) loans from Northpointe and hold them until funded by the end investor.  The mortgage loan investors include Fannie Mae and Freddie Mac, and other major financial institutions such as Wells Fargo Bank.  This process on average takes approximately 14 days.  Given the short term nature of each of these individual loans, common credit risks such as past due, impairment and trouble debt restructure (TDR), nonperforming, and nonaccrual classification are substantially reduced.  The maximum aggregate purchase interest shall not exceed $45,000.  Northpointe maintains a 20% ownership interest in each loan it participates.  The agreement further calls for full control to be relinquished by the broker to Northpointe and its participants with recourse to the broker after 120 days, at the sole discretion of Northpointe. As such, these purchased loans are classified as portfolio loans.  These loans are 100% risk rated for CFBank capital adequacy purposes.

The ALLL is a valuation allowance for probable incurred credit losses in the loan portfolio based on management’s evaluation of various factors including past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. A provision for loan losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors described in Note 1 to the Consolidated Financial Statements contained in the Company’s 2012 Annual Report that was filed as Exhibit 13.1 to the Company’s Form 10-K for the year ended December 31, 2012. 

The following tables present the activity in the ALLL by portfolio segment for the three and six months ended June 30, 2013:

	Three months ended June 30, 2013
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,409	$	239	$	1,604	$	2,197	$	1	$	220	$	12	$	5,682
Addition to (reduction in) provision for loan losses		31		128		69		(44)		18		125		(3)		324
Charge-offs		-		-		-		-		-		(17)		-		(17)
Recoveries		9		1		57		4		-		3		2		76
Ending balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065

	Six months ended June 30, 2013
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,311	$	332	$	1,396	$	1,946	$	-	$	241	$	11	$	5,237
Addition to (reduction in) provision for loan losses		112		34		248		153		19		102		(18)		650
Charge-offs		-		-		-		-		-		(17)		-		(17)
Recoveries		26		2		86		58		-		5		18		195
Ending balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065

The following tables present the activity in the ALLL by portfolio segment for the three and six months ended June 30, 2012:

	Three months ended June 30, 2012
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	1,802	$	190	$	1,446	$	1,912	$	-	$	274	$	17	$	5,641
Addition to (reduction in) provision for loan losses		(589)		58		(58)		712		-		45		32		200
Charge-offs		(84)		(7)		(18)		(496)		-		(40)		(34)		(679)
Recoveries		248		4		-		2		-		7		2		263
Reclass of ALLL on loan -related commitments (1)		9		-		-		-		-		-		-		9
Ending balance	$	1,386	$	245	$	1,370	$	2,130	$	-	$	286	$	17	$	5,434

	Six months ended June 30, 2012
			Real Estate								Consumer
			Single-		Multi-						Home Equity
	Commercial		family		family		Commercial		Construction		lines of credit		Other		Total
Beginning balance	$	2,281	$	207	$	1,470	$	1,863	$		$	272	$	17	$	6,110
Addition to (reduction in) provision for loan losses		(1,097)		39		312		1,059				64		23		400
Charge-offs		(99)		(7)		(434)		(930)				(60)		(34)		(1,564)
Recoveries		292		6		22		138				10		11		479
Reclass of ALLL on loan -related commitments (1)		9		-		-						-		-		9
Ending balance	$	1,386	$	245	$	1,370	$	2,130	$	-	$	286	$	17	$	5,434

The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on the impairment method as of June 30, 2013:

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	632	$	111	$	673	$	143	$	-	$	-	$	-	$	1,559
Collectively evaluated for impairment		817		257		1,057		2,014		19		331		11		4,506
Total ending allowance balance	$	1,449	$	368	$	1,730	$	2,157	$	19	$	331	$	11	$	6,065
Loans:
Individually evaluated for impairment	$	1,092	$	479	$	2,068	$	5,610	$	-	$	-	$	-	$	9,249
Collectively evaluated for impairment		26,519		54,644		22,433		56,632		1,701		13,809		955		176,693
Total ending loan balance	$	27,611	$	55,123	$	24,501	$	62,242	$	1,701	$	13,809	$	955	$	185,942

The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on the impairment method as of December 31, 2012: 

