<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>3
<FILENAME>l17961aexv13w1.txt
<DESCRIPTION>EXHIBIT 13.1 ANNUAL REPORT
<TEXT>
<PAGE>
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                                                                    EXHIBIT 13.1

 ANNUAL REPORT TO SECURITY HOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

Table of Contents

<TABLE>
<CAPTION>
                                                             Page
                                                             ----
<S>                                                          <C>
Message to Shareholders                                        3

Management's Discussion and Analysis of
Financial Condition and Results of Operations
Selected Financial and Other Data                              4
General                                                        6
Forward-Looking Statements                                     6
Management Strategy                                            7
Financial Condition                                            8
Comparison of Results of Operations for 2005 and 2004         10
Comparison of Results of Operations for 2004 and 2003         12
Quantitative and Qualitative Disclosures about Market Risk    16
Liquidity and Capital Resources                               17
Impact of Inflation                                           17
Critical Accounting Policies                                  17
Market Prices and Dividends Declared                          18

Financial Statements
Report of Independent Registered Public Accounting Firm       19
Consolidated Financial Statements                             20
Notes to Consolidated Financial Statements                    26

Board of Directors                                            48

Officers                                                      48

CFBank Office Locations                                       48

Corporate Data
Annual Report                                                 48
Annual Meeting                                                48
Shareholder Services                                          48
</TABLE>

<PAGE>

Message to Shareholders

Dear Shareholders,

Change, growth, execution, discovery and restructuring are all words that are
applicable to the successful implementation of our vision. Over the past three
years we have asked you, our shareholders, to allow us an opportunity to build
an outstanding community bank that is focused on growth and a fanatical
attention to detail and customer service. You have been patient as we have
undergone a number of changes and we are appreciative and thankful.

During this past year we made additional tough decisions that required
restructuring and added expense in the short term. At the same time we made
substantial investments for the future that are required for the foundation of a
strong, growth oriented community bank.

In February 2005 Mark Allio took the reins as CEO and he has brought us years of
residential lending, management experience and financial accounting expertise.
Dave Vernon, Ray Heh and the other members of the commercial banking team
continued to lead our expansion into business financial services. And expand we
did. Total loans grew 29% during the year. Specifically, commercial loans,
commercial real estate and multi-family loans grew 37.5%. On the consumer side
we focused our attention on Home Equity Lines of Credit which grew over 302%
during the year.

We also saw substantial growth in deposits which grew 25%; while certificates of
deposits grew 48%.

The growth added significantly to our net interest income for the year, which
increased 24%.

We are approaching the point where the growth will be sufficient to bring about
the profitability we envisioned when we implemented our growth and expansion
plan at the beginning of 2003.

In the fourth quarter of the year, we announced and executed an offering of 2.3
million shares of common stock. Proceeds from issuing the additional shares have
provided us with the needed capital for continued growth. The offering was
completed in January 2006 and we have received the $14.5 million net proceeds
from the offering.

Our promise of creating value for our customers, the communities we serve and
for our shareholders continues. Systemic, sustainable and profitable growth will
be our focus for 2006.

We look forward to the coming year and the opportunity to build on the
accomplishments of 2005. We are growing and becoming stronger. Thank you for
your support.


Mark S. Allio
Chairman, President and CEO


David C. Vernon
Vice-Chairman


                                      -2-

<PAGE>

         Management's Discussion and Analysis of Financial Condition and
                              Results of Operations

                        SELECTED FINANCIAL AND OTHER DATA

The information in the following tables should be read in conjunction with our
Consolidated Financial Statements, the related Notes and Management's Discussion
and Analysis of Financial Condition and Results of Operations as contained in
this report.

<TABLE>
<CAPTION>
                                                        AT DECEMBER 31,
                                     ----------------------------------------------------
                                       2005       2004       2003       2002       2001
                                     --------   --------   --------   --------   --------
                                                    (DOLLARS IN THOUSANDS)
<S>                                  <C>        <C>        <C>        <C>        <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets                         $173,021   $171,005   $107,011   $110,551   $120,927
Cash and cash equivalents               2,972     32,675      8,936     12,861      4,329
Securities available for sale          30,872     13,508     27,126      1,439      2,092
Securities held to maturity                --         --         --     17,822     23,343
Loans, net(1)                         124,026    108,149     58,024     62,565     70,570
Allowance for loan losses               1,495        978        415        361        373
Nonperforming assets                      800        418        934        783        985
Foreclosed assets                          --        132        193          2         98
Goodwill                                   --      1,749         --         --         --
Other intangible assets                    --        299         --         --         --
Deposits                              127,588    101,624     73,358     74,690     76,168
FHLB advances                          22,995     41,170      7,500     11,430     18,393
Other borrowings                           --      2,249         --      4,900      7,000
Subordinated debentures                 5,155      5,155      5,155         --         --
Total shareholders' equity             16,081     19,507     19,856     17,583     18,160
</TABLE>

<TABLE>
<CAPTION>
                                              FOR THE YEAR ENDED DECEMBER 31,
                                     ------------------------------------------------
                                       2005       2004       2003      2002     2001
                                     --------   --------   --------   ------   ------
                                                  (DOLLARS IN THOUSANDS)
<S>                                  <C>        <C>        <C>        <C>      <C>
SUMMARY OF OPERATIONS:
Total interest income                $ 8,691    $ 6,144    $ 5,435    $7,067   $9,588
Total interest expense                 3,723      2,149      3,521     3,462    5,299
                                     -------    -------    -------    ------   ------
   Net interest income                 4,968      3,995      1,914     3,605    4,289
Provision for loan losses                674        646        102        19       62
                                     -------    -------    -------    ------   ------
   Net interest income after
      provision for loan losses        4,294      3,349      1,812     3,586    4,227
Noninterest income:
   Net gain (loss) on sale of
      securities                          --        (55)        42        16       15
   Other                                 866        592        714       549      169
                                     -------    -------    -------    ------   ------
      Total noninterest income           866        537        756       565      184
Impairment loss on goodwill and
   intangibles                         1,966         --         --        --       --
Noninterest expense (12)               6,861      6,420      5,930     3,164    3,501
                                     -------    -------    -------    ------   ------
Income (loss) before income taxes     (3,667)    (2,534)    (3,362)      987      910
Income tax expense (benefit)            (377)      (872)      (988)      313      312
                                     -------    -------    -------    ------   ------
      Net income (loss)              $(3,290)   $(1,662)   $(2,374)   $  674   $  598
                                     =======    =======    =======    ======   ======
</TABLE>

                                                    (See footnotes on next page)


                                      -3-

<PAGE>

         Management's Discussion and Analysis of Financial Condition and
                              Results of Operations

<TABLE>
<CAPTION>
                                                                AT OR FOR THE YEAR ENDED DECEMBER 31,
                                                          --------------------------------------------------
                                                            2005       2004       2003       2002      2001
                                                          --------   -------    -------    -------   -------
<S>                                                       <C>        <C>        <C>        <C>       <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:

PERFORMANCE RATIOS:(2) (10)
Return on average assets                                    (2.02%)    (1.23%)    (2.19%)     0.58%     0.45%
Return on average equity                                   (17.71%)    (8.60%)   (12.34%)     3.76%     3.32%
Average yield on interest-earning assets(3)                  5.93%      5.03%      5.62%      6.98%     7.71%
Average rate paid on interest-bearing liabilities            2.75%      1.93%      2.63%      3.63%     4.65%
Average interest rate spread(4)                              3.18%      3.10%      2.99%      3.35%     3.06%
Net interest margin, fully taxable equivalent(5) (11)        3.39%      3.27%      3.28%      3.56%     3.45%
Interest-earning assets to interest-bearing liabilities    108.28%    109.82%    113.38%    106.09%   109.17%
Efficiency ratio(6)                                        151.30%    139.96%    225.65%     76.17%    78.53%
Noninterest expense to average assets                        5.43%      4.74%      5.47%      2.74%     2.63%
Dividend payout ratio                                         n/m        n/m        n/m       83.7%    81.58%

CAPITAL RATIOS:(2)
Equity to total assets at end of period                      9.29%     11.41%     18.56%     15.90%    15.02%
Average equity to average assets                            11.43%     14.26%     17.76%     15.54%    13.54%
Tangible capital ratio (9)                                   6.90%      8.10%     13.90%     18.90%    18.40%
Core capital ratio (9)                                       6.90%      8.10%     13.90%     18.90%    18.40%
Risk-based capital ratio (9)                                10.10%     12.20%     21.60%     38.60%    35.70%

ASSET QUALITY RATIOS:(2)
Nonperforming loans to total loans (7)                       0.64%      0.26%      1.28%      1.25%     1.25%
Nonperforming assets to total assets(8)                      0.46%      0.24%      0.87%      0.71%     0.81%
Allowance for loan losses to total loans                     1.19%      0.90%      0.71%      0.57%     0.53%
Allowance for loan losses to nonperforming loans (7)       186.88%    341.96%     56.01%     46.22%    42.24%
Net charge-offs to average loans                             0.14%      0.10%      0.08%      0.05%     0.05%

PER SHARE DATA:
Basic earnings (loss) per share                           $ (1.49)   $ (0.82)   $ (1.31)   $  0.44   $  0.38
Diluted earnings (loss) per share                           (1.49)     (0.82)     (1.31)      0.43      0.38
Dividends declared                                           0.36       0.36       0.36       0.36      0.31
Tangible book value per share at end of period               7.17       7.99       9.81      10.68     10.42
</TABLE>

----------
(1)  Loans, net represents gross loans receivable net of the allowance for loan
     losses, loans in process and deferred loan origination fees.

(2)  Asset quality ratios and capital ratios are end-of-period ratios. All other
     ratios are based on average monthly balances during the indicated periods.

(3)  Calculations of yield are presented on a taxable equivalent basis using the
     federal income tax rate of 34%.

(4)  The average interest rate spread represents the difference between the
     weighted average yield on average interest-earning assets and the weighted
     average cost of average interest-bearing liabilities.

(5)  The net interest margin represents net interest income as a percent of
     average interest-earning assets.

(6)  The efficiency ratio equals noninterest expense divided by net interest
     income plus noninterest income (excluding gains or losses on securities
     transactions).

(7)  Nonperforming loans consist of nonaccrual loans and other loans 90 days or
     more past due.

(8)  Nonperforming assets consist of nonperforming loans, other repossessed
     assets and REO.

(9)  Regulatory capital ratios of CFBank.

(10) Performance ratios for the year ended December 31, 2005 were significantly
     affected by the pre-tax $2.0 million impairment loss on goodwill and
     intangibles. Following are performance ratios excluding this charge:

<TABLE>
<S>                                                   <C>
     Return on average assets                          (0.86%)
     Return on average equity                          (7.27%)
     Efficiency ratio                                 117.60%
     Ratio of noninterest expense to average assets     4.20%
</TABLE>

     Reconciliation of GAAP net loss to loss excluding the impairment loss on
     goodwill and intangibles:

<TABLE>
<S>                                                   <C>
     GAAP net loss                                    $(3,290)
     Impairment loss on goodwill and intangibles,
        net of tax                                      1,893
                                                      -------
     Loss excluding impairment loss on goodwill and
        intangibles                                   $(1,397)
                                                      =======
     Diluted loss per share                           $ (0.63)
                                                      =======
</TABLE>

(11) Calculated excluding the $1.3 million penalty on prepayment of FHLB
     advances in 2003.

(12) Excludes the $2.0 million impairment loss in 2005.


                                      -4-
<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

GENERAL

Central Federal Corporation is a savings and loan holding company incorporated
in Delaware in 1998. Our primary business is the operation of our principal
subsidiary, CFBank, a federally chartered savings association formed in Ohio in
1892.

We are a community-oriented financial institution offering a variety of
financial services to meet the needs of the communities we serve. 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. We also invest in consumer loans, construction and land loans
and securities.

We emphasize personalized service, access to decision makers, timely response to
loan requests and loan processing and the convenience of telephone banking,
corporate cash management and online internet banking for our depositors.

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 Columbus, Ohio; and Columbiana County through our offices
in Calcutta and Wellsville, Ohio. We have a residential mortgage origination
office in Akron, Ohio. We originate commercial and conventional real estate
loans and business loans throughout Ohio.

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

Our results of operations are dependent primarily on net interest income, which
is the difference between the interest income earned on loans and securities and
the 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 and deposit flows. Net income is also
affected by, among other things, loan fee income, provisions for loan losses,
service charges, gains on loan sales, operating expenses and franchise and
income taxes. Operating expenses principally consist of employee compensation
and benefits, occupancy and other general and administrative expenses. Results
of operations are significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, government policies
and actions of regulatory authorities. Future changes in applicable laws,
regulations or government policies may also materially impact our performance.

FORWARD-LOOKING STATEMENTS

This Annual Report contains "forward-looking statements" which may be identified
by the use of such words as "may," "believe," "expect," "anticipate," "should,"
"plan," "estimate," "predict," "continue" and "potential" or the negative of
these terms or other


                                       -5-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

comparable terminology. Examples of forward-looking statements include, but are
not limited to, estimates with respect to our financial condition, results of
operations and business that are subject to various factors which could cause
actual results to differ materially from these estimates. These factors include,
but are not limited to (i) general and local economic conditions, (ii) changes
in interest rates, deposit flows, demand for mortgages and other loans, real
estate values and competition, (iii) changes in accounting principles, policies
or guidelines, (iv) changes in legislation or regulation; and (v) other
economic, competitive, governmental, regulatory and technological factors
affecting our operations, pricing, products and services.

Any or all of the forward-looking statements in this Annual Report and in any
other public statements we make may turn out to be wrong. They can be affected
by inaccurate assumptions we might make or by known or unknown risks and
uncertainties. Consequently, no forward-looking statement can be guaranteed. We
do not intend to update any of the forward-looking statements after the date of
this Annual Report or to conform these statements to actual results.

MANAGEMENT STRATEGY

From the time of our mutual-to-stock thrift conversion in 1998 through 2002, we
operated as an overcapitalized company exhibiting limited growth potential and
earnings that were well below industry averages in terms of returns on average
assets and equity. In order to increase our growth potential and earnings and to
more effectively deploy our capital, the Board of Directors recognized that we
needed to strengthen our management team, move into more rapidly growing markets
and expand into business banking in order to be properly positioned to deliver
long-term shareholder value.

At the beginning of 2003, the Board of Directors adopted a plan which called for
adding experienced bankers to the management team, converting to a new data
processing system, opening new offices in Fairlawn and Columbus and expanding
into business financial services. The plan also called for other structural
changes. Implementing the plan has resulted in increased expenses in the
short-term, and our level of net interest income has not been sufficient to
cover the increased overhead levels since we embarked on this strategy. We have
undertaken significant restructuring costs, such as severance costs, termination
of our Employee Stock Ownership Plan, freezing our defined benefit plan and
restructuring our Federal Home Loan Bank (FHLB) debt. We believe that we have
largely completed restructuring our management team and balance sheet, and
believe that we are positioned to increase shareholder value as we become a more
profitable community bank and continue building on the growth we have achieved
in the past three years. While we recognize that we have many well-established
competitors in our new markets, we believe that we will be able to achieve
significant growth in these markets over the next several years. Our stock
offering in January 2006 provided approximately $14.5 million in additional
capital which has enabled us to expand our lending limit and further enhance our
ability to expand in the markets we serve.


                                       -6-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

Our strategy to increase growth and profitability has the following components:

-    Management -- In 2003, we began to put in place a strong senior management
     team with extensive banking experience. We believe it is unusual for a
     community bank to have a management team with such depth of experience and
     expertise. There has been significant industry consolidation in our markets
     in recent years, and we believe a substantial segment of the market is
     eager to do business with experienced bankers who are willing and able to
     provide personal service and prompt decisions.