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	609	$	71	$	24	$	126	$	-	$	-	$	-	$	830
Collectively evaluated for impairment		702		261		1,372		1,820		-		241		11		4,407
Total ending allowance balance	$	1,311	$	332	$	1,396	$	1,946	$	-	$	241	$	11	$	5,237
Loans:
Individually evaluated for impairment		1,091		129		2,167		6,467		-		-		-		9,854
Collectively evaluated for impairment		24,317		42,929		19,409		47,824		14		12,963		970		148,426
Total ending loan balance	$	25,408	$	43,058	$	21,576	$	54,291	$	14	$	12,963	$	970	$	158,280

The following table presents loans individually evaluated for impairment by class of loans at June 30, 2013.  The unpaid principal balance is the contractual principal balance outstanding.  The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs and includes accrued interest. The table presents accrual basis interest income recognized during the three and six months ended June 30, 2013.  Cash payments of interest during the three and six months ended June 30, 2013 totaled $57 and $114, respectively.

	As of June 30, 2013						Three months ended June 30, 2013				Six  months ended June 30, 2013
	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	135	$	121	$	-	$	165	$	-	$	169	$	-
Real estate:
Single-family residential		-		-		-		-		-		-		-
Multi-family residential		185		185		-		188		-		192		-
Commercial:
Non-owner occupied		2,172		1,505		-		1,510		-		1,913		-
Owner occupied		2,110		1,159		-		1,174		-		1,197		-
Land		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other												-		-
Total with no allowance recorded		4,602		2,970		-		3,037		-		3,471		-
With an allowance recorded:
Commercial		971		971		632		849		5		866		11
Real estate:
Single-family residential		479		479		111		127		3		127		5
Multi-family residential		2,005		1,883		673		1,900		1		1,922		2
Commercial:
Non-owner occupied		2,186		2,187		124		2,191		34		2,211		69
Owner occupied		388		388		7		390		6		392		12
Land		416		371		12		377		6		381		11
Construction
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total with an allowance recorded		6,445		6,279		1,559		5,834		55		5,899		110
Total	$	11,047	$	9,249	$	1,559	$	8,871	$	55	$	9,370	$	110

The following table presents loans individually evaluated for impairment by class of loans at December 31, 2012.  The unpaid principal balance is the contractual principal balance outstanding.  The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs and includes accrued interest. The table presents accrual basis interest income recognized during the three and six months ended June 30, 2012.  Cash payments of interest during the three and six months ended June 30, 2012 totaled $50 and $118, respectively

	As of December 31, 2012						Three months ended June 30, 2012				Six  months ended June 30, 2012
	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	136	$	121	$	-	$	133	$	-	$	89	$	-
Real estate:
Single-family residential		-		-		-		-		-		-		-
Multi-family residential		2,001		1,879		-		3,955		29		4,099		39
Commercial:
Non-owner occupied		3,000		2,195		-		1,909		-		1,571		-
Owner occupied		2,195		1,244		-		413		-		422		-
Land		-		-		-		-		-		-		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Total with no allowance recorded		7,332		5,439		-		6,410		29		6,181		39
With an allowance recorded:
Commercial		970		970		609		679		9		687		22
Real estate:
Single-family residential		129		129		71		131		-		111		-
Multi-family residential		288		288		24		90		2		91		3
Commercial:
Non-owner occupied		2,239		2,239		105		2,411		36		2,404		87
Owner occupied		396		396		7		406		6		407		12
Land		438		393		14		438		6		461		13
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		-		-		-
Purchased for portfolio		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Total with an allowance recorded		4,460		4,415		830		4,155		59		4,161		137
Total	$	11,792	$	9,854	$	830	$	10,565	$	88	$	10,342	$	176

The following table presents the recorded investment in nonaccrual loans by class of loans:

	June 30,		December 31,
	2013		2012
Nonaccrual loans:
Commercial	$	599	$	714
Real estate:
Single-family residential		171		113
Multi-family residential		2,006		2,082
Commercial:
Non-owner occupied		1,505		2,195
Owner occupied		1,159		1,243
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-
Purchased for portfolio		-		9
Total nonaccrual and nonperforming loans	$	5,440	$	6,356

Nonaccrual loans include both smaller balance single-family mortgage and consumer loans that are collectively evaluated for impairment and individually classified impaired loans. There were no loans 90 days or more past due and still accruing interest at June 30, 2013 or December 31, 2012.