-    Growth Markets -- With the change in management, we also adopted an
     ambitious growth plan and expanded into new markets. We opened offices in
     Columbus and Fairlawn, Ohio, where higher population and median income
     levels offer far greater potential for growth and profitability. Along with
     our expansion into these new markets, we shifted our focus to more fully
     serving the more profitable commercial and commercial real estate loan
     markets. We also enhanced our mortgage lending capabilities by positioning
     ourselves to originate mortgages utilizing the internet.

-    Customer Service -- We have differentiated ourselves from the competition
     by providing personalized service and access to experienced decision makers
     with the goal of meeting the individual financial needs and objectives of
     each customer. We limit the number of accounts served by each of our
     officers so that CFBank clients receive the highest level of personal
     service. We also provide courier service for depositors, and we are a
     leader in utilizing technology to enhance the level of service we provide.

-    Asset Quality -- Historically, we have had excellent asset quality, which
     we have been careful to maintain. We have a team of very experienced
     lenders, and believe we have developed a stronger credit review process
     than would typically be seen at a community bank. With an increased legal
     lending limit as a result of our recent stock offering, we plan to
     significantly increase our loan portfolio while maintaining superior asset
     quality through conservative underwriting practices.

We continued to successfully execute our plan for growth during 2005.
Commercial, commercial real estate and multi-family loans increased $19.8
million or 37.5% during 2005 and totaled $72.5 million at December 31, 2005.
Home equity lines of credit increased $17.9 million or 302.4% during 2005 and
totaled $23.9 million at year-end, including the purchase an $8.8 million pool
of these loans in October 2005. Deposits increased $26.0 million or 25.5% during
2005 and totaled $127.6 million at year-end.

This growth positively impacted net interest income which increased 24.4% and
totaled $5.0 million in 2005 compared to $4.0 million in 2004. Net interest
margin increased to 3.39% during 2005 compared to 3.27% during 2004.

In January 2006, we successfully completed the offering of 2.3 million shares of
common stock at a purchase price of $7.00 per share raising additional capital
of approximately $14.5 million after offering expenses and underwriting
commissions. The proceeds from this offering provided the capital needed to take
advantage of opportunities as we continue to execute our strategy of growth.


                                       -7-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

Profitability during 2005 was negatively impacted by pretax operating losses of
Reserve Mortgage Services (Reserve), our mortgage banking division. We expected
the division's performance to be immediately accretive to earnings, but lower
than projected loan origination and sales volumes resulted in losses. We
recorded a non-cash after-tax impairment loss of $1.9 million in the quarter
ended September 30, 2005 to write-off the value of goodwill and other intangible
assets related to the October 2004 acquisition of Reserve. Recognition of the
impairment loss had no effect on the regulatory capital ratios of CFBank or
tangible book value of the Company.

In December 2005, a redemption of $1.3 million in FHLB stock resulted in a $1.0
million gain for tax purposes which utilized a portion of our net operating loss
carryforward. The stock redemption resulted in no gain for book purposes but did
result in the recognition of federal income tax expense of $344,000, which was a
non-cash, non-recurring expense reflecting the tax liability associated with
FHLB stock dividends received from 1978 through 1997 which reduced the basis of
the shares redeemed for which no deferred tax liability had been established.

Profitability during 2005 was also impacted by expenses associated with
additions to management and staff necessary to support growth, operating
expenses associated with expansion into new markets and provisions for loan
losses resulting from increased commercial, commercial real estate and
multi-family residential lending. Current projections indicate improved
performance in 2006 that is significantly dependent on our ability to continue
to grow. Operating expenses which were essential for our expansion into business
and financial services require the support of a larger asset base and resultant
increased earnings to achieve profitability.

We are not aware of any market or institutional trends, other events or
uncertainties that are expected to have a material effect on liquidity, capital
resources or operations. We are not aware of any current recommendations by
regulators which would have a material effect if implemented.

FINANCIAL CONDITION

GENERAL. Total assets at December 31, 2004 included $30.0 million in overnight
investments at a positive spread to the FHLB advances used to fund the
investment. As short-term interest rates increased and the spread between the
investment and borrowing declined, the investments were liquidated and cash was
used to repay the advances during the first quarter of 2005. The $2.0 million
increase in total assets to $173.0 million at December 31, 2005 from $171.0
million at December 31, 2004 occurred even though assets and liabilities were
reduced by $30 million as a result of unwinding the arbitrage transaction. The
remaining increase in total assets was due to $19.8 million growth in commercial
loans and $17.9 million growth in home equity lines of credit offset by the $2.0
million pre-tax impairment charge discussed previously. Loan growth was funded
by deposit growth and FHLB advances.


                                       -8-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

CASH AND CASH EQUIVALENTS. Cash and cash equivalents totaled $3.0 million at
December 31, 2005, a decline of $29.7 million from $32.7 million at December 31,
2004 due to the use of cash to repay FHLB advances as discussed above.

SECURITIES. Securities available for sale increased $17.4 million during the
year and totaled $30.9 million at December 31, 2005 compared to $13.5 million at
December 31, 2004. The increase in the portfolio was the result of a
securitization of single-family residential mortgage loans held in our portfolio
with an outstanding principal balance of $18.6 million with Freddie Mac in the
second quarter of 2005. The securitization increased liquidity as the securities
retained are readily marketable and held as available-for-sale. Credit risk on
the loans was eliminated as a result of the securitization and CFBank's
risk-based capital requirement was reduced.

LOANS. Loans, net totaled $124.0 million at December 31, 2005 compared to $108.1
million at December 31, 2004. Not considering the securitization transaction
which reduced net mortgage balances by $18.5 million, overall loan balances
increased by $34.4 million, or 38.4% driven by growth in commercial, commercial
real estate, multi-family loans and home equity lines of credit which are an
integral focus of our strategic growth plan. Commercial, commercial real estate
and multi-family loans increased $19.8 million or 37.5% during 2005 and totaled
$72.5 million at December 31, 2005 compared to $52.7 million at December 31,
2004 as we continued to focus on lending to businesses. Home equity lines of
credit increased $17.9 million or 302.4% during 2005 and totaled $23.9 million
at year-end 2005 compared to $6.0 million at year-end 2004. Growth in home
equity lines of credit included the purchase of an $8.8 million pool of these
loans in October 2005.

FEDERAL HOME LOAN BANK STOCK. FHLB stock declined $1.1 million during 2005 and
totaled $2.7 million at year-end 2005 compared to $3.8 million at year-end 2004
due to the $1.3 million redemption discussed above offset by current year stock
dividends.

GOODWILL AND OTHER INTANGIBLE ASSETS. Goodwill totaling $1.7 million represented
the excess of the purchase price over the fair value of acquired tangible assets
and liabilities and identifiable intangible assets from the Reserve acquisition.
Other intangible assets consisted of prior owner intangibles arising from the
acquisition. The decision to recognize the impairment loss discussed above was
in accordance with Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Other Intangible Assets" which requires recognition of an
impairment loss when the carrying amount of the asset is not recoverable and its
carrying amount exceeds its fair value. Additional information is included in
Notes 8 and 21 to our audited consolidated financial statements.

DEPOSITS. Deposits increased $26.0 million, or 25.5% during 2005 and totaled
$127.6 million at December 31, 2005 compared to $101.6 million at December 31,
2004. The increase was due to growth of $22.3 million in certificate of deposit
accounts and $7.2 million in demand deposit accounts (including money market
accounts) offset by a $3.5 million decline in traditional savings account
balances. The growth in certificate of deposit accounts included $6.9 million in
brokered deposits, which totaled $13.0 million


                                       -9-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

at year-end 2005. We expect to continue to use brokered deposits as a source of
funding depending on market conditions, pricing and funding needs.

FEDERAL HOME LOAN BANK ADVANCES. FHLB advances declined $18.2 million during
2005 and totaled $23.0 million at year-end 2005 compared to $41.2 million at
year-end 2004 due to repayment of advances associated with the arbitrage
transaction, discussed previously and use of advances in the current year to
fund loan growth. FHLB advances at year-end 2005 include $10.3 million in fixed
rate advances maturing at various times from March 2006 through September 2008
at an average interest rate of 2.90% which were drawn primarily during the first
six months of 2004 to fund loans at low borrowing interest rates and protect our
interest rate risk position as market interest rates increased.

OTHER BORROWINGS. Other borrowings, which totaled $2.2 million at December 31,
2004, represented the outstanding balance on a revolving line of credit which
was acquired in the Reserve acquisition. The line of credit was repaid during
the quarter ended March 31, 2005.

SUBORDINATED DEBENTURES. Subordinated debentures totaled $5.2 million at
year-end 2005 and 2004 and 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 proceeds of the offering are available to provide capital for
CFBank to support growth.

SHAREHOLDERS' EQUITY. Total shareholders' equity declined $3.4 million or 17.6%
during 2005 and totaled $16.1 million at December 31, 2005 compared to $19.5
million at December 31, 2004 primarily due to the net loss and dividends during
the year. Our capital ratio was 9.29% at December 31, 2005 compared to 11.41% at
December 31, 2004. In January 2006, we successfully completed the offering of
2.3 million shares of common stock raising additional capital of approximately
$14.5 million after offering expenses and underwriting commissions.

Office of Thrift Supervision (OTS) regulations require savings institutions to
maintain certain minimum levels of regulatory capital. Additionally, the
regulations establish a framework for the classification of savings institutions
into five categories: well-capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. Generally, an institution is considered well-capitalized if it
has a core (Tier 1) capital ratio of at least 5.0% (based on adjusted total
assets); a core (Tier 1) risk-based capital ratio of a least 6.0%; and a total
risk-based capital ratio of at least 10.0%. CFBank had capital ratios above the
well-capitalized levels at year-end 2005 and 2004.

COMPARISON OF RESULTS OF OPERATIONS FOR 2005 AND 2004

GENERAL. Operations resulted in a net loss of $3.3 million or $.1.49 per diluted
share in 2005, an increase of $1.6 million compared to a net loss of $1.7
million or $.82 per diluted share in 2004 primarily due to the impairment loss
on goodwill and intangibles and


                                      -10-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

federal income tax on the FHLB stock redemption discussed above offset by
increased net interest income resulting from our growth strategy.

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 following 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 increased 24.4% and totaled $5.0 million in 2005 compared to
$4.0 million in 2004. The improvement in net interest income was due to growth
in assets, primarily commercial, commercial real estate and multi-family
mortgage loans and home equity lines of credit.

Interest income increased $2.6 million or 41.5% to $8.7 million in 2005,
compared to $6.1 million in 2004, primarily due to increased income on loans and
securities offset by a decline in income from short-term cash investments.
Interest income on loans increased $2.4 million, or 50.3% in 2005 to $7.3
million compared to $4.9 million in 2004, due to growth in loan balances and
higher yields on loans. Average loan balances increased $32.3 million and
totaled $114.2 million in 2005 compared to $81.9 million in 2004 primarily due
to commercial, commercial real estate and multi-family mortgage loan growth.
Average loan yields increased 46 basis points (bp) to 6.39% in 2005 compared to
5.93% in 2004 due to an increase in short-term market interest rates in 2005 and
growth in commercial, commercial real estate and multi-family mortgage loans and
home equity lines of credit, which are primarily adjustable rate loans and
comprised 76.7% of the loan portfolio in 2005 compared to 53.7% in 2004.
Interest income on securities increased $351,000 or 45.6% and totaled $1.1
million in 2005 compared to $770,000 in 2004 due to an increase in the average
balance and yield on securities. The average balance of securities increased
$5.8 million and totaled $25.4 million in 2005 compared to $19.6 million in 2004
due to the securitization transaction discussed previously. The yield on
securities increased 44 bp and totaled 4.45% in 2005 compared to 4.01% in 2004
primarily due to the mortgage loan securitization which added higher yielding
assets to the securities portfolio. Interest income on federal funds sold and
other earning assets declined $279,000 and totaled $88,000 in 2005 compared to
$367,000 in 2004 due to a decline in the average balance partially offset by an
increase in yield on these assets. The average balance of other earning assets
decreased $13.9 million and totaled $3.4 million in 2005 compared to $17.3
million in 2004, which included the arbitrage transaction described previously.
The yield on other earning assets increased 49 bp to 2.61% in 2005 from 2.12% in
2004 as short-term market interest rates increased during 2005. The average
balance of interest-earning assets increased $24.2 million and the average yield
of interest-earning assets increased 90 bp during 2005.

Interest expense increased $1.6 million or 73.2% to $3.7 million in 2005
compared to $2.1 million in 2004 due to increased interest expense on both
deposits and borrowings.


                                      -11-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

Interest expense on deposits increased $1.4 million or 96.7% to $2.8 million
from $1.4 million in 2004 due to increases in both the average balance and cost
of deposits. Average deposit balances increased $30.3 million to $110.6 million
in 2005 from $80.3 million in 2004 primarily due to growth in certificate of
deposit accounts. The average cost of deposits increased 76 bp to 2.55% in 2005
from 1.79% in 2004 due to higher market interest rates in 2005. Interest expense
on FHLB advances and other borrowings, including subordinated debentures,
increased $186,000 or 26.1% to $899,000 in 2005 from $713,000 in 2004 due to an
increase in the average cost offset by a decline in the average balance of
borrowings. The average cost of FHLB advances and other borrowings increased 134
bp to 3.62% in 2005 from 2.28% in 2004 primarily due increased short-term
interest rates in 2005 which negatively affected both the cost of short-term
FHLB advances and subordinated debentures. The average balance of FHLB advances
and other borrowings decreased $6.4 million to $24.9 million in 2005 from $31.3
million in 2004 as short-term borrowings were repaid when the arbitrage
transaction described previously was unwound in the first quarter of 2005. The
average balance of interest-bearing liabilities increased $23.9 million and the
average cost of interest-bearing liabilities increased 82 bp in 2005.

Net interest margin increased 12 bp from 3.27% in 2004 to 3.39% in 2005.

PROVISION FOR LOAN LOSSES. Management analyzes the adequacy of the allowance for
loan losses regularly through reviews of the performance of the loan portfolio
considering economic conditions, changes in interest rates and the effect of
such changes on real estate values and changes in the composition of the loan
portfolio. The allowance for loan losses is established through a provision for
loan losses based on management's evaluation of the risk in its loan portfolio.
The evaluation includes a review of all loans for which full collectibility may
not be reasonably assured and considers, among other matters, the estimated fair
value of the underlying collateral, economic conditions, historical loan loss
experience, changes in the size and growth of the loan portfolio and additional
factors that warrant recognition in providing for an adequate loan loss
allowance. Future additions to the allowance for loan losses will be dependent
on these factors.

Based on management's review, the provision for loan losses totaled $674,000 in
2005; comparable to $646,000 in 2004. At December 31, 2005, the allowance for
commercial, commercial real estate and multi-family mortgage loans totaled $1.3
million, an increase of $456,000 or 52.9% from $862,000 at December 31, 2004 as
these loan types increased from 48.3% of the loan portfolio at year-end 2004 to
58.7% at year-end 2005. 88.2% of the allowance was allocated to these loan types
at December 31, 2005, as they tend to be larger balance, higher risk loans. At
December 31, 2005, the allowance for loan losses represented 1.19% of total
loans compared to 0.90% at December 31, 2004. Nonperforming loans, all of which
are nonaccrual loans, totaled $800,000 at December 31, 2005, an increase of
$514,000 compared to $286,000 at December 31, 2004 representing an increase in
single-family mortgage loan delinquencies. At December 31, 2005, 0.6% of total
loans were nonaccrual loans compared to 0.3% at December 31, 2004. All of the
nonaccrual loan balances are secured by single-family homes in our primary
market area. Management believes the allowance for loan losses is adequate to
absorb probable incurred credit losses in the loan portfolio at December 31,
2005; however,


                                      -12-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

future additions to the allowance may be necessary based on changes in economic
conditions and the factors discussed in the previous paragraph.