The following table presents the aging of the recorded investment in past due loans by class of loans as of June 30, 2013:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	-	$	121	$	121	$	27,490	$	478
Real estate:
Single-family residential		1,059		110		149		1,318		53,805		22
Multi-family residential		-		-		-		-		24,501		2,006
Commercial:
Non-owner occupied		-		-		949		949		31,614		556
Owner occupied		-		-		-		-		24,807		1,159
Land		-		-		-		-		4,872		-
Construction		-		-		-		-		1,701		-
Consumer:
Home equity lines of credit:
Originated for portfolio				61		-		61		11,822		-
Purchased for portfolio		126		-		-		126		1,800		-
Other		3		-		-		3		952		-
Total	$	1,188	$	171	$	1,219	$	2,578	$	183,364	$	4,221

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2012:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	65	$	121	$	186	$	25,222	$	593
Real estate:
Single-family residential		1,105		122		74		1,301		41,757		39
Multi-family residential		-		-		-		-		21,576		2,082
Commercial:
Non-owner occupied		40		-		1,611		1,651		28,299		583
Owner occupied		-		-		-		-		19,774		1,244
Land		-		-		-		-		4,568		-
Construction		-		-		-		-		14		-
Consumer:
Home equity lines of credit:
Originated for portfolio		20		-		-		20		10,699		-
Purchased for portfolio		-		-		9		9		2,235		-
Other		18		-		-		18		951		-
Total	$	1,183	$	187	$	1,815	$	3,185	$	155,095	$	4,541

Troubled Debt Restructurings (TDRs):

As of June 30, 2013 and December 31, 2012, TDR’s totaled $6.6 million and $7.0 million, respectively.  The Company allocated $1.6 million and $830 of specific reserves to loans whose terms had been modified in TDRs as of June 30, 2013 and December 31, 2012, respectively.  The Company had not committed to lend any additional amounts as of June 30, 2013 or December 31, 2012 to customers with outstanding loans classified as nonaccrual TDRs.

During the three and six months ended June 30, 2013, there was one single-family residential loan modified as a TDR, where concessions were granted to a borrower experiencing financial difficulties. The modified terms included a reduction in the stated interest rate of the loan from 6.5% to 3.5%, for a period of six months, and a deferral of two interest payments to the end of the loan. The impact to the income statement was approximately $5,200.

During the quarter ended June 30, 2012, the terms of one loan were modified as a TDR, where concessions were granted to a borrower experiencing financial difficulties. The modification of the terms of this non-owner occupied commercial real estate loan included an extension of the maturity date from May 31, 2012 to September 30, 2012 and required a $50 principal repayment at the date of modification.

During the six months ended June 30, 2012, the terms of two loans were modified as TDRs, where concessions were granted to borrowers experiencing financial difficulties. In addition to the loan described in the preceding paragraph, one single-family residential loan was modified as a TDR during the six months ended June 30, 2012 and included a reductionin the stated interest rate of the loan from 10% to 5%, a waiver of a portion of the accrued and unpaid interest, addition of the remaining accrued and unpaid interest to the principal balance and extension of the maturity date from 2034 to 2042. This modification involved a reduction in the stated interest rate of the loan for a period of 30 years.

There were no TDRs in payment default or that became nonperforming during the period ended June 30, 2013 and 2012.  A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms, at which time the loan is re-evaluated to determine whether an impairment loss should be recognized, so that the loan is reported, net, at the present value of estimated future cash flows, or at the fair value of collateral, less cost to sell, if repayment is expected solely from the collateral.

The terms of certain other loans were modified during the quarter ended June 30, 2013 and 2012 that did not meet the definition of a TDR. These loans had a total recorded investment of $6,350 and $5,448 as of June 30, 2013 and 2012, respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties, a delay in a payment that was considered to be insignificant or there were no concessions granted.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Nonaccrual loans include loans that were modified and identified as TDRs and the loans are not performing.  At June 30, 2013 and December 31, 2012, nonaccrual TDRs were as follows:

	June 30,		December 31,
	2013		2012
Commercial	$	478	$	528
Real estate:
Multi-family residential		2,006		2,082
Commercial:
Non-owner occupied		-		388
Owner occupied		265		288
Total	$	2,749	$	3,286

Nonaccrual loans at June 30, 2013 and December 31, 2012 do not include $3,848 and $3,684, respectively, of TDRs where customers have established a sustained period of repayment performance, generally six months, the loans are current according to their modified terms and repayment of the remaining contractual payments is expected. These loans are included in total impaired loans.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.  Management analyzes loans individually by classifying the loans as to credit risk.  This analysis includes commercial, commercial real estate and multi-family residential real estate loans.  Internal loan reviews for these loan types are performed at least annually, and more often for loans with higher credit risk. Adjustments to loan risk ratings are made based on the reviews and at any time information is received that may affect risk ratings.  The following definitions are used for risk ratings:

Special Mention.  Loans classified as special mention have a potential weakness that deserves management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of CFBank’s credit position at some future date.

Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that there will be some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loans not meeting the criteria to be classified into one of the above categories are considered to be not rated or pass-rated loans.  Loans listed as not rated are primarily groups of homogeneous loans.  Past due information is the primary credit indicator for groups of homogenous loans.  Loans listed as pass-rated loans are loans that are subject to internal loan reviews and are determined not to meet the criteria required to be classified as special mention, substandard or doubtful. 

The recorded investment in loans by risk category and by class of loans as of June 30, 2013 and based on the most recent analysis performed follows.  There were no loans rated doubtful at June 30, 2013 and December 31, 2012. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	250	$	22,952	$	3,150	$	1,259	$	27,611
Real estate:
Single-family residential		54,904		-		-		219		55,123
Multi-family residential		-		19,202		2,449		2,850		24,501
Commercial:
Non-owner occupied		176		25,341		2,354		4,692		32,563
Owner occupied		-		21,414		597		2,796		24,807
Land		112		1,363		433		2,964		4,872
Construction		-		1,701		-		-		1,701
Consumer:										-
Home equity lines of credit:										-
Originated for portfolio		11,781		-		-		102		11,883
Purchased for portfolio		1,501		-		425		-		1,926
Other		955		-		-		-		955
	$	69,679	$	91,973	$	9,408	$	14,882	$	185,942

The recorded investment in loans by risk category and by class of loans as of December 31, 2012 follows. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	285	$	21,013	$	2,637	$	1,473	$	25,408
Real estate:
Single-family residential		42,945		-		-		113		43,058
Multi-family residential		-		12,846		5,790		2,939		21,575
Commercial:
Non-owner occupied		322		21,147		2,995		5,486		29,950
Owner occupied		-		16,385		762		2,627		19,774
Land		119		987		434		3,028		4,568
Construction		-		14		-		-		14
Consumer:
Home equity lines of credit:
Originated for portfolio		10,719		-		-		-		10,719
Purchased for portfolio		1,800		-		435		9		2,244
Other		970		-		-		-		970
	$	57,160	$	72,392	$	13,053	$	15,675	$	158,280

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Consolidated Statements Of Stockholders' Equity (Unaudited) (Parenthetical)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Statement Of Stockholders Equity [Abstract]
Stock-based incentive plan, shares	100	600

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Loans (Aging Of Recorded Investment In Past Due Loans By Class Of Loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	$ 1,188	$ 1,183
60 - 89 Days Past Due	171	187
Greater than 90 Days Past Due	1,219	1,815
Total Past Due	2,578	3,185
Loans Not Past Due	183,364	155,095
Nonaccrual Loans Not > 90 Days Past Due	4,221	4,541
Commercial Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
60 - 89 Days Past Due		65
Greater than 90 Days Past Due	121	121
Total Past Due	121	186
Loans Not Past Due	27,490	25,222
Nonaccrual Loans Not > 90 Days Past Due	478	593
Single-family residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,059	1,105
60 - 89 Days Past Due	110	122
Greater than 90 Days Past Due	149	74
Total Past Due	1,318	1,301
Loans Not Past Due	53,805	41,757
Nonaccrual Loans Not > 90 Days Past Due	22	39
Multi-family residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	24,501	21,576
Nonaccrual Loans Not > 90 Days Past Due	2,006	2,082
Other consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	3	18
Total Past Due	3	18
Loans Not Past Due	952	951
Non-owner occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due		40
Greater than 90 Days Past Due	949	1,611
Total Past Due	949	1,651
Loans Not Past Due	31,614	28,299
Nonaccrual Loans Not > 90 Days Past Due	556	583
Owner occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	24,807	19,774
Nonaccrual Loans Not > 90 Days Past Due	1,159	1,244
Land [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	4,872	4,568
Originated for portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due		20
60 - 89 Days Past Due	61
Total Past Due	61	20
Loans Not Past Due	11,822	10,699
Purchased for portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	126
Greater than 90 Days Past Due		9
Total Past Due	126	9
Loans Not Past Due	1,800	2,235
Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	$ 1,701	$ 14