NONINTEREST INCOME. Noninterest income increased $329,000 or 61.3% to $866,000
in 2005 compared to $537,000 in 2004 due to an increase in net gains on loan
sales. Mortgage loan originations and sales increased and net gains on sales
totaled $469,000 in 2005, an increase of $247,000 from $222,000 in 2004 due to
increased originations by the mortgage banking division acquired in October
2004. Significant future increases in market mortgage interest rates may reduce
the volume of loan originations, sales and resultant gains.

NONINTEREST EXPENSE. Noninterest expense included an impairment loss of $2.0
million recognized in the third quarter of 2005, discussed previously.
Noninterest expense, excluding the impairment loss, totaled $6.9 million in
2005, an increase of $441,000 or 6.9% compared to $6.4 million in 2004 primarily
due to operating costs related to Reserve, (acquired in October 2004) which
totaled $831,000 in 2005 compared to $144,000 in 2004. Current year noninterest
expense also included $68,000 in professional fees related to implementation of
the internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002
which will be applicable to us beginning in 2007. Noninterest expense in 2004
included $106,500 in legal and professional fees related to the reverse stock
split abandoned by the Board in early 2005 and $166,000 in expenses related to
employee severance and post-retirement life insurance benefits associated with
bank owned life insurance.

INCOME TAXES. The income tax benefit in 2005 totaled $377,000 and included a
non-cash non-recurring federal income tax charge of $344,000 related to
redemption of FHLB stock described previously. The goodwill impairment loss
recognized in 2005 was not deductible for tax purposes.

COMPARISON OF RESULTS OF OPERATIONS FOR 2004 AND 2003

GENERAL. We incurred a net loss of $1.7 million or $.82 per diluted share in
2004, a 30.0% improvement from the net loss of $2.4 million or $1.31 per diluted
share in 2003 primarily due to higher net interest income offset by additional
provision for loan losses, a decline in gains on loan sales and increased
noninterest expense.

NET INTEREST INCOME. Net interest income totaled $4.0 million in 2004 compared
to $1.9 million in 2003. Net interest income in 2003 included a $1.3 million
pre-tax prepayment penalty incurred in the repayment of long-term, fixed-rate
FHLB advances, discussed below. Not including the prepayment penalty, net
interest income increased 25.5% in 2004 compared to 2003. The improvement in net
interest income was due to growth in assets, primarily commercial, commercial
real estate and multi-family mortgage loans, and a reduction in the cost of
borrowings in 2004 due to FHLB advance payoffs, noted above and lower market
interest rates.


                                      -13-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

Interest income increased $709,000 or 13.0% to $6.1 million in 2004, compared to
$5.4 million in 2003 primarily due to increased income on loans and short-term
cash investments offset by a decline in income on securities. Interest income on
loans increased $652,000, or 15.5% in 2004 to $4.9 million, compared to $4.2
million in 2003, primarily due to growth in loan balances offset by lower yields
on loans. Average loan balances increased $24.5 million and totaled $81.9
million in 2004 compared to $57.4 million in 2003 primarily due to loan growth
pursuant to our strategy to expand into business financial services in the
Fairlawn and Columbus, Ohio markets. Average loan yields declined 139 bp to
5.93% in 2004 compared to 7.32% in 2003 due to payoffs of higher yielding
mortgage loans and growth in commercial, commercial real estate and multi-family
mortgage loans, which are primarily adjustable rate loans at lower rates than
single-family mortgage loans and comprised 59.6% of the loan portfolio in 2003
compared to 37.9% in 2004. Interest income on federal funds sold and other
earning assets totaled $367,000 in 2004 and increased $215,000, or 141.4% from
$152,000 in 2003 due to an increase in both the average balance and yield of
other earning assets. The average balance of other earning assets increased $4.9
million and totaled $17.3 million in 2004 compared to $12.4 million in 2003 as
we maintained short-term cash balances in anticipation of loan growth. The yield
on other earning assets increased 90 bp to 2.12% in 2004 from 1.22% in 2003 as
short-term market interest rates increased during 2004. Interest income on
securities declined $169,000 or 18.0% and totaled $770,000 in 2004 compared to
$939,000 in 2003 primarily due to a decline in the average balance of
securities. The average balance of securities declined $4.1 million and totaled
$19.6 million in 2004 compared to $23.7 million in 2003 due to cash flows from
maturities and sales of securities generally invested in short-term cash
investments in anticipation of loan growth. The yield on securities was 4.01% in
2004 compared to 4.02% in 2003. The average balance of interest-earning assets
increased $25.4 million and the average yield of interest-earning assets
declined 59 bp during 2004.

Interest expense, not including the $1.3 million prepayment penalty, decreased
$102,000 or 4.5% to $2.1 million in 2004 compared to $2.2 million in 2003 due to
a decline in interest expense on deposits offset by an increase in interest
expense on borrowings. Interest expense on deposits decreased $134,000 or 8.5%
to $1.4 million in 2004 from $1.6 million in 2003 due to a decline in the cost
of deposits offset by an increase in the deposit balances. The average cost of
deposits declined 35 bp to 1.79% in 2004 from 2.14% in 2003. Average deposit
balances increased $6.9 million to $80.3 million in 2004 from $73.4 million in
2003 primarily due to success in building deposit relationships with business
loan customers. Interest expense on FHLB advances and other borrowings including
subordinated debentures increased $32,000 or 4.7% to $713,000 in 2004 from
$681,000 in 2003, not including the $1.3 million prepayment penalty. The
increase was due to higher borrowing balances offset by a decline in the average
cost of borrowings. The average balance of FHLB advances and other borrowings
increased $19.1 million to $31.3 million in 2004 from $12.2 million in 2003 as
borrowings were used to fund loan growth and short-term cash investments. The
average cost of FHLB advances and other borrowings decreased 331 bp to 2.28% in
2004 from 5.59% in 2003 primarily due to payoff of long- term, fixed-rate FHLB
advances in 2003. The average balance of interest-bearing liabilities increased
$25.9 million and the average cost of interest-bearing liabilities declined 70
bp in 2004.

Net interest margin declined 1 bp from 3.28% in 2003 to 3.27% in 2004.


                                      -14-

<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

PROVISION FOR LOAN LOSSES. The provision for loan losses is based on
management's regular review of the loan portfolio as described in detail
previously. Based on this review, the provision for loan losses totaled $646,000
in 2004, an increase of $544,000 from $102,000 in 2003. The significant growth
in commercial, commercial real estate and multi-family mortgage loans in 2004
required an increase in the provision and allowance for loan losses. At December
31, 2004, the allowance for commercial, commercial real estate and multi-family
mortgage loans totaled $862,000, an increase of $762,000 from $100,000 at
December 31, 2003 as these loan types grew from 17.8% of the total loan
portfolio at year-end 2003 to 48.3% at year-end 2004. 88.4% of the allowance was
allocated to these loan types at December 31, 2004, as they tend to be larger
balance, higher risk loans. At December 31, 2004, the allowance for loan losses
represented .90% of total loans compared to .71% at December 31, 2003. Further,
nonperforming loans, all of which are nonaccrual loans, were $286,000 at
December 31, 2004 and $741,000 at December 31, 2003. At December 31, 2004, 0.3%
of total loans were nonaccrual, compared to 1.3% at December 31, 2003. The
decline in nonaccrual loans was principally due to acquisition of properties
through the foreclosure process. More than 96% of the nonaccrual loan balances
were secured by single-family homes in our primary market area.

NONINTEREST INCOME. Noninterest income declined $219,000 or 29.0% to $537,000 in
2004, compared to $756,000 in 2003 due to losses on security sales and decreased
gains on sales of loans offset by increased loan servicing fees. Net losses on
sales of securities, which totaled $55,000 in 2004 compared to gains of $42,000
in 2003, were primarily from sales of fixed-rate debt securities. Gains on sales
of loans totaled $222,000 in 2004, a decline of $207,000 or 48.3% from $429,000
during 2003 due to decreased mortgage originations and sales as market mortgage
interest rates increased and customer refinancing slowed during 2004. Net loan
servicing fee income totaled $62,000 in 2004, an increase of $163,000 from a net
loss of $101,000 in 2003, primarily a result of slower mortgage loan prepayments
as market interest rates increased in 2004.

NONINTEREST EXPENSE. Noninterest expense increased $490,000 or 8.3% and totaled
$6.4 million in 2004 compared to $5.9 million in 2003 primarily due to a full
year of operating costs related to staffing, improved technology and expansion
to new locations in Fairlawn and Columbus, including data processing, occupancy,
depreciation and other expenses. Noninterest expense in 2004 also included
$106,500 in legal and professional fees related to the abandoned reverse stock
split and $412,000 in expenses related to employee severance, post-retirement
life insurance benefits associated with bank owned life insurance, one time
charges recognized in connection with the servicing of loans and one time
internal operating account write-offs. Expense for the year ended December 31,
2003 included $1.6 million in salaries and benefits expense related to
restructuring of employee benefit plans and payments on agreements with former
executives.

INCOME TAXES. The income tax benefit associated with the lower net loss in 2004
totaled $872,000 compared to $988,000 in 2003.


                                      -15-
<PAGE>

   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

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.

<TABLE>
<CAPTION>
                                                                   For the Years Ended December 31,
                                    ----------------------------------------------------------------------------------------------
                                                 2005                            2004                            2003
                                    ------------------------------  ------------------------------  ------------------------------
                                      Average    Interest  Average    Average    Interest  Average    Average    Interest  Average
                                    Outstanding   Earned/   Yield/  Outstanding   Earned/   Yield/  Outstanding   Earned/   Yield/
                                      Balance      Paid      Rate     Balance      Paid      Rate     Balance      Paid      Rate
                                    -----------  --------  -------  -----------  --------  -------  -----------  --------  -------
                                                                        (Dollars in thousands)
<S>                                 <C>          <C>       <C>      <C>          <C>       <C>      <C>          <C>       <C>
Interest-earning assets:
   Securities (1) (2)                $ 25,404     $1,121    4.45%    $ 19,605     $  780    4.01%    $ 23,675     $  942    4.02%
   Loans (3)                          114,157      7,295    6.39%      81,900      4,855    5.93%      57,449      4,203    7.32%
   Other earning assets                 3,368         88    2.61%      17,329        367    2.12%      12,410        152    1.22%
   FHLB stock                           3,751        187    4.99%       3,694        152    4.11%       3,557        141    3.96%
                                     --------     ------             --------     ------             --------     ------
      Total interest-earning
         assets                       146,680      8,691    5.93%     122,528      6,154    5.03%      97,091      5,438    5.62%
   Noninterest-earning assets          15,872                          13,034                          11,268
                                     --------                        --------                        --------
      Total assets                   $162,552                        $135,562                        $108,359
                                     ========                        ========                        ========

Interest-bearing liabilities:
   Deposits                          $110,601      2,824    2.55%    $ 80,305      1,436    1.79%    $ 73,440      1,570    2.14%
   FHLB advances and other
      borrowings (4)                   24,860        899    3.62%      31,265        713    2.28%      12,192        681    5.59%
                                     --------     ------             --------     ------             --------     ------
      Total interest-bearing
         liabilities                  135,461      3,723    2.75%     111,570      2,149    1.93%      85,632      2,251    2.63%
   Noninterest-bearing liabilities      8,518                           4,658                           3,484
                                     --------                        --------                        --------
      Total liabilities               143,979                         116,228                          89,116
  Equity                               18,573                          19,334                          19,243
                                     --------                        --------                        --------
      Total liabilities and equity   $162,552                        $135,562                        $108,359
                                     ========                        ========                        ========
   Net interest-earning assets       $ 11,219                        $ 10,958                        $ 11,459
                                     ========                        ========                        ========
   Net interest income/interest
      rate spread                                 $4,968    3.18%                 $4,005    3.10%                 $3,187    2.99%
                                                  ======    ====                  ======    ====                  ======    ====
   Net interest margin                                      3.39%                           3.27%                           3.28%
                                                            ====                            ====                            ====
   Average interest-earning assets
      to average interest-bearing
      liabilities                      108.28%                         109.82%                         113.38%
                                     ========                        ========                        ========
</TABLE>

----------
(1)  Average balance is computed using the carrying value of securities.

     Average yield is computed using the historical amortized cost average
     balance for available for sale securities.

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

(3)  Balance is net of deferred loan origination fees, undisbursed proceeds of
     construction loans and includes nonperforming loans.

(4)  Interest paid does not include the $1.3 million penalty on prepayment of
     FHLB advances in 2003.


                                      -16-
<PAGE>

   Management's Discussion and Analysis of Financial Condition and
                             Results of Operations

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 or 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.

<TABLE>
<CAPTION>
                                                     Year Ended                     Year Ended
                                                  December 31, 2005             December 31, 2004
                                               Compared to Year Ended         Compared to Year Ended
                                                  December 31, 2004             December 31, 2003
                                            ----------------------------   ---------------------------
                                            Increase (decrease)            Increase (decrease)
                                                   due to                         due to
                                            -------------------            -------------------
                                               Rate    Volume       Net       Rate   Volume       Net
                                              ------   ------     ------     -----   ------      -----
                                                              (Dollars in thousands)
<S>                                         <C>        <C>        <C>      <C>       <C>         <C>
Interest-earning assets:
   Securities (1)                             $   92   $  249     $  341     $  (2)  $ (160)     $(162)
   Loans                                         402    2,038      2,440      (904)   1,556        652
   Other earning assets                           70     (349)      (279)      140       75        215
   FHLB stock                                     33        2         35         6        5         11
                                              ------   ------     ------     -----   ------      -----
      Total interest-earning assets              597    1,940      2,537      (760)   1,476        716
Interest-bearing liabilities:
   Deposits                                      737      651      1,388      (272)     138       (134)
   FHLB advances and other borrowings (2)        354     (168)       186      (576)     608         32
                                              ------   ------     ------     -----   ------      -----
      Total interest-bearing liabilities       1,091      483      1,574      (848)     746       (102)
                                              ------   ------     ------     -----   ------      -----
Net change in net interest income             $ (494)  $1,457     $  963     $  88   $  730      $ 818
                                              ======   ======     ======     =====   ======      =====
</TABLE>

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

(2)  Amounts do not include the $1.3 million penalty on prepayment of FHLB
     advances in 2003.


                                      -17-

<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market prices and
interest rates. We have not engaged in and, accordingly, have no risk related to
trading accounts, commodities, foreign exchange, hedging activities, interest
rate derivatives or interest rate swaps. However, our hedging policy does allow
CFBank to enter into hedging activities, such as interest rate swaps, up to 10%
of total assets. Market risk arises primarily from interest rate risk inherent
in our lending and deposit gathering activities and the issuance of debentures.
The measurement of market risk associated with financial instruments is
meaningful only when all related and offsetting on- and off-balance sheet
transactions are aggregated, and the resulting net positions are identified.
Disclosures about the fair value of financial instruments as of December 31,
2005, which reflect changes in market prices and rates, are set forth in Note 20
to our consolidated financial statements.

Management actively monitors and manages interest rate risk. The primary
objective in managing interest rate risk is to limit, within established
guidelines, the adverse impact of changes in interest rates on our net interest
income and capital. CFBank measures the effect of interest rate changes on its
net portfolio value (NPV), which is the difference between the estimated market
value of its assets and liabilities under different interest rate scenarios.
Changes in NPV are measured using instantaneous changes in interest rates,
rather than linear changes in rates over a period of time. At December 31, 2005
CFBank's NPV ratios, using interest rate shocks ranging from a 300 bp rise in
rates to a 200 bp decline in rates are shown in the following table. All values
are within the acceptable range established by the Board.

<TABLE>
<CAPTION>
    Net Portfolio Value
        (Bank only)
---------------------------
  Basis Point
Change in Rates   NPV Ratio
---------------   ---------
<S>               <C>
      +300           9.70%
      +200          10.11%
      +100          10.52%
         0          10.78%
      -100          10.85%
      -200          10.40%
</TABLE>

In evaluating CFBank's exposure to interest rate risk, certain shortcomings
inherent in the method of analysis presented in the foregoing table must be
considered. For example, although certain assets and liabilities may have
similar maturities or periods to which they reprice, they may react in different
degrees to changes in market interest rates. In addition, the interest rates on
certain types of assets and liabilities may fluctuate in advance of changes in
market interest rates, while interest rates on other types may lag behind
changes in market rates. Furthermore, in the event of a change in interest
rates, prepayments and early withdrawal levels would likely deviate
significantly from those assumed in calculating the table. Finally, the ability
of many borrowers to service their debt may decrease when interest rates rise.
Therefore, the actual effect of changing interest rates may differ materially
from that presented in the foregoing table.


                                      -18-

<PAGE>

Our interest rate risk position has improved as a result of management's
strategic decisions to sell fixed-rate single-family mortgage loan originations
rather than retain long-term, low fixed-rate loans in portfolio and grow
commercial, commercial real estate and multi-family loans and home equity lines
of credit, which, in many cases, have adjustable interest rates. Our interest
rate risk position also improved as a result of the extension of maturity dates
of borrowings using longer-term, fixed-rate FHLB advances in 2004 and the
securitization of mortgage loans in 2005, which increased the liquidity of the
mortgages.

LIQUIDITY AND CAPITAL RESOURCES

In general terms, liquidity is a measurement of ability to meet cash needs. The
primary objective in liquidity management is to maintain the ability to meet
loan commitments or 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 the
bank's overall asset/liability structure, market conditions, the activities of
competitors and the requirements of its own deposit and loan customers.
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 management's 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 sources of liquidity available including, but not limited
to access to advances from the FHLB, use of brokered deposits and the ability to
obtain deposits by offering above-market interest rates.

CFBank relies primarily on competitive rates, customer service and relationships
with customers to retain deposits. Based on our historical experience with
deposit retention and current retention strategies, we believe that, although it
is not possible to predict future terms and conditions upon renewal, a
significant portion of such deposits will remain with the bank.

At December 31, 2005, CFBank exceeded all of its regulatory capital requirements
to be considered well-capitalized with a Tier 1 capital level of $11.7 million,
or 6.9% of adjusted total assets, which exceeds the required level of $8.5
million, or 5.0%; Tier 1 risk-based capital level of $11.7 million, or 9.0% of
risk-weighted assets, which exceeds the required level of $7.8 million, or 6.0%;
and risk-based capital of $13.2 million, or 10.1% of risk-weighted assets, which
exceeds the required level of $13.1 million, or 10.0%. In January 2006, the
holding company contributed $10.4 million in additional capital to CFBank.


                                      -19-

<PAGE>

IMPACT OF INFLATION

The financial statements and related data presented herein have been prepared in
accordance with generally accepted accounting principles, which presently
require us to measure financial position and results of operations primarily in
terms of historical dollars. Changes in the relative value of money due to
inflation are generally not considered. In management's opinion, changes in
interest rates affect our financial condition to a far greater degree than
change in the inflation rate. While interest rates are generally influenced by
changes in the inflation rate, they do not move concurrently. Rather, interest
rate volatility is based on changes in the expected rate of inflation, as well
as changes in monetary and fiscal policy. A financial institution's ability to
be relatively unaffected by changes in interest rates is a good indicator of its
ability to perform in a volatile economic environment. In an effort to protect
itself from the effects of interest rate volatility, we review interest rate
risk frequently and take the steps necessary to minimize any detrimental effects
on profitability.

CRITICAL ACCOUNTING POLICIES

We follow financial accounting and reporting policies that are in accordance
with U. S. generally accepted accounting principles and conform to general
practices within the banking industry. These policies are presented in Note 1 to
our audited consolidated financial statements. Some of these accounting policies
are considered to be critical accounting policies, which are those policies that
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. Management believes that the judgments, estimates and assumptions
used in the preparation of the consolidated financial statements are appropriate
given the factual circumstances at the time.

We have identified accounting polices that are critical accounting policies and
an understanding of these policies is necessary to understand our financial
statements. One critical accounting policy relates to determining the adequacy
of the allowance for loan losses. The Allowance for Loan Losses Policy provides
a thorough, disciplined and consistently applied process that incorporates
management's current judgments about the credit quality of the loan portfolio
into determination of the allowance for loan losses in accordance with generally
accepted accounting principles and supervisory guidance. Management estimates
the allowance balance required using 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. Management
believes that an adequate allowance for loan losses has been established.
Additional information regarding this policy is included in the sections above
captioned "Provision for Loan Losses" and in Notes 1 and 4 to our audited
consolidated financial statements.

Another critical accounting policy relates to the valuation of the deferred tax
asset for net operating losses. Net operating losses totaling $2.8 million, $2.5
million and $696,000 expire in 2023, 2024 and 2025, respectively. No valuation
allowance has been recorded against the deferred tax asset for net operating
losses because the benefit is more likely than not to be realized. As we
continue our strategy to expand into business financial services and focus on
growth, the resultant increase in interest-earning assets is expected to
increase profitability.


                                      -20-
<PAGE>

Additional information is included in Notes 1 and 15 to our audited consolidated
financial statements.

Another critical accounting policy relates to the valuation of goodwill and the
assessment of impairment. Goodwill is not subject to amortization and is tested
for impairment annually or more frequently if events or changes in circumstances
indicate that the asset might be impaired. Goodwill totaling $1.7 million
resulted from the acquisition of Reserve in 2004 and represented the excess of
the purchase price over the fair value of acquired tangible assets and
liabilities and identifiable intangible assets. We expected Reserve's
performance to be accretive to earnings, but lower than projected loan
origination and sales volumes have resulted in losses. Management does not
believe that volumes will achieve a sufficient level to support the recorded
goodwill. As a result, we recorded a non-cash after-tax impairment loss of $1.9
million or $.86 per diluted share in the quarter ended September 30, 2005 to
write-off the $1.7 million value of goodwill and $217,000 in other intangible
assets related to the acquisition. The decision to recognize the impairment loss
was in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets"
which requires recognition of an impairment loss when the carrying amount of the
asset is not recoverable and its carrying amount exceeds its fair value.
Additional information is included in Notes 1, 8 and 21 to our audited
consolidated financial statements.

MARKET PRICES AND DIVIDENDS DECLARED

The common stock of Central Federal Corporation trades on the Nasdaq SmallCap
Market under the symbol "CFBK." As of December 31, 2005, there were 2,243,662
shares of common stock outstanding and 567 shareholders, excluding persons or
entities holding stock in nominee or street name through various brokerage
firms.

The following table shows the quarterly reported high and low trade prices of
the common stock and cash dividends per share declared during 2005 and 2004.

<TABLE>
<CAPTION>
                  High      Low    Dividends
                 ------   ------   ---------
<S>              <C>      <C>      <C>
2005
First quarter    $13.72   $10.15     $0.09
Second quarter    10.99     9.53      0.09
Third quarter     10.49     8.07      0.09
Fourth quarter     9.45     7.07      0.09

2004
First quarter    $16.10   $12.00     $0.09
Second quarter    18.00    12.35      0.09
Third quarter     15.22    11.25      0.09
Fourth quarter    13.73    10.95      0.09
</TABLE>


                                      -21-

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Central Federal Corporation
Fairlawn, Ohio

We have audited the accompanying consolidated balance sheets of Central Federal
Corporation as of December 31, 2005 and 2004 and the related consolidated
statements of operations, comprehensive loss, changes in shareholders' equity
and cash flows for each of the three years in the period ended December 31,
2005. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Central Federal
Corporation as of December 31, 2005 and 2004 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2005, in conformity with U.S. generally accepted accounting principles.

                                                    Crowe Chizek and Company LLC

Cleveland, Ohio
February 13, 2006


                                      -22-

<PAGE>

                           CENTRAL FEDERAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2005 and 2004
                  (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                      2005       2004
                                                    --------   --------
<S>                                                 <C>        <C>
ASSETS
Cash and cash equivalents                           $  2,972   $ 32,675
Securities available for sale                         30,872     13,508
Loans held for sale                                      178         --
Loans, net of allowance of $1,495 and $978           124,026    108,149
Federal Home Loan Bank stock                           2,656      3,778
Loan servicing rights                                    250        208
Foreclosed assets, net                                    --        132
Premises and equipment, net                            2,934      2,690
Goodwill                                                  --      1,749
Other intangible assets                                   --        299
Bank owned life insurance                              3,531      3,401
Loan sales proceeds receivable                         2,241      1,888
Deferred tax asset                                     1,978      1,491
Accrued interest receivable and other assets           1,383      1,037
                                                    --------   --------
                                                    $173,021   $171,005
                                                    ========   ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
   Non-interest bearing                             $  7,509   $  5,505
   Interest bearing                                  120,079     96,119
                                                    --------   --------
      Total deposits                                 127,588    101,624
Federal Home Loan Bank advances                       22,995     41,170
Other borrowings                                          --      2,249
Advances by borrowers for taxes and insurance            113        321
Accrued interest payable and other liabilities         1,089        979
Subordinated debentures                                5,155      5,155
                                                    --------   --------
      Total liabilities                              156,940    151,498

Shareholders' equity
   Preferred stock, 1,000,000 shares authorized;
      none issued                                         --         --
   Common stock, $.01 par value; 6,000,000 shares
      authorized; 2005 - 2,312,195 shares issued,
      2004 - 2,294,520 shares issued                      23         23
   Additional paid-in capital                         12,787     12,519
   Retained earnings                                   4,315      8,497
   Accumulated other comprehensive income                 28         61
   Unearned stock based incentive plan shares           (289)      (351)
   Treasury stock, at cost (2005 - 68,533 shares,
      2004 - 108,671 shares)                            (783)    (1,242)
                                                    --------   --------
      Total shareholders' equity                      16,081     19,507
                                                    --------   --------
                                                    $173,021   $171,005
                                                    ========   ========
</TABLE>

                             See accompanying notes.


                                      -23-
<PAGE>

                           CENTRAL FEDERAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  Years ended December 31, 2005, 2004 and 2003
                  (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                        2005      2004      2003
                                                      -------   -------   -------
<S>                                                   <C>       <C>       <C>
Interest and dividend income
   Loans, including fees                              $ 7,295   $ 4,855   $ 4,203
   Taxable securities                                   1,121       750       934
   Tax exempt securities                                   --        20         5
   Federal Home Loan Bank stock dividends                 187       152       141
   Federal funds sold and other                            88       367       152
                                                      -------   -------   -------
                                                        8,691     6,144     5,435
Interest expense
   Deposits                                             2,824     1,436     1,570
   Federal Home Loan Bank advances and other debt         578       488     1,940
   Subordinated debentures                                321       225        11
                                                      -------   -------   -------
                                                        3,723     2,149     3,521
                                                      -------   -------   -------
Net interest income                                     4,968     3,995     1,914
Provision for loan losses                                 674       646       102
                                                      -------   -------   -------
Net interest income after provision for loan losses     4,294     3,349     1,812
Noninterest income
   Service charges on deposit accounts                    195       141       165
   Net gains on sales of loans                            469       222       429
   Loan servicing fees, net                                16        62      (101)
   Net gains (losses) on sales of securities               --       (55)       42
   Earnings on bank owned life insurance                  130       145       188
   Other                                                   56        22        33
                                                      -------   -------   -------
                                                          866       537       756
Noninterest expense
   Salaries and employee benefits                       3,568     3,454     3,549
   Occupancy and equipment                                462       327       224
   Data processing                                        495       431       246
   Franchise taxes                                        233       196       301
   Professional fees                                      595       424       673
   Director fees                                          170       169       119
   Postage, printing and supplies                         161       167       198
   Advertising and promotion                              138       171        27
   Telephone                                              122        91        48
   Loan expenses                                           32        48        91
   Foreclosed assets, net                                  18        57        14
   Depreciation                                           415       355       176
   Amortization of intangibles                             82        21        --
   Impairment loss on goodwill and intangibles          1,966        --        --
   Other                                                  370       509       264
                                                      -------   -------   -------
                                                        8,827     6,420     5,930
                                                      -------   -------   -------
Loss before income taxes                               (3,667)   (2,534)   (3,362)
Income tax benefit                                       (377)     (872)     (988)
                                                      -------   -------   -------
Net loss                                              $(3,290)  $(1,662)  $(2,374)
                                                      =======   =======   =======
Loss per share:
   Basic                                              $ (1.49)  $ (0.82)  $ (1.31)
   Diluted                                            $ (1.49)  $ (0.82)  $ (1.31)

</TABLE>

                             See accompanying notes.


                                      -24-

<PAGE>

                           CENTRAL FEDERAL CORPORATION
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                  Years ended December 31, 2005, 2004 and 2003
                  (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                        2005      2004      2003
                                                      -------   -------   -------
<S>                                                   <C>       <C>       <C>
Net loss                                              $(3,290)  $(1,662)  $(2,374)
Change in net unrealized gain (loss) on securities
   available for sale                                    (580)     (267)     (154)
Less: Reclassification adjustment for gains and
   (losses) later recognized in net income                 --       (55)       42
                                                      -------   -------   -------
Net unrealized loss                                      (580)     (212)     (196)
Initial unrealized gain on mortgage-backed
   securities received in securitization                  530        --        --
Unrealized gain on securities transferred from held
   to maturity to available for sale                       --        --       458
Tax effect                                                 17        72       (89)
                                                      -------   -------   -------
Other comprehensive income (loss)                         (33)     (140)      173
                                                      -------   -------   -------
Comprehensive loss                                    $(3,323)  $(1,802)  $(2,201)
                                                      =======   =======   =======
</TABLE>

                             See accompanying notes.