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Loans (Recorded Investment In loans By Portfolio Segment) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Loans [Abstract]
Commercial	$ 27,611		$ 25,408
Single-family residential	55,123		43,058
Multi-family residential	24,501		21,576
Commercial	62,242		54,291
Construction	1,701		14
Home equity lines of credit	13,809		12,963
Other	955		970
Subtotal	185,942		158,280
Less: ALLL	(6,065)	(5,682)	(5,237)	(5,434)	(5,641)	(6,110)
Loans, net	$ 179,877		$ 153,043

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Regulatory Capital Matters (Tables)

6 Months Ended

Jun. 30, 2013

Regulatory Capital Matters [Abstract]

Actual and required capital amounts and ratios of CFBank

							To Be Well
							Capitalized Under			Required
				For Capital			Applicable Regulatory			By Terms Of
	Actual			Adequacy Purposes			Capital Standards			CFBank Order
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
June 30, 2013
Total Capital to risk
weighted assets	$	24,352	13.17%	$	14,793	8.00%	$	18,491	10.00%	$	22,189	12.00%
Tier 1 (Core) Capital to risk
weighted assets		21,994	11.89%		7,396	4.00%		11,094	6.00%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		21,994	9.19%		9,569	4.00%		11,961	5.00%		18,138	8.00%
Tangible Capital to
adjusted total assets		21,994	9.19%		3,588	1.50%		N/A	N/A		N/A	N/A

							To Be Well
							Capitalized Under			Required
				For Capital			Applicable Regulatory			By Terms Of
	Actual			Adequacy Purposes			Capital Standards			CFBank Order
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31,2012
Total Capital to risk
weighted assets	$	25,002	15.53%	$	12,878	8.00%	$	16,098	10.00%	$	19,317	12.00%
Tier 1 (Core) Capital to risk
weighted assets		22,950	14.26%		6,439	4.00%		9,659	6.00%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		22,950	10.97%		8,372	4.00%		10,465	5.00%		16,744	8.00%
Tangible Capital to
adjusted total assets		22,950	10.97%		3,139	1.50%		N/A	N/A		N/A	N/A

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Other Borrowings (Narrative) (Details) (USD $)	Jun. 30, 2013
Other Borrowings [Abstract]
Debt instrument maximum borrowing capacity amount	$ 21,988,000
Line of credit with a commercial bank	$ 1,000,000

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Fair Value (Aggregate Fair Value, Contractual Balance (Including Accrued Interest) And Gain Or Loss) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value [Abstract]
Aggregate fair value	$ 629	$ 623
Contractual balance	621	595
Gain (loss)	$ 8	$ 28

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Regulatory Capital Matters

6 Months Ended

Jun. 30, 2013

Regulatory Capital Matters [Abstract]

REGULATORY CAPITAL MATTERS

NOTE 11 – REGULATORY CAPITAL MATTERS

CFBank is subject to regulatory capital requirements administered by federal banking agencies.  Prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off‑balance-sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action. 

Prompt corrective action regulations provide five classifications:  well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If adequately capitalized, regulatory approval is required to accept brokered deposits.  If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

The CFBank Order required CFBank to have by September 30, 2011, and maintain thereafter, 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets. CFBank met the capital requirement at June 30, 2013 and December 31, 2012 as a result of a $13,500 capital contribution from the Holding Company using net proceeds of the stock offering. However, CFBank will not be considered “well-capitalized” under applicable regulatory capital standards as long as it is subject to individual minimum capital requirements under the CFBank Order.

Actual and required capital amounts and ratios of CFBank are presented below:

							To Be Well
							Capitalized Under			Required
				For Capital			Applicable Regulatory			By Terms Of
	Actual			Adequacy Purposes			Capital Standards			CFBank Order
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
June 30, 2013
Total Capital to risk
weighted assets	$	24,352	13.17%	$	14,793	8.00%	$	18,491	10.00%	$	22,189	12.00%
Tier 1 (Core) Capital to risk
weighted assets		21,994	11.89%		7,396	4.00%		11,094	6.00%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		21,994	9.19%		9,569	4.00%		11,961	5.00%		18,138	8.00%
Tangible Capital to
adjusted total assets		21,994	9.19%		3,588	1.50%		N/A	N/A		N/A	N/A