                                      -25-
<PAGE>

                          CENTRAL FEDERAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  Years ended December 31, 2005, 2004 and 2003
                  (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                                                      Unearned   Unearned
                                                                                      Employee    Stock
                                                                       Accumulated     Stock      Based
                                                Additional                Other      Ownership  Incentive                Total
                                        Common    Paid-In   Retained  Comprehensive     Plan       Plan    Treasury  Shareholders'
                                         Stock    Capital   Earnings      Income       Shares     Shares     Stock       Equity
                                        ------  ----------  --------  -------------  ---------  ---------  --------  -------------
<S>                                     <C>     <C>         <C>       <C>            <C>        <C>        <C>       <C>
Balance at January 1, 2003                $19     $ 8,306    $14,085      $  28       $(1,425)    $(160)    $(3,270)    $17,583
Comprehensive loss:
Net loss                                                      (2,374)                                                    (2,374)
Other comprehensive income                                                  173                                             173
                                                                                                                        -------
   Total comprehensive loss                                                                                              (2,201)
Issuance of common stock in private
placement, net of offering costs of
   $64 (312,649 shares)                     3       3,116                                                                 3,119
Issuance of stock based incentive
   plan shares (28,500 shares)              1         337                                          (338)                     --
Sale of employee stock ownership plan
   shares at plan termination
   (81,000 shares)                                    125                                 748                               873
Final allocation of employee stock
   ownership plan shares at plan
   termination (41,882 shares)                        (39)                                677                               638
Release of 16,002 stock based
   incentive plan shares                                                                            141                     141
Stock options exercised (37,302
   shares)                                                       (72)                                           417         345
Tax benefits from stock options
   exercised                                                      47                                                         47
Cash dividends declared ($.36 per
   share)                                                       (689)                                                      (689)
                                          ---     -------    -------      -----       -------     -----     -------     -------
Balance at December 31, 2003               23      11,845     10,997        201            --      (357)     (2,853)     19,856
Comprehensive loss:
Net loss                                                      (1,662)                                                    (1,662)
Other comprehensive loss                                                   (140)                                           (140)
                                                                                                                        -------
   Total comprehensive loss                                                                                              (1,802)
Issuance of stock based incentive plan
   shares (20,703 shares)                             237                                          (237)                     --
Release of 21,278 stock based
   incentive plan shares                                                                            243                     243
Stock options exercised (44,900
   shares)                                                       (90)                                           502         412
Tax benefits from stock options
   exercised                                           48                                                                    48
Purchase of 25,000 shares of treasury
   stock                                                                                                       (319)       (319)
Issuance of 127,077 shares of treasury
   stock in acquisition                               389                                                     1,428       1,817
Cash dividends declared ($.36 per
   share)                                                       (748)                                                      (748)
                                          ---     -------    -------      -----       -------     -----     -------     -------
Balance at December 31, 2004               23      12,519      8,497         61            --      (351)     (1,242)     19,507
Comprehensive loss:
Net loss                                                      (3,290)                                                    (3,290)
Other comprehensive income                                                  (33)                                            (33)
                                                                                                                        -------
   Total comprehensive loss                                                                                              (3,323)
Issuance of stock based incentive plan
   shares (17,675 shares)                             178                                          (178)                     --
Release of 20,447 stock based
   incentive plan shares                                                                            240                     240
Tax benefits from stock based
   incentive plan shares released                      34                                                                    34
Stock options exercised (40,138
   shares)                                              2        (86)                                           459         375
Tax benefits from stock options
   exercised                                           54                                                                    54
Cash dividends declared ($.36 per
   share)                                                       (806)                                                      (806)
                                          ---     -------    -------      -----       -------    ------     -------     -------
Balance at December 31, 2005              $23     $12,787    $ 4,315      $  28       $    --    $ (289)    $  (783)    $16,081
                                          ===     =======    =======      =====       =======    ======     =======     =======

</TABLE>

                             See accompanying notes.


                                      -26-
<PAGE>

                           CENTRAL FEDERAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2005, 2004 and 2003
                  (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                                  2005       2004       2003
                                                                --------   --------   --------
<S>                                                             <C>        <C>        <C>
Cash flows from operating activities
Net loss                                                        $ (3,290)  $ (1,662)  $ (2,374)
Adjustments to reconcile net loss to net cash
   provided by operating activities:
      Provision for loan losses                                      674        646        102
      Valuation (gain) loss on mortgage servicing rights               4        (36)        56
      Depreciation                                                   415        355        176
      Amortization, net                                               42        184         (5)
      Impairment loss on goodwill and intangibles                  1,966         --         --
      Net realized (gain) loss on sales of securities                 --         55        (42)
      Loss (gain) on disposal of premises and equipment                3         (3)        50
      Loss (gain) on sale of foreclosed assets                         9         13         --
      FHLB stock dividend                                           (186)      (152)      (141)
      SBIP expense                                                   240        243        141
      ESOP expense                                                    --         --        638
      Net change in:
         Loans held for sale                                        (178)       106       (106)
         Bank owned life insurance                                  (130)      (145)      (188)
         Loan sales proceeds receivable                             (353)      (589)        --
         Deferred tax assets                                        (470)      (589)    (1,083)
         Accrued interest receivable and other assets               (240)        86        (22)
         Accrued interest payable and other liabilities              107        (42)      (600)
                                                                --------   --------   --------
            Net cash from operating activities
                                                                  (1,387)    (1,530)    (3,398)
Cash flows from investing activities
   Net decrease in interest bearing deposits                          --      1,587      5,618
   Available-for-sale securities:
      Sales                                                        1,435     15,191      3,078
      Maturities, prepayments and calls                            4,580      5,114     28,968
      Purchases                                                   (5,037)    (7,081)   (46,914)
   Held-to-maturity securities:
      Maturities, prepayments and calls                               --         --      7,201
   Loan originations and payments, net                           (26,158)   (45,900)     4,434
   Loans purchased                                                (8,778)    (5,574)        --
   Proceeds from redemption of FHLB stock                          1,308         --         --
   Additions to premises and equipment                              (662)    (1,027)    (1,326)
   Proceeds from the sale of premises and equipment                   --          5         --
   Proceeds from the sale of foreclosed assets                       104        765         --
   Net cash used in acquisition                                       --       (236)        --
   Cash received in repayment of ESOP loan                            --         --        853
                                                                --------   --------   --------
      Net cash from investing activities                         (33,208)   (37,156)     1,912
Cash flows from financing activities
   Net change in deposits                                         25,950     28,266     (1,332)
   Net change in short-term borrowings from the Federal Home
      Loan Bank and other                                        (18,424)    22,417      7,500
   Proceeds from Federal Home Loan Bank advances and other
      debt                                                            --     12,270         --
   Repayments on Federal Home Loan Bank
      advances and other debt                                     (2,000)        --    (16,330)
   Net change in advances by borrowers for taxes and
      insurance                                                     (208)       114       (241)
   Proceeds from subordinated debentures                              --         --      5,155
   Cash dividends paid                                              (801)      (735)      (655)
   Proceeds from private placement                                    --         --      3,119
   Proceeds from exercise of stock options                           375        412        345
   Repurchase of common stock                                         --       (319)        --
                                                                --------   --------   --------
      Net cash from financing activities                           4,892     62,425     (2,439)
Net change in cash and cash equivalents                          (29,703)    23,739     (3,925)
Beginning cash and cash equivalents                               32,675      8,936     12,861
                                                                --------   --------   --------
Ending cash and cash equivalents                                $  2,972   $ 32,675   $  8,936
                                                                ========   ========   ========
Supplemental cash flow information:
   Interest paid                                                $  3,657   $  2,178   $  3,519
   Income taxes paid                                                  --         --        106
Supplemental noncash disclosures:
   Securitization of single-family residential mortgage loans   $ 18,497   $     --   $     --
   Transfers from loans to repossessed assets                         --        716        193
   Acquisition of Reserve Mortgage Services, Inc. through
      issuance of common stock                                        --      1,787         --
   Transfer of securities from held to maturity to available
      for sale                                                        --         --     10,533

</TABLE>

                            See accompanying notes.


                                      -27-

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation: The consolidated financial
statements include Central Federal Corporation, its wholly-owned subsidiary,
CFBank, and Reserve Mortgage Services, Inc. (Reserve), a wholly owned subsidiary
of CFBank from October 22, 2004 through May 12, 2005 at which time it was merged
into CFBank, together referred to as "the Company". Intercompany transactions
and balances are eliminated in consolidation.

The Company provides financial services through its offices in Fairlawn,
Columbus, Wellsville and Calcutta, Ohio. Its primary deposit products are
checking, savings, and term certificate accounts, and its primary lending
products are residential mortgage, commercial, and installment loans.
Substantially all loans are secured by specific items of collateral including
business assets, consumer assets, and commercial and residential real estate.
Commercial loans are expected to be repaid from cash flow from operations of
businesses. There are no significant concentrations of loans to any one industry
or customer. However, the customers' ability to repay their loans is dependent
on the real estate and general economic conditions in the areas. Other financial
instruments which potentially represent concentrations of credit risk include
deposit accounts in other financial institutions.

Use of Estimates: To prepare financial statements in conformity with U.S.
generally accepted accounting principles, management makes estimates and
assumptions based on available information. These estimates and assumptions
affect the amounts reported in the financial statements and the disclosures
provided, and actual results could differ. The allowance for loan losses, loan
servicing rights and fair values of financial instruments are particularly
subject to change.

Cash Flows: Cash and cash equivalents include cash and deposits with other
financial institutions under 90 days. Net cash flows are reported for customer
loan and deposit transactions, interest-bearing deposits in other financial
institutions and borrowings with original maturities under 90 days.

Securities: Debt securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Debt securities are classified as available for sale when they
might be sold before maturity. Equity securities with readily determinable fair
values are classified as available for sale. Securities available for sale are
carried at fair value, with unrealized holding gains and losses reported in
other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums
and discounts on securities are amortized on the level-yield method without
anticipating prepayments, except for mortgage-backed securities where
prepayments are anticipated. Gains and losses on sales are recorded on the trade
date and determined using the specific identification method.


                                      -28-

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Declines in the fair value of securities below their cost that are other than
temporary are reflected as realized losses. In estimating other-than-temporary
losses, management considers: (1) the length of time and extent that fair value
has been less than cost, (2) the financial condition and near term prospects of
the issuer, and (3) the Company's ability and intent to hold the security for a
period sufficient to allow for any anticipated recovery in fair value.

Loans Held for Sale: Mortgage loans originated and intended for sale in the
secondary market are carried at the lower of aggregate cost or market, as
determined by outstanding commitments from investors. Net unrealized losses, if
any, are recorded as a valuation allowance and charged to earnings.

Mortgage loans held for sale after 2003 are generally sold with servicing rights
released. Mortgage loans held for sale prior to 2004 were generally sold with
servicing rights retained and the carrying value of mortgage loans sold was
reduced by the cost allocated to the servicing right. Gains and losses on sales
of mortgage loans are based on the difference between the selling price and the
carrying value of the related loan sold.

Loans: Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at the principal
balance outstanding, net of unearned interest, deferred loan fees and costs, and
an allowance for loan losses. Interest income is accrued on the unpaid principal
balance. Loan origination fees, net of certain direct origination costs, are
deferred and recognized in interest income using the level-yield method without
anticipating prepayments.

Interest income on mortgage and commercial loans is discontinued at the time the
loan is 90 days delinquent unless the loan is well-secured and in process of
collection. Consumer and credit card loans are typically charged-off no later
than 90 days past due. Past due status is based on the contractual terms of the
loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier
date if collection of principal or interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed
against interest income. Interest received on such loans is accounted for on the
cash-basis or cost-recovery method, until qualifying for return to accrual.
Loans are returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably
assured.

Acquired Loans: Allowances for all acquired loans subject to Statement of
Position (SOP) 03-3 reflect only those losses incurred after acquisition - that
is, the present value of cash flows expected at acquisition that are not
expected to be collected.

The Company acquires loans individually and in groups or portfolios. At
acquisition, the Company reviews each loan to determine whether there is
evidence of deterioration of credit quality since origination and if it is
probable that it will be unable to collect all amounts due according to the
loan's contractual terms. If both conditions exist, the Company determines


                                      -29-

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

whether each such loan is to be accounted for individually or whether such loans
will be assembled into pools of loans based on common risk characteristics
(credit score, loan type, and date of origination). The Company considers
expected prepayments, and estimates the amount and timing of undiscounted
expected principal, interest, and other cash flows (expected at acquisition) for
each loan and subsequently aggregated pool of loans. The Company determines the
excess of the loan's or pool's scheduled contractual principal and contractual
interest payments over all cash flows expected at acquisition as an amount that
should not be accreted (nonaccretable difference). The remaining
amount--representing the excess of the loan's cash flows expected to be
collected over the amount paid--is accreted into interest income over the
remaining life of the loan or pool (accretable yield).

Over the life of the loan or pool, the Company continues to estimate cash flows
expected to be collected, and evaluates whether the present value of its loans
determined using the effective interest rates has decreased and if so,
recognizes a loss. The present value of any subsequent increase in the loan's or
pool's actual cash flows or cash flows expected to be collected is used first to
reverse any existing valuation allowance for that loan or pool. For any
remaining increases in cash flows expected to be collected, the Company adjusts
the amount of accretable yield recognized on a prospective basis over the loan's
or pool's remaining life.

Allowance for Loan Losses: The allowance for loan losses is a valuation
allowance for probable incurred credit losses. Loan losses are charged against
the allowance when management believes the uncollectibility of a loan balance is
confirmed. Subsequent recoveries, if any, are credited to the allowance.
Management estimates the allowance balance required using 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. Allocations of the allowance may be made for specific loans, but
the entire allowance is available for any loan that, in management's judgment,
should be charged-off.

The allowance consists of specific and general components. The specific
component relates to loans that are individually classified as impaired or loans
otherwise classified as substandard or doubtful. The general component covers
non-classified loans and is based on historical loss experience adjusted for
current factors.

A loan is impaired when full payment under the loan terms is not expected.
Commercial, multi-family residential and commercial real estate loans are
individually evaluated for impairment. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present value
of estimated future cash flows using the loan's existing rate or at the fair
value of collateral 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.


                                      -30-

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Servicing Rights: Servicing rights represent the allocated value of retained
servicing rights on loans sold. Servicing assets are expensed in proportion to,
and over the period of, estimated net servicing revenues. Impairment is
evaluated based on the fair value of the assets, using groupings of the
underlying loans as to interest rates and then, secondarily, as to loan type and
investor. Fair value is determined using prices for similar assets with similar
characteristics, when available, or based upon discounted cash flows using
market-based assumptions. Any impairment of a grouping is reported as a
valuation allowance, to the extent that fair value is less than the capitalized
amount for a grouping.

Transfers of Financial Assets: Transfers of financial assets are accounted for
as sales when control over the assets has been surrendered. Control over
transferred assets is deemed to be surrendered when (1) the assets have been
isolated from the Company, (2) the transferee obtains the right (free of
conditions that constrain it from taking advantage of that right) to pledge or
exchange the transferred assets, and (3) the Company does not maintain effective
control over the transferred assets through an agreement to repurchase them
before their maturity.

Foreclosed Assets: Assets acquired through or instead of loan foreclosure are
initially recorded at fair value when acquired, establishing a new cost basis.
If fair value declines subsequent to foreclosure, a valuation allowance is
recorded through expense. Costs after acquisition are expensed.

Premises and Equipment: Land is carried at cost. Premises and equipment are
stated at cost less accumulated depreciation. Buildings and related components
are depreciated using the straight-line method with useful lives ranging from 7
to 40 years. Furniture, fixtures and equipment are depreciated using the
straight-line method with useful lives ranging from 3 to 25 years. Leasehold
improvements are amortized over the lives of the respective leases.

Federal Home Loan Bank (FHLB) stock: The Bank is a member of the FHLB system.
Members are required to own a certain amount of stock based on the level of
borrowings and other factors, and may invest in additional amounts. FHLB stock
is carried at cost, classified as a restricted security, and periodically
evaluated for impairment. Because this stock is viewed as long term investment,
impairment is based on ultimate recovery of par value. Both cash and stock
dividends are reported as income.

Bank Owned Life Insurance: The Company has purchased life insurance policies on
certain directors and employees. Bank owned life insurance is recorded at its
cash surrender value, or the amount that can be realized.

Goodwill and Other Intangible Assets: Goodwill results from business
acquisitions and represents the excess of the purchase price over the fair value
of acquired tangible assets and liabilities and identifiable intangible assets.
Goodwill is assessed at least annually for impairment, or more frequently if
events or circumstances indicate the asset might be impaired, and any such
impairment is recognized in the period identified. See Note 8 - Goodwill and
Intangible Assets for information regarding the impairment loss recognized in
2005.


                                      -31-

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Other intangible assets consist of a noncompete agreement and prior owner
intangible assets arising from the acquisition of Reserve. They are initially
measured at fair value and then are amortized on the straight-line method over
their estimated useful lives.

Long-term Assets: Premises and equipment, other intangible assets, and other
long-term assets are reviewed for impairment when events indicate their carrying
amount may not be recoverable from future undiscounted cash flows. If impaired,
the assets are recorded at fair value. See Note 8 - Goodwill and Intangible
Assets for information regarding the impairment loss recognized in 2005.

Loan Commitments and Related Financial Instruments: Financial instruments
include off-balance-sheet credit instruments, such as commitments to make loans
and commercial letters of credit, issued to meet customer financing needs. The
face amount for these items represents the exposure to loss, before considering
customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.