							To Be Well
							Capitalized Under			Required
				For Capital			Applicable Regulatory			By Terms Of
	Actual			Adequacy Purposes			Capital Standards			CFBank Order
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31,2012
Total Capital to risk
weighted assets	$	25,002	15.53%	$	12,878	8.00%	$	16,098	10.00%	$	19,317	12.00%
Tier 1 (Core) Capital to risk
weighted assets		22,950	14.26%		6,439	4.00%		9,659	6.00%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		22,950	10.97%		8,372	4.00%		10,465	5.00%		16,744	8.00%
Tangible Capital to
adjusted total assets		22,950	10.97%		3,139	1.50%		N/A	N/A		N/A	N/A

In July 2013, the Office of the Comptroller of the Currency and the other federal bank regulatory agencies issued a final rule that will revise their leverage and risk-based capital requirements and the method of calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the rule establishes a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirement unless a one-time opt-in or opt-out is exercised. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

The final rule becomes effective for the Bank on January 1, 2015.  The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective.

The Qualified Thrift Lender test requires at least 65% of assets be maintained in housing‑related finance and other specified areas.  If this test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or CFBank must convert to a commercial bank charter.  Management believes that this test has been met at June 30, 2013 and December 31, 2012.

CFBank converted from a mutual to a stock institution in 1998, and a “liquidation account” was established in the amount of $14,300, which was the net worth reported in the conversion prospectus.  The liquidation account represents a calculated amount for the purposes described below, and it does not represent actual funds included in the consolidated financial statements of the Company.  Eligible depositors who have maintained their accounts, less annual reductions to the extent they have reduced their deposits, would receive a distribution from this account if CFBank liquidated and its assets exceeded its liabilities.  Dividends may not reduce CFBank’s stockholder’s equity below the required liquidation account balance.

Dividend Restrictions

Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year's net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. Currently, CFBank must receive regulatory approval prior to any dividend payments.

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Other Borrowings

6 Months Ended

Jun. 30, 2013

Other Borrowings [Abstract]

OTHER BORROWINGS

NOTE 7 - OTHER BORROWINGS

There were no outstanding borrowings with the Federal Reserve Bank (the FRB) at June 30, 2013 or at December 31, 2012. 

Assets pledged as collateral with the FRB were as follows:

	June 30, 2013		December 31, 2012
Commercial Loans		12,887		9,352
Commercial Real Estate Loans		20,187		16,700
Total	$	33,074	$	26,052

Based on the collateral pledged, CFBank was eligible to borrow up to $21,988 from the FRB at June 30, 2013. 

CFBank had a $1.0 million line of credit with a commercial bank at both June 30, 2013 and December 31, 2012. There were no outstanding borrowings on this line of credit at June 30, 2013 and December 31, 2012.  Interest on this line accrues daily and is variable based on the commercial bank’s cost of funds and current market returns.

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Stock-Based Compensation (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	May 16, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost	$ 29	$ 4	$ 50	$ 10
Stock options canceled or forfeited			(24,290)
Stock Options Exercised
Stock Options Granted			30,000
Unrecognized compensation cost related to nonvested stock options granted under Plans	$ 122		$ 122
Period over which unrecognized compensation costs are expected to be recognized			1 year 7 months 6 days
Nonvested stock options, expected to vest	227,410		227,410
Shares available to be issued, net of option awards under the Plans					1,500,000
Shares, Forfeited			(1,000,000)
2009 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares for stock option grants	200,000		200,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares for stock option grants	1,638,778		1,638,778
Vesting periods exercisable from date of grant			10 years
Stock Options [Member] | 1999 Stock-Based Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares for stock option grants	38,778		38,778
Stock Options [Member] | 2003 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares for stock option grants	100,000		100,000
Stock Options [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods			3 years
Stock Options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods			1 year
Restricted Stock [Member] | 1999 Stock-Based Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares for stock option grants	15,511		15,511
Restricted Stock [Member] | 2009 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares for stock option grants	30,000		30,000
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods			3 years
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods			1 year

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

FEDERAL INCOME TAX

NOTE 14 – INCOME TAXES

The Company maintained a valuation allowance against deferred tax assets at June 30, 2013 and December 31, 2012, based on its estimate of future reversal and utilization. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information.  This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items. Based on these criteria, the Company determined that it was necessary to establish a full valuation allowance against the entire net deferred tax asset.

At year-end 2012, the Company had net operating loss carryforwards of $25,941, which expire at various dates from 2024 to 2032, and alternative minimum tax credit carryforwards of $60, which do not expire.  As a result of the change in stock ownership associated with the stock offering completed in August 2012, within the guidelines of Section 382 of the Internal Revenue Code of 1986, the Company incurred an ownership change. As a result, its ability to utilize carryforwards that arose before the stock offering closed is limited to $163 per year.  Due to this limitation, management determined it is more likely than not that $20,342 of net operating loss carryforwards will expire unutilized and, as required by accounting standards, reduced deferred tax assets and the valuation allowance by $6,916 to reflect this lost realizability as of December 31, 2012.