Stock Compensation: Employee compensation expense under stock options is
reported using the intrinsic value method. No stock-based compensation cost is
reflected in net income, as all options granted had an exercise price equal to
or greater than the market price of the underlying common stock at date of
grant. The following table illustrates the effect on net income and earnings per
share if expense was measured using the fair value recognition provisions of
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation.

<TABLE>
<CAPTION>
                                                2005      2004      2003
                                              -------   -------   -------
<S>                                           <C>       <C>       <C>
Net loss as reported                          $(3,290)  $(1,662)  $(2,374)
Deduct: Stock-based compensation expense
   determined under fair value based method       404       183       175
                                              -------   -------   -------
Pro forma net loss                            $(3,694)  $(1,845)  $(2,549)
                                              =======   =======   =======
Basic loss per share as reported              $ (1.49)  $ (0.82)  $ (1.31)
Pro forma basic loss per share                  (1.68)    (0.91)    (1.40)
Diluted loss per share as reported            $ (1.49)  $ (0.82)  $ (1.31)
Pro forma diluted loss per share                (1.68)    (0.91)    (1.40)
</TABLE>

The pro forma effects are computed using option pricing models, using the
following weighted- average assumptions as of grant date.

<TABLE>
<CAPTION>
                                                  2005          2004          2003
                                                 -----         -----         -----
<S>                                              <C>           <C>           <C>
Risk-free interest rate                           3.85%         3.26%         2.96%

Expected option life (years)                       6.0 years     6.0 years     5.9 years
Expected stock price volatility                     27%           24%           44%
Dividend yield                                    3.46%         2.86%         3.13%
Weighted average fair value of options granted
during year                                      $2.27         $2.53         $3.96
</TABLE>


                                      -32-

<PAGE>

On June 23, 2005, the Board of Directors approved the accelerated vesting of all
unvested stock options awarded prior to 2005 to eligible participants under the
1999 Stock Based Incentive Plan and the 2003 Equity Compensation Plan. As a
result of the acceleration, unvested options granted in 2003 and 2004 to acquire
102,000 shares of the Company's common stock, which otherwise would have vested
on various dates thru January 16, 2008, became immediately exercisable. All
other terms and conditions applicable to options granted under these plans,
including the exercise prices and the number of shares subject to the
accelerated options, are unchanged. No compensation expense was recognized from
the accelerated vesting of the stock options.

The decision to accelerate the vesting of these options was related to the
issuance of Statement of Financial Accounting Standard No. 123 (revised 2004),
Share Based Payment (SFAS 123R). In accordance with the provisions of SFAS 123R,
the Company adopted the pronouncement on January 1, 2006 and believes the
above-mentioned acceleration of vesting will eliminate compensation expense
related to these options of approximately $115 and $33 in 2006 and 2007. The
total expense is reflected in the pro forma footnote disclosure above, as
permitted under the transition guidance provided by the Financial Accounting
Standards Board. As a result of the acceleration of the vesting of these
options, the Company has no unvested options at January 1, 2006. Future option
grants will be accounted for in accordance with SFAS 123R.

Income Taxes: Income tax expense is the total of the current year income tax due
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax amounts for the temporary
differences between carrying amounts and tax bases of assets and liabilities,
computed using enacted tax rates. A valuation allowance, if needed, reduces
deferred tax assets to the amount expected to be realized. Deferred tax assets
are recognized for net operating losses that expire primarily in 2023, 2024 and
2025 because the benefit is more likely than not to be realized.

Retirement Plans: Pension expense is the net of service and interest cost,
return on plan assets and amortization of gains and losses not immediately
recognized. Supplemental executive retirement plan expense allocates the
benefits over years of service.

Employee Stock Ownership Plan: The cost of shares issued to the ESOP, but not
yet allocated to participants, is shown as a reduction of shareholders' equity.
Compensation expense is based on the market price of shares as they are
committed to be released to participant accounts. Dividends on allocated ESOP
shares reduce retained earnings; dividends on unearned ESOP shares reduce debt
and accrued interest. See Note 14 - ESOP Plan for information regarding
termination of this plan in 2003.


                                      -33-
<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares outstanding during the period.
ESOP shares are considered outstanding for this calculation unless unearned.
Stock based incentive plan shares are considered outstanding as they are earned
over the vesting period. Diluted earnings per common share includes the dilutive
effect of stock based incentive plan shares and additional potential common
shares issuable under stock options.

Comprehensive Income (Loss): Comprehensive income (loss) consists of net income
(loss) and other comprehensive income (loss). Other comprehensive income (loss)
includes unrealized gains and losses on securities available for sale, which are
also recognized as a separate component of equity.

Loss Contingencies: Loss contingencies, including claims and legal actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the financial statements. See Note 25 - Arbitration for
information regarding a request for arbitration filed against CFBank by the
former President of Reserve.

Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank
of $624 and $459 was required to meet regulatory reserve and clearing
requirements at year-end 2005 and 2004. These balances do not earn interest.

Dividend Restriction: Banking regulations require maintaining certain capital
levels and may limit the dividends paid by the bank to the holding company or by
the holding company to shareholders.

Fair Value of Financial Instruments: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. 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.

Operating Segments: Beginning in 2005, internal financial information is
primarily reported and aggregated in two lines of business, banking and mortgage
banking. Prior to 2005, while the chief decision-makers monitored the revenue
streams of the various products and services, the identifiable segments were not
material and operations were managed and financial performance was evaluated on
a Company-wide basis. Accordingly, all of the financial service operations were
considered by management to be aggregated in one reportable operating segment.

Reclassifications: Some items in the prior year financial statements were
reclassified to conform to the current presentation.


                                      -34-

<PAGE>

NOTE 2 - SUBSEQUENT EVENT (UNAUDITED)

In January 2006, the Company successfully completed the offering of 2.3 million
shares of common stock at a purchase price of $7.00 per share raising additional
capital of approximately $14.5 million after offering expenses and underwriting
commissions. The proceeds from this offering provide the Company with a larger
capital base to take advantage of opportunities to execute its growth strategy
and will be used for general corporate purposes. In January 2006, the holding
company contributed $10.4 million in capital to CFBank from the proceeds of this
offering. See Note 18 - Capital Requirements and Restrictions on Retained
Earnings for information regarding CFBank's capital levels.

NOTE 3 - SECURITIES

The fair value of available for sale securities and the related gross unrealized
gains and losses recognized in accumulated other comprehensive income (loss)
were as follows:

<TABLE>
<CAPTION>
                                      Gross        Gross
                           Fair    Unrealized   Unrealized
                          Value       Gains       Losses
                         -------   ----------   ----------
<S>                      <C>       <C>          <C>
2005
   Federal agency        $ 5,838      $ --        $(169)
   State and municipal     1,987        --          (33)
   Mortgage-backed        23,047       405         (161)
                         -------      ----        -----
      Total              $30,872      $405        $(363)
                         =======      ====        =====
2004
   Federal agency        $ 4,983      $  2        $ (37)
   Mortgage-backed         8,525       195          (68)
                         -------      ----        -----
      Total              $13,508      $197        $(105)
                         =======      ====        =====
</TABLE>


                                      -35-

<PAGE>

NOTE 3 - SECURITIES (continued)

Sales of available for sale securities were as follows:

<TABLE>
<CAPTION>
                2005      2004     2003
               ------   -------   ------
<S>            <C>      <C>       <C>
Proceeds       $1,435   $15,191   $3,078
Gross gains        --        41       42
Gross losses       --       (96)      --
</TABLE>

The tax (benefit) provision related to these net realized gains and losses was
($19) and $14, for the years ended 2004 and 2003, respectively.

The fair value of debt securities at year-end 2005 by contractual maturity were
as follows. Securities not due at a single maturity date, primarily
mortgage-backed securities, are shown separately.

<TABLE>
<CAPTION>
                             Available
                              for Sale
                                Fair
                               Value
                             ---------
<S>                          <C>
Due from one to five years    $ 6,833
Due from five to ten years        992
Mortgage-backed                23,047
                              -------
   Total                      $30,872
                              =======
</TABLE>

Securities at year-end 2005 and 2004 with a carrying amount of $15,689 and $770
were pledged to secure Federal Home Loan Bank advances. At year-end 2005 and
2004, there were no holdings of securities of any one issuer, other than federal
agencies, in an amount greater than 10% of shareholders' equity.

Securities with unrealized losses at year-end 2005 and 2004, aggregated by
investment category and length of time that individual securities have been in a
continuous unrealized loss position, are as follows:

<TABLE>
<CAPTION>
                               Less than 12 Months        12 Months or More               Total
                             -----------------------   -----------------------   -----------------------
2005                                      Unrealized                Unrealized                Unrealized
Description of Securities    Fair Value      Loss      Fair Value      Loss      Fair Value      Loss
--------------------------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                          <C>          <C>          <C>          <C>          <C>          <C>
Federal agency                 $1,955       $ (42)       $3,883       $(127)       $ 5,838      $(169)
State and municipal             1,987         (33)           --          --          1,987        (33)
Mortgage-backed                 5,953         (79)        1,907         (82)         7,860       (161)
                               ------       -----        ------       -----        -------      -----
Total temporarily impaired     $9,895       $(154)       $5,790       $(209)       $15,685      $(363)
                               ======       =====        ======       =====        =======      =====
</TABLE>


                                      -36-

<PAGE>

NOTE 3 - SECURITIES (continued)

<TABLE>
<CAPTION>
                               Less than 12 Months        12 Months or More               Total
                             -----------------------   -----------------------   -----------------------
2004                                      Unrealized                Unrealized                Unrealized
Description of Securities    Fair Value      Loss      Fair Value      Loss      Fair Value      Loss
--------------------------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                          <C>          <C>          <C>          <C>          <C>          <C>
Federal agency                 $3,976        $(37)       $   --        $ --        $3,976       $ (37)
Mortgage-backed                   700          (1)        2,476         (67)        3,176         (68)
                               ------        ----        ------        ----        ------       -----
Total temporarily impaired     $4,676        $(38)       $2,476        $(67)       $7,152       $(105)
                               ======        ====        ======        ====        ======       =====
</TABLE>

     Unrealized losses on the above federal agency and mortgage-backed
     securities have not been recognized in income because the issuers of the
     bonds are all federal agencies and the decline in fair value is temporary
     and largely due to changes in market interest rates. The fair value is
     expected to recover as the bonds approach their maturity date and/or market
     rates decline.

     Unrealized losses on state and municipal bonds have not been recognized in
     income because the bonds are of high credit quality (rated AAA), management
     has the intent and ability to hold for the foreseeable future and the
     decline in fair value is largely due to changes in interest rates. The fair
     value is expected to recover as the bonds approach maturity.

NOTE 4 - LOANS

Loans at year-end were as follows:

<TABLE>
<CAPTION>
                                    2005       2004
                                  --------   --------
<S>                               <C>        <C>
Commercial                        $ 16,347   $  7,030
Real estate:
   Single-family residential        23,627     41,450
   Multi-family residential         30,206     25,602
   Commercial                       25,937     20,105
   Construction                         --      1,127
Consumer                            29,540     13,952
                                  --------   --------
      Subtotal                     125,657    109,266
Less: Net deferred loan fees          (136)      (139)
      Allowance for loan losses     (1,495)      (978)
                                  --------   --------
Loans, net                        $124,026   $108,149
                                  ========   ========
</TABLE>


                                      -37-
<PAGE>

NOTE 4 - LOANS (continued)

Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                             2005     2004   2003
                            ------   -----   ----
<S>                         <C>      <C>     <C>
Beginning balance           $  978   $ 415   $361
Provision for loan losses      674     646    102
Loans charged-off             (255)   (117)   (50)
Recoveries                      98      34      2
                            ------   -----   ----
Ending balance              $1,495   $ 978   $415
                            ======   =====   ====
</TABLE>

Impaired loans are not material for any period presented.

Nonperforming loans were as follows:

<TABLE>
<CAPTION>
                                               2005   2004
                                               ----   ----
<S>                                            <C>    <C>
Loans past due over 90 days still on accrual   $ --   $ --
Nonaccrual loans                                800    286
</TABLE>

Nonperforming 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 nonperforming commercial, commercial
real estate or multi-family loans at year-end 2005 or 2004.


                                      -38-

<PAGE>

NOTE 5 - LOAN SERVICING

Mortgage loans serviced for others are not reported as assets. The principal
balances of these loans were $37,790 and $27,319 at year-end 2005 and 2004.

Custodial escrow balances maintained in connection with serviced loans were $482
and $282 at year-end 2005 and 2004.

Activity for capitalized mortgage servicing rights and the related valuation
allowance follows:

<TABLE>
<CAPTION>
                                                2005   2004    2003
                                                ----   ----   -----
<S>                                             <C>    <C>    <C>
Servicing rights, net of valuation allowance:
Beginning of period                             $208   $221   $ 200
Additions                                        120      3     195
Amortized to expense                             (74)   (52)   (118)
Provision for loss in fair value                  (4)    36     (56)
                                                ----   ----   -----
End of period                                   $250   $208   $ 221
                                                ====   ====   =====
Valuation allowance:
Beginning of period                             $ 20   $ 56   $  --
Additions expensed                                 4     --      56
Reductions credited to expense                    --    (36)     --
                                                ----   ----   -----
End of period                                   $ 24   $ 20   $  56
                                                ====   ====   =====
</TABLE>

The fair value of capitalized mortgage servicing rights was $314 and $213 at
year-end 2005 and 2004. Fair value was determined using a 10% discount rate and
prepayment speeds ranging from 128% to 800%, depending on the stratification of
the specific right.

The weighted average amortization period is 4.8 years. Estimated amortization
expense for each of the next five years:

<TABLE>
<S>    <C>
2006   $63
2007    61
2008    59
2009    55
2010    36
</TABLE>


                                      -39-

<PAGE>

NOTE 6 - SECURITIZATION

On June 30, 2005, the Company securitized single-family residential mortgage
loans with an outstanding principal balance of $18.6 million, formerly held in
its portfolio, with Freddie Mac. The Company continues to hold the securities
and service the loans. The Company receives annual servicing fees of 0.25
percent of the outstanding balance and recorded a servicing asset related to
this transaction of $120. Since the Company cannot de-securitize the securities
to get back the loans, the securitization is not considered a sale or transfer
under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities, but an exchange of loans for securities
under SFAS No. 134, Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise
and SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities because the Company received the beneficial interest in the loans it
transferred to Freddie Mac. As such, the mortgage-backed securities were
recorded at the cost of the loans and were classified as "available for sale"
with a $530,000 initial unrealized gain reported in other comprehensive income.

NOTE 7 - PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

<TABLE>
<CAPTION>
                                      2005      2004
                                    -------   -------
<S>                                 <C>       <C>
Land and land improvements          $   127   $   127
Buildings                             1,880     1,880
Furniture, fixtures and equipment     2,514     2,020
Leasehold improvements                  484       325
                                    -------   -------
                                      5,005     4,352
Less: accumulated depreciation       (2,071)   (1,662)
                                    -------   -------
                                    $ 2,934   $ 2,690
                                    =======   =======
</TABLE>

The Company leases certain office properties. Rent expense was $351, $209, and
$14 for 2005, 2004 and 2003. Rent commitments under noncancelable operating
leases were as follows, before considering renewal options that generally are
present.

<TABLE>
<S>          <C>
2006         $  282
2007            261
2008            248
2009            207
2010            154
Thereafter      521
             ------
Total        $1,673
             ======
</TABLE>


                                      -40-
<PAGE>

NOTE 7 - PREMISES AND EQUIPMENT (continued)

The Company is a one-third owner of a limited liability company that owns and
manages the office building at 2923 Smith Road, Fairlawn, Ohio 44333 where the
Company's headquarters and CFBank's Fairlawn office are located. The Company
entered into a 10 year lease with the limited liability company in March 2004
that calls for monthly payments of $11, increasing 3% annually for the life of
the lease through February 2014. Total rent expense under this operating lease,
including common area maintenance costs per the lease agreement, was $171 and
$114 in 2005 and 2004.

The former President of Reserve is a 100% owner of a company that owns and
manages the office building at 1730 Akron-Peninsula Road, Akron, Ohio 44313
where CFBank's mortgage services office is located. Lease agreements are for 5
year terms expiring at various times from May 2007 through December 2009, and
call for monthly rental payments of $7, increasing 3% annually for the lives of
the respective leases. Total rent expense was $86 and $8 in 2005 and 2004.

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS

GOODWILL

<TABLE>
<CAPTION>
                        2005     2004
                      -------   ------
<S>                   <C>       <C>
Beginning of period   $ 1,749   $   --
Acquired goodwill          --    1,749
Impairment             (1,749)      --
                      -------   ------
End of period         $    --   $1,749
                      =======   ======
</TABLE>

Goodwill was related to the October 2004 acquisition of Reserve Mortgage
Services, Inc., the Company's mortgage services division. The acquisition of
Reserve was expected to be immediately accretive to earnings. Unfortunately, the
Reserve operation experienced losses rather than the expected profits.
Management does not believe that volumes will achieve a sufficient level to
support the recorded goodwill and, as a result, a goodwill impairment loss of
$1,749 was recorded in the quarter ended September 30, 2005. The fair value of
the mortgage services segment was estimated using the expected present value of
future cash flows in determining the impairment loss.


                                      -41-

<PAGE>

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS (continued)

ACQUIRED INTANGIBLE ASSETS

Acquired intangible assets were as follows as of year end:

<TABLE>
<CAPTION>
                                         2005                      2004
                               -----------------------   -----------------------
                                 Gross                    Gross
                               Carrying    Accumulated   Carrying    Accumulated
                                Amount    Amortization    Amount    Amortization
                               --------   ------------   --------   ------------
<S>                            <C>        <C>            <C>        <C>
Amortized intangible assets:
   Noncompete agreement           $--          $--         $ 25          $ 4
   Prior owner intangible          --           --          295           17
                                  ---          ---         ----          ---
Total                             $--          $--         $320          $21
                                  ===          ===         ====          ===
</TABLE>

Aggregate amortization expense was $82 and $21 for 2005 and 2004. There was no
amortization expense in 2003 as the assets were acquired in the Company's
purchase of Reserve Mortgage Services, Inc. in October 2004.

In association with the goodwill impairment loss discussed above, it was
determined that the carrying amount of other intangible assets was not
recoverable and exceeded the fair value. An impairment loss of $217, the
unamortized balance of other intangible assets, was recorded in the quarter
ended September 30, 2005.

NOTE 9 - DEPOSITS

Time deposits of $100 or more were $25,802 and $11,259 at year-end 2005 and
2004.

Scheduled maturities of time deposits for the next five years were as follows.

<TABLE>
<S>                 <C>
December 31, 2006   $47,977
December 31, 2007    15,463
December 31, 2008     1,592
December 31, 2009     3,037
December 31, 2010       558
                    -------
                    $68,627
                    =======
</TABLE>

Time deposits included $13,024 and $6,117 in brokered deposits at year-end 2005
and 2004.


                                      -42-

<PAGE>

NOTE 10 - FEDERAL HOME LOAN BANK ADVANCES

At year-end, advances from the Federal Home Loan Bank were as follows:

<TABLE>
<CAPTION>
                                                           2005      2004
                                                         -------   -------
<S>                                                      <C>       <C>
Maturity January 2006 at 4.33% floating rate             $12,725   $    --
Maturity January 2005 at 2.20% floating rate                  --    28,900
Maturities March 2006 through September 2008,
   fixed at rates from 2.03% to 3.41%, averaging 2.91%    10,270        --
Maturities March 2005 through September 2008,
   fixed at rates from 1.50% to 3.41%, averaging 2.70%        --    12,270
                                                         -------   -------
Total                                                    $22,995   $41,170
                                                         =======   =======
</TABLE>

The fixed rate advances are due in full at their maturity date, with a penalty
if prepaid. Floating rate advances at year-end 2005 can be prepaid at any time
with no penalty.

In December 2003, the Company prepaid $11,195 in Federal Home Loan Bank
advances, with an average cost of 5.52% and an average remaining maturity of 4.5
years. These fixed-rate advances were originated primarily in 1998 and 1999 and
were used to finance mortgage loans which had prepaid. Accordingly, the loans
represented a costly source of funding which was not necessary due to the
liquidity position of the Company. The pre-tax prepayment penalty associated
with this transaction was $1,270 and is included in interest expense on Federal
Home Loan Bank advances and other debt in the 2003 Consolidated Statement of
Operations.

The advances were collateralized as follows:

<TABLE>
<CAPTION>
                                                          2005      2004
                                                        -------   -------
<S>                                                     <C>       <C>
First mortgage loans under a blanket lien arrangement   $23,308   $41,269
Second mortgages                                            783       695
Multi-family mortgage loans                               8,885    10,372
Home equity lines of credit                               9,109     3,236
Commercial real estate loans                             18,014    14,964
Securities                                               15,689       770
                                                        -------   -------
Total                                                   $75,788   $71,306
                                                        =======   =======
</TABLE>

Based on this collateral and the Company's holdings of FHLB stock, the Company
is eligible to borrow up to $45,744 at year-end 2005.

Payment information

Required payments over the next five years are:

<TABLE>
<S>     <C>
2006    $16,725
2007      4,270
2008      2,000
        -------
Total   $22,995
        =======
</TABLE>


                                      -43-
<PAGE>

NOTE 11 - OTHER BORROWINGS

The Company had a revolving line of credit with an unaffiliated bank, acquired
in the Reserve acquisition, which provided financing up to $3,000. The line of
credit matured on June 30, 2005 and was not renewed. Interest on the outstanding
balance was payable monthly at the prime rate plus .25%. The line of credit was
collateralized by loan sales proceeds receivable. The interest rate was 5.5% and
the outstanding balance was $2,238 at year-end 2004.

The Company had a term note payable to an unaffiliated bank, acquired in the
Reserve acquisition, payable in monthly installments of principal and interest
of $1. Interest on the note was at the prime rate plus .50%. The note was
collateralized by equipment and accounts receivable of Reserve and was repaid in
January 2005. The interest rate was 5.75% and the outstanding balance was $11 at
year-end 2004.

NOTE 12 - SUBORDINATED DEBENTURES

In December 2003, Central Federal Capital Trust I, a trust formed by the
Company, closed a pooled private offering of 5,000 trust preferred securities
with a liquidation amount of $1 per security. The Company issued $5,155 of
subordinated debentures to the trust in exchange for ownership of all of the
common security of the trust and the proceeds of the preferred securities sold
by the trust. The 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. The Company has the
option to defer interest payments on the subordinated debentures from time to
time for a period not to exceed five consecutive years. There are no required
payments on the subordinated debentures over the next 5 years.

The trust preferred securities and subordinated debentures have a variable rate
of interest, reset quarterly, equal to the sum of the three month London
Interbank Offered Rate (LIBOR) and 2.85%, which was 6.87% at year-end 2005. The
Company's investment in the common stock of the trust was $155 and is included
in other assets.

NOTE 13 - BENEFIT PLANS

Multi-employer pension plan: The Company participates in a multi-employer
contributory trusteed pension plan. The retirement benefits to be provided by
the plan were frozen as of June 30, 2003 and future employee participation in
the plan was stopped. The plan was maintained for all eligible employees and the
benefits were funded as accrued. The cost of funding was charged directly to
operations. The unfunded liability at June 30, 2005 totaled $268. The Company's
contribution for the plan years ending June 30, 2006, June 30, 2005 and June 30,
2004, totaled $90, $66 and $34.


                                      -44-

<PAGE>

NOTE 13 - BENEFIT PLANS (continued)

401(k) Plan: In 2003, the Company instituted a 401(k) benefit plan. Employees 21
years of age and older are eligible to participate and are eligible for Company
matching contributions after one year of service. The plan allows employee
contributions up to 90% of their compensation, which may be matched by the
Company on a discretionary basis. There was no match in 2005, 2004 or 2003.

Salary Continuation Agreement: In 2004, the Company initiated a nonqualified
salary continuation agreement for the Vice-Chairman of the Company. Benefits
provided under the plan are unfunded, and payments will be made the by Company.
Under the plan, the Company pays him, or his beneficiary, a benefit of $25
annually for 20 years, beginning the earlier of March 2008 or termination of his
employment. The expense related to this plan totaled $68 and $38 in 2005 and
2004. The accrual is included in accrued interest payable and other liabilities
in the consolidated balance sheets and totaled $106 and $38 at year-end 2005 and
2004.

Life Insurance Benefits: The Company entered into agreements with certain
employees, former employees and directors to provide life insurance benefits
which are funded through life insurance policies purchased and owned by the
Company. The expense related to these benefits totaled $11 and $101 in 2005 and
2004. The accrual is included in accrued interest payable and other liabilities
in the consolidated balance sheets and totaled $112 and $101 at year-end 2005
and 2004.

NOTE 14 - ESOP PLAN

Until the plan was terminated in 2003, employees participated in an Employee
Stock Ownership Plan (ESOP). The ESOP borrowed from the Company to purchase
155,111 shares of stock at $10 per share. The Company made discretionary
contributions to the ESOP, and paid dividends on unallocated shares to the ESOP,
and the ESOP used funds it received to repay the loan. When loan payments were
made, ESOP shares were allocated to participants based on relative compensation
and expense was recorded. Dividends on allocated shares increased participant
accounts.

The ESOP received $738 from a return of capital distribution paid by the Company
in 2000 and purchased an additional 83,353 shares with the proceeds.

At the time of termination, there were 122,882 unearned ESOP shares of which
81,000 shares were sold and the proceeds were used to repay the outstanding
balance of the loan incurred to fund the ESOP plan at inception. The remaining
41,882 shares were allocated to participants on a fully vested basis. The cost
associated with terminating the ESOP totaled $638 and is included in salaries
and employee benefits expense in the 2003 Consolidated Statement of Operations.

There was no contribution to the ESOP in 2003. Expense for 2003 was $638.


                                      -45-

<PAGE>

NOTE 15 - INCOME TAXES

Income tax expense (benefit) was as follows.

<TABLE>
<CAPTION>
                    2005    2004     2003
                   -----   -----   -------
<S>                <C>     <C>     <C>
Current federal    $  93   $(283)  $    95
Deferred federal    (470)   (589)   (1,083)
                   -----   -----   -------
Total              $(377)  $(872)  $  (988)
                   =====   =====   =======
</TABLE>

Effective tax rates differ from federal statutory rate of 34% applied to loss
before income taxes due to the following.

<TABLE>
<CAPTION>
                                                     2005     2004     2003
                                                   -------   -----   -------
<S>                                                <C>       <C>     <C>
Federal statutory rate times financial statement
loss                                               $(1,247)  $(861)  $(1,143)
Effect of:
Goodwill impairment                                    595      --        --
FHLB stock redemption                                  344      --        --
Bank owned life insurance income                       (44)    (49)      (64)
ESOP shares released at fair market value               --      --       207
Other                                                  (25)     38        12
                                                   -------   -----   -------
                                                   $  (377)  $(872)  $  (988)
                                                   =======   =====   =======
Effective tax rate                                   -10.3%  -34.4%    -29.4%
</TABLE>

In December 2005, a redemption of $1,300 in FHLB stock resulted in a $1,000 gain
for tax purposes which utilized a portion of the Company's net operating loss
carryforward. The stock redemption resulted in no gain for book purposes but did
result in the recognition of federal income tax expense of $344. The federal
income tax charge was a non-cash, non-recurring expense reflecting the tax
liability associated with FHLB stock dividends received from 1978 through 1997
which reduced the basis of the shares redeemed for which no deferred tax
liability had been established.


                                      -46-

<PAGE>

NOTE 15 - INCOME TAXES (Continued)

Year-end deferred tax assets and liabilities were due to the following.

<TABLE>
<CAPTION>
                                                       2005     2004
                                                      ------   ------
<S>                                                   <C>      <C>
Deferred tax assets:
   Allowance for loan losses                          $  508   $  333
   Deferred loan fees                                    107      159
   Post-retirement death benefits                         38       34
   Deferred compensation                                  36       13
   Nonaccrual interest                                    17        5
   Accrued stock awards                                   84       58
   Net operating losses                                2,122    1,810
   Deferred tax credits                                   17       17
   Other                                                   4        6
                                                      ------   ------
                                                       2,933    2,435

Deferred tax liabilities:
   Depreciation                                          299      284
   FHLB stock dividends                                  493      430
   Intangible assets                                      --       95
   Mortgage servicing rights                              85       71
   Prepaid expenses                                       30       33
   Unrealized gain on securities available for sale       14       31
   Other                                                  34       --
                                                      ------   ------
                                                         955      944
                                                      ------   ------
Net deferred tax asset                                $1,978   $1,491
                                                      ======   ======
</TABLE>

Federal income tax laws provided additional bad debt deductions through 1987,
totaling $2,250. Accounting standards do not require a deferred tax liability to
be recorded on this amount, which otherwise would total $765 at year-end 2005.
If CFBank were liquidated or otherwise ceases to be a bank or if tax laws were
to change, this amount would be expensed.

No valuation allowance has been recorded against the deferred tax asset for net
operating losses because the benefit is more likely than not to be realized. Net
operating losses totaling $2,839, $2,707 and $696 expire in 2023, 2024 and 2025,
respectively.

NOTE 16 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors and their affiliates at year-end 2005
totaled $5 and represented the disbursed portion of a $1,400 line of credit to
an affiliate of a director. The remaining $1,395 was disbursed on January 3,
2006.

Deposits from principal officers, directors, and their affiliates at year-end
2005 and 2004 were $1,808 and $1,282.


                                      -47-
<PAGE>

NOTE 17 - STOCK BASED INCENTIVE PLANS

Stock based incentive plans (SBIP) provide for stock option grants and
restricted stock awards to directors, officers and employees. The 1999 Stock
Based Incentive Plan was approved by shareholders on July 13, 1999. The plan
provided for 193,887 shares for stock option grants and 77,554 shares for
restricted stock awards. The 2003 Equity Compensation Plan was ratified by
shareholders on April 23, 2003 and provided an aggregate of 100,000 shares for
stock option grants and restricted stock awards, including up to a maximum of
30,000 shares for restricted stock awards. An amendment and restatement of the
2003 Equity Compensation Plan was approved by stockholders on April 20, 2004 to
provide an additional 100,000 shares of Company stock for stock option grants
and restricted stock awards, including up to a maximum of 30,000 shares for
restricted stock awards. A second amendment and restatement of the 2003 Equity
Compensation Plan was approved by stockholders on May 20, 2005 to provide an
additional 100,000 shares of Company stock for stock option grants and
restricted stock awards, including up to a maximum of 30,000 shares for
restricted stock awards. Both plans provide for options to be granted for terms
of up to, but not exceeding ten years from the date of grant and cannot be
granted at a price less than the fair market value of the common stock on the
date of grant. Shares related to forfeited stock options and restricted stock
awards become available for subsequent grant under the terms of the plans.
Exercise price is the market price at date of grant for stock options, so there
is no compensation expense recognized in the income statement. Options granted
in 2005 vested on December 31, 2005. See Note 1 - Summary of Significant
Accounting Policies - Stock Compensation for information regarding the Board of
Directors' decision on June 23, 2005, to accelerate vesting of all unvested
stock options awarded prior to 2005 to eligible participants under the 1999
Stock Based Incentive Plan and the 2003 Equity Compensation Plan.