Federal income tax laws provided additional deductions, totaling $2,250, for thrift bad debt reserves established before 1988. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would total $765 at year-end 2012.  However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded.  Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank makes a distribution that reduces the amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

At June 30, 2013 and December 31, 2012, the Company had no unrecognized tax benefits.  The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months.  

The Company is subject to U.S. federal income tax and is no longer subject to federal examination for years prior to 2009.

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Derivative Instruments

6 Months Ended

Jun. 30, 2013

Derivative Instruments [Abstract]

DERIVATIVE INSTRUMENTS

NOTE 12 – DERIVATIVE INSTRUMENTS 

Interest-rate swaps:  CFBank utilizes interest-rate swaps as part of its asset/liability management strategy to help manage its interest rate risk position, and does not use derivatives for trading purposes.  The notional amount of the interest-rate swaps does not represent amounts exchanged by the parties.  The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest-rate swap agreements.  CFBank was party to interest-rate swaps with a combined notional amount of $7,644 at June 30, 2013 and $7,750 at December 31, 2012.

The objective of the interest-rate swaps is to protect the related fixed rate commercial real estate loans from changes in fair value due to changes in interest rates.  CFBank has a program whereby it lends to its borrowers at a fixed rate with the loan agreement containing a two-way yield maintenance provision, which will be invoked in the event of prepayment of the loan, and is expected to exactly offset the fair value of unwinding the swap.  The yield maintenance provision represents an embedded derivative which is bifurcated from the host loan contract and, as such, the swaps and embedded derivatives are not designated as hedges.  Accordingly, both instruments are carried at fair value and changes in fair value are reported in current period earnings. CFBank currently does not have any derivatives designated as hedges. 

Contingent Features:  The counterparty to CFBank’s interest-rate swaps is exposed to credit risk whenever the interest-rate swaps are in a liability position.  At June 30, 2013, CFBank had pledged $787 in securities as collateral for these derivatives.   Should the liability increase, CFBank will be required to pledge additional collateral. 

Additionally, CFBank’s interest-rate swap instruments contain provisions that require CFBank to remain well capitalized under regulatory capital standards. The interest-rate swaps could be called by the counterparty as a result of CFBank’s failure to maintain well-capitalized status under regulatory capital standards due to the CFBank Order.While the

counterparty has not requested payment at this time, it may elect to do so at any time while CFBank fails to qualify as “well capitalized” under regulatory capital standards. If the counterparty elected to request payment, CFBank would be required to remit $716 based on the June 30,2013 valuation of the interest-rate swaps. The yield maintenance provisions may not be unwound to offset the repayment of the interest-rate swaps, as they may only be invoked in the event of prepayment of the borrowers’ loans.  Should market interest rates decrease from June 30, 2013 levels, the payment may increase in the event the swaps are called.   In the event the interest-rate swaps are called and CFBank is unable to replace them, CFBank will be exposed to the market risk of the valuation of the yield maintenance provisions and, absent the borrowers prepaying the loans, as of June 30, 2013 would incur a net $716 expense, subject to valuation fluctuations, over the remaining lives of the related loans.

Summary information about the derivative instruments is as follows:

	30-Jun-13		31-Dec-12
Notional amount	$	7,644	$	7,750
Weighted average pay rate on interest-rate swaps		3.86%		3.86%
Weighted average receive rate on interest-rate swaps		0.22%		0.24%
Weighted average maturity (years)		4.1		4.6
Fair value of interest-rate swaps	$	(716)	$	(990)
Fair value of yield maintenance provisions		716		990

The fair value of the yield maintenance provisions and interest-rate swaps is recorded in other assets and other liabilities, respectively, in the consolidated balance sheet.  Changes in the fair value of the yield maintenance provisions and interest-rate swaps are reported currently in earnings, as other noninterest income in the consolidated statements of operations.  There were no net gains or losses recognized in earnings related to yield maintenance provisions or interest-rate swaps for the three or six months ended June 30, 2013 or 2012.

Mortgage banking derivatives: Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market are considered derivatives.  These mortgage banking derivatives are not designated in hedge relationships.  The Company had approximately $4,756 and $2,079 of interest rate lock commitments related to residential mortgage loans at June 30, 2013 and December 31, 2012, respectively.  The fair value of these mortgage banking derivatives was reflected by a derivative asset of $28 and $45 at June 30, 2013 and December 31, 2012, respectively, which was included in other assets in the consolidated balance sheet. Fair values were estimated based on anticipated gains on the sale of the underlying loans. Changes in the fair values of these mortgage banking derivatives are included in net gains on sales of loans. 

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013	May 15, 2013
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Entity Registrant Name	CENTRAL FEDERAL CORP
Entity Central Index Key	0001070680
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		15,823,710

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Contingent Liabilities

6 Months Ended

Jun. 30, 2013

Contingent Liabilities [Abstract]

CONTINGENT LIABILITIES

NOTE 13 – CONTINGENT LIABILITIES

CFBank participates in a multi-employer contributory trusteed pension plan.  On August 17, 2012, CFBank was notified by the trustees of the plan that, due to CFBank’s financial performance and the CFBank Order, it was required to make a contribution or provide a letter of credit in the amount of the funding shortfall plus estimated cost of annuitization of benefits in the plan, which was determined to be $908.   CFBank obtained a letter of credit from Comerica Bank for this amount.  The cost of obtaining the letter of credit was $9. CFBank may be required to make additional contributions or provide additional amounts via an expanded letter of credit if the funding shortfall increases in the future.  If CFBank’s financial condition should worsen in the future, the trustee may execute the letter of credit, resulting in a charge to CFBank. 

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Fair Value (Carrying Amounts And Estimated Fair Values Of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial assets
Cash and cash equivalents	$ 33,197	$ 25,152
Interest-bearing deposits in other financial institutions	2,726	2,726
Securities available for sale	12,155	17,639
Loans held for sale	629	623
Loans, net	182,221	156,256
Accrued interest receivable	70	105
Yield maintenance provisions (embedded derivatives)	716	990
Interest rate lock commitments	28	45
Financial liabilities
Deposits	(205,833)	(175,286)
Subordinated debentures	(2,979)	(2,999)
Accrued interest payable	(202)	(98)
Interest-rate swaps	(716)	(990)
Fair Value, Inputs, Level 1 [Member]
Financial assets
Cash and cash equivalents	33,197	25,152
Interest-bearing deposits in other financial institutions	2,726	2,726
Accrued interest receivable	11	10
Financial liabilities
Deposits	(88,665)	(75,340)
Accrued interest payable	(1)
Fair Value, Inputs, Level 2 [Member]
Financial assets
Securities available for sale	12,155	17,639
Loans held for sale	629	623
Accrued interest receivable	59	95
Yield maintenance provisions (embedded derivatives)	716	990
Interest rate lock commitments	28	45
Financial liabilities
Deposits	(117,168)	(99,946)
Subordinated debentures	(2,979)	(2,999)
Accrued interest payable	(201)	(98)
Interest-rate swaps	(716)	(990)
Fair Value, Inputs, Level 3 [Member]
Financial assets
Loans, net	182,221	156,256
Carrying Value [Member]
Financial assets
Cash and cash equivalents	33,197	25,152
Interest-bearing deposits in other financial institutions	2,726	2,726
Securities available for sale	12,155	17,639
Loans held for sale	629	623
Loans, net	179,877	153,043
FHLB stock	1,942	1,942
Accrued interest receivable	69	105
Yield maintenance provisions (embedded derivatives)	716	990
Interest rate lock commitments	28	45
Financial liabilities
Deposits	(204,679)	(173,508)
Subordinated debentures	(5,155)	(5,155)
Accrued interest payable	(202)	(98)
Interest-rate swaps	(716)	(990)
Federal Home Loan Bank Advances [Member]
Financial liabilities
FHLB	(10,187)	(10,338)
Federal Home Loan Bank Advances [Member] | Fair Value, Inputs, Level 2 [Member]
Financial liabilities
FHLB	(10,187)	(10,338)
Federal Home Loan Bank Advances [Member] | Carrying Value [Member]
Financial liabilities
FHLB	$ (10,000)	$ (10,000)

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Fair Value (Amount Of Gains And Losses From Changes In Fair Value Included In Earnings) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair Value [Abstract]
Interest income	$ 11	$ 7	$ 16	$ 19
Change in fair value	(9)	13	(20)	4
Total change in fair value	$ 2	$ 20	$ (4)	$ 23