A summary of the activity for stock options is as follows.

<TABLE>
<CAPTION>
                              2005                 2004                 2003
                       ------------------   ------------------   ------------------
                                 Weighted             Weighted             Weighted
                                  Average              Average              Average
                                 Exercise             Exercise             Exercise
                        Shares     Price     Shares     Price     Shares     Price
                       -------   --------   -------   --------   -------   --------
<S>                    <C>       <C>        <C>       <C>        <C>       <C>
Outstanding at
   beginning of year   256,536    $11.32    209,721    $10.17    182,497    $ 9.23
Granted                 86,474     10.39    110,864     12.63     77,758     11.79
Exercised              (40,138)     9.33    (44,900)     9.19    (37,302)     9.23
Forfeited              (12,000)    11.27    (19,149)    11.16    (13,232)     9.26
                       -------    ------    -------    ------    -------    ------
Outstanding at
   end of year         290,872    $11.32    256,536    $11.32    209,721    $10.17
                       =======    ======    =======    ======    =======    ======
Options available
   for grant            20,000               12,149               18,364

Options exercisable
   at year-end         290,872    $11.32    106,386    $ 9.86    101,285    $ 9.20
                       =======    ======    =======    ======    =======    ======
</TABLE>


                                      -48-

<PAGE>

Options outstanding at year-end 2005 were as follows.

<TABLE>
<CAPTION>
                             Outstanding                 Exercisable
                  --------------------------------   ------------------
                              Weighted
                              Average     Weighted             Weighted
                             Remaining     Average              Average
Range of                    Contractual   Exercise             Exercise
Exercise Prices    Number       Life        Price    Number      Price
---------------   -------   -----------   --------   -------   --------
<S>               <C>       <C>           <C>        <C>        <C>
$9.19 - $10.42    133,640    7.4 years     $10.00    133,640    $10.00
$11.50 - $12.70   140,000    7.6 years     $12.28    140,000    $12.28
$13.76- $13.94     17,232    5.1 years     $13.81     17,232    $13.81
</TABLE>

A summary of activity for restricted stock awards is as follows.

<TABLE>
<CAPTION>
                                               2005      2004      2003
                                             -------   -------   -------
<S>                                          <C>       <C>       <C>
Unvested shares outstanding at beginning
of year                                       41,253    40,518    28,695
Granted                                       20,000    26,028    28,500
Vested                                       (13,300)  (19,968)  (12,024)
Forfeited                                     (2,126)   (5,325)   (4,653)
                                             -------   -------   -------
Unvested shares outstanding at end of year    45,827    41,253    40,518
                                             =======   =======   =======
Shares available for grant                    20,126     8,659    10,028
                                             =======   =======   =======
</TABLE>

Compensation expense for restricted stock awards is recognized over the vesting
period of the shares based on the fair value of the shares on the date of grant.
Unearned compensation is reported as a reduction of shareholders' equity until
earned. Compensation expense was $240, $243 and $141 for 2005, 2004 and 2003.


                                      -49-
<PAGE>

NOTE 18 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

CFBank is subject to regulatory capital requirements administered by federal
banking agencies. Capital adequacy guidelines and, additionally for banks,
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 most recent
regulatory notification categorized CFBank as well-capitalized at year-end 2005
and 2004. In January 2006, the holding company contributed $10.4 million in
additional capital to CFBank. There are no conditions or events since then that
management believes have changed the institution's category.

Actual and required capital amounts and ratios are presented below at year-end.

<TABLE>
<CAPTION>
                                                                         To Be Well-
                                                                      Capitalized Under
                                                     For Capital      Prompt Corrective
                                     Actual       Adequacy Purposes   Action Provisions
                                ---------------   -----------------   -----------------
                                 Amount   Ratio     Amount   Ratio      Amount   Ratio
                                -------   -----    -------   -----      -------  -----
<S>                             <C>       <C>     <C>        <C>      <C>        <C>
2005
Total Capital to risk
   weighted assets              $13,212   10.1%    $10,454    8.0%      $13,067  10.0%
Tier 1 (Core) Capital to risk
   weighted assets               11,717    9.0%      5,227    4.0%        7,840   6.0%
Tier 1 (Core) Capital to
   adjusted assets               11,717    6.9%      6,811    4.0%        8,514   5.0%
Tangible Capital (to
   adjusted total assets)        11,717    6.9%      2,554    1.5%          N/A
</TABLE>


                                      -50-

<PAGE>

NOTE 18 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS (Continued)

<TABLE>
<CAPTION>
                                                                         To Be Well-
                                                                      Capitalized Under
                                                     For Capital      Prompt Corrective
                                     Actual       Adequacy Purposes   Action Provisions
                                ---------------   -----------------   -----------------
                                 Amount   Ratio     Amount   Ratio      Amount   Ratio
                                -------   -----    -------   -----      -------  -----
<S>                             <C>       <C>     <C>        <C>      <C>        <C>
2004
Total Capital to risk
   weighted assets              $14,555    12.2%    $9,580    8.0%      $11,975   10.0%
Tier 1 (Core) Capital to risk
   weighted assets               13,576    11.3      4,790    4.0         7,185    6.0
Tier 1 (Core) Capital to
   adjusted assets               13,576     8.1      6,726    4.0         8,408    5.0
Tangible Capital (to
   adjusted total assets)        13,576     8.1      2,522    1.5           N/A
</TABLE>

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 is met.

CFBank converted from a mutual to a stock institution, and a "liquidation
account" was established at $14,300, which was net worth reported in the
conversion prospectus. 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. Dividends may not
reduce shareholders' equity below the required liquidation account balance.

The holding company's principal source of funds for dividend payments is
dividends received from CFBank. 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. At year-end 2005, no amount is available to pay dividends to
the holding company without prior approval from the Office of Thrift Supervision
(OTS).


                                      -51-
<PAGE>

NOTE 19 - LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES

Some financial instruments, such as loan commitments, credit lines, letters of
credit, and overdraft protection, are issued to meet customer financing needs.
These are agreements to provide credit or to support the credit of others, as
long as conditions established in the contract are met, and usually have
expiration dates. Commitments may expire without being used. Off-balance-sheet
risk to credit loss exists up to the face amount of these instruments, although
material losses are not anticipated. The same credit policies are used to make
such commitments as are used for loans, including obtaining collateral at
exercise of the commitment.

The contractual amount of financial instruments with off-balance-sheet risk was
as follows at year-end.

<TABLE>
<CAPTION>
                                   2005               2004
                            -----------------   ----------------
                             Fixed   Variable   Fixed   Variable
                             Rate      Rate      Rate     Rate
                            ------   --------   -----   --------
<S>                         <C>      <C>        <C>     <C>
Commitments to make loans   $1,453    $ 1,961    $882    $  917
Unused lines of credit         905     16,846     543     8,406
</TABLE>

Commitments to make loans are generally made for periods of 60 days or less. The
fixed rate loan commitments have interest rates ranging from 6.50% to 8.75% at
December 31, 2005 and 5.75% to 9.63% at December 31, 2004 with maturities
ranging from 2 years to 30 years.

NOTE 20 - FAIR VALUES OF FINANCIAL INSTRUMENTS

Carrying amounts and estimated fair values of financial instruments were as
follows at year-end.

<TABLE>
<CAPTION>
                                              2005                    2004
                                     ---------------------   ---------------------
                                      Carrying      Fair      Carrying      Fair
                                       Amount      Value       Amount      Value
                                     ---------   ---------   ---------   ---------
<S>                                  <C>         <C>         <C>         <C>
Financial assets
   Cash and cash equivalents         $   2,972   $   2,972   $  32,675   $  32,675
   Securities available for sale        30,872      30,872      13,508      13,508
   Loans held for sale                     178         178          --          --
   Loans, net                          124,026     125,343     108,149     108,712
   Federal Home Loan Bank stock          2,656       2,656       3,778       3,778
   Loan sales proceeds receivable        2,241       2,241       1,888       1,888
   Accrued interest receivable             845         845         501         501

Financial liabilities
   Deposits                           (127,588)   (127,935)   (101,624)   (102,030)
   Federal Home Loan Bank advances     (22,995)    (22,756)    (41,170)    (41,017)
   Other borrowings                         --          --      (2,249)     (2,249)
   Subordinated debentures              (5,155)     (5,155)     (5,155)     (5,155)
   Accrued interest payable                (90)        (90)        (36)        (36)
</TABLE>


                                      -52-

<PAGE>

NOTE 20 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

The methods and assumptions used to estimate fair value are described as
follows.

Carrying amount is the estimated fair value for cash and cash equivalents,
short-term borrowings, Federal Home Loan Bank stock, loan sales proceeds
receivable, accrued interest receivable and payable, demand deposits, short-term
debt, and variable rate loans or deposits that reprice frequently and fully.
Security fair values are based on market prices or dealer quotes, and if no such
information is available, on the rate and term of the security and information
about the issuer. For fixed rate loans or deposits and for variable rate loans
or deposits with infrequent repricing or repricing limits, fair value is based
on discounted cash flows using current market rates applied to the estimated
life and credit risk. Fair values for impaired loans are estimated using
discounted cash flow analysis or underlying collateral values. Fair value of
loans held for sale is based on market quotes. Fair value of debt is based on
current rates for similar financing. The fair value of off-balance-sheet items
is based on the current fees or cost that would be charged to enter into or
terminate such arrangements.

NOTE 21 - BUSINESS COMBINATION

On October 22, 2004, the Company acquired 100% of the outstanding common stock
of RJO Financial Services, Inc., doing business as Reserve Mortgage Services
(Reserve), an Akron, Ohio based company licensed as a mortgage banker in Ohio,
Florida and Georgia. Reserve's name changed to Reserve Mortgage Services, Inc.
and it became an operating subsidiary of CFBank on the date of the acquisition.
It was subsequently merged into CFBank on May 12, 2005. Operating results of
Reserve are included in the consolidated financial statements since the date of
the acquisition.

The aggregate purchase price was $2,206, including $419 in cash and $1,787 in
common stock. The value of the 127,077 common shares issued was determined based
on the average market price over the week before and after the terms of the
acquisition were agreed to and announced.

The purchase price resulted in goodwill of $1,749, a noncompete agreement of $25
and prior owner intangible of $295. See Note 8 - Goodwill and Intangible Assets
for information regarding the impairment loss recognized in 2005. Prior to
recognition of the impairment loss, the noncompete agreement was amortized over
its one year term and the prior owner intangible was amortized over 3 years,
using the straight-line method for book and tax purposes. Goodwill was not
amortized but instead evaluated for impairment. Goodwill is not deductible for
tax purposes.


                                      -53-

<PAGE>

NOTE 22 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of Central Federal Corporation follows.

CONDENSED BALANCE SHEETS
December 31

<TABLE>
<CAPTION>
                                                     2005      2004
                                                   -------   -------
<S>                                                <C>       <C>
ASSETS
Cash and cash equivalents                          $ 6,989   $ 8,504
Investment in banking subsidiary                    13,009    15,708
Investment in and advances to other subsidiaries       319       296
Other assets                                         1,142       399
                                                   -------   -------
Total assets                                       $21,459   $24,907
                                                   =======   =======
LIABILITIES AND EQUITY
Subordinated debentures                            $ 5,155   $ 5,155
Accrued expenses and other liabilities                 223       245
Shareholders' equity                                16,081    19,507
                                                   -------   -------
Total liabilities and shareholders' equity         $21,459   $24,907
                                                   =======   =======
</TABLE>

CONDENSED STATEMENTS OF OPERATIONS
Years ended December 31

<TABLE>
<CAPTION>
                                             2005      2004      2003
                                           -------   -------   -------
<S>                                        <C>       <C>       <C>
Interest income                            $    --   $    --   $    20
Dividends from subsidiaries                     --        --     5,437
Other income                                    --        --        11
Interest expense                               321       225        59
Other expense                                  308       306       338
                                           -------   -------   -------
Loss before income tax and
   undistributed subsidiaries operations      (629)     (531)    5,071
Income tax benefit                             239       143       125
Effect of subsidiaries' operations          (2,900)   (1,274)   (7,570)
                                           -------   -------   -------
Net loss                                   $(3,290)  $(1,662)  $(2,374)
                                           =======   =======   =======
</TABLE>


                                      -54-
<PAGE>

NOTE 22 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
(Continued)

CONDENSED STATEMENTS OF CASH FLOWS
Years ended December 31

<TABLE>
<CAPTION>
                                                       2005      2004      2003
                                                     -------   -------   -------
<S>                                                  <C>       <C>       <C>
Cash flows from operating activities
   Net loss                                          $(3,290)  $(1,662)  $(2,374)
   Adjustments:
      Effect of subsidiaries' operations               2,900     1,274     7,570
      Change in other assets and other liabilities      (716)      296      (102)
                                                     -------   -------   -------
         Net cash from operating activities           (1,106)      (92)    5,094
Cash flows from investing activities
   Cash received in repayment of ESOP loan                --        --       853
   Investments in subsidiaries                            17        --      (289)
                                                     -------   -------   -------
         Net cash from investing activities               17        --       564
Cash flows from financing activities
   Proceeds from subordinated debentures                  --        --     5,155
   Repayments of borrowings                               --        --    (4,900)
   Proceeds from stock issue                              --        --     3,119
   Proceeds from exercise of stock options               375       412       345
   Purchase of treasury stock                             --      (319)       --
   Dividends paid                                       (801)     (735)     (655)
   Dividends on unallocated ESOP shares                   --        --        --
                                                     -------   -------   -------
         Net cash from financing activities             (426)     (642)    3,064
                                                     -------   -------   -------
Net change in cash and cash equivalents               (1,515)     (734)    8,722
Beginning cash and cash equivalents                    8,504     9,238       516
                                                     -------   -------   -------
Ending cash and cash equivalents                     $ 6,989   $ 8,504   $ 9,238
                                                     =======   =======   =======
</TABLE>


                                      -55-

<PAGE>

NOTE 23 - EARNINGS PER SHARE

The factors used in the earnings per share computation follow.

<TABLE>
<CAPTION>
                                                                  2005         2004         2003
                                                               ----------   ----------   ----------
<S>                                                            <C>          <C>          <C>
Basic
   Net loss                                                    $   (3,290)  $   (1,662)  $   (2,374)
                                                               ==========   ==========   ==========
   Weighted average common shares outstanding                   2,203,623    2,033,376    1,815,210
                                                               ==========   ==========   ==========
   Basic loss per common share                                 $    (1.49)  $    (0.82)  $    (1.31)
                                                               ==========   ==========   ==========
Diluted
   Net loss                                                    $   (3,290)  $   (1,662)  $   (2,374)
                                                               ==========   ==========   ==========
   Weighted average common shares outstanding
      for basic loss per share                                  2,203,623    2,033,376    1,815,210
   Add: Dilutive effects of assumed exercises
      of stock options and stock based incentive plan shares           --           --           --
                                                               ----------   ----------   ----------
   Average shares and dilutive potential common shares          2,203,623    2,033,376    1,815,210
                                                               ==========   ==========   ==========
   Diluted loss per common share                               $    (1.49)  $    (0.82)  $    (1.31)
                                                               ==========   ==========   ==========
</TABLE>

The following potential average common shares were anti-dilutive and not
considered in computing diluted earnings (loss) per share because the Company
had a loss from continuing operations, the exercise price of the options was
greater than the average stock price for the periods or the fair value of the
stock based incentive plan shares at the date of grant was greater than the
average stock price for the periods.

<TABLE>
<CAPTION>
                                      2005      2004      2003
                                    -------   -------   -------
<S>                                 <C>       <C>       <C>
Stock options                       270,131   263,400   225,285
Stock based incentive plan shares    29,366    33,313    28,927
</TABLE>


                                      -56-
<PAGE>

NOTE 24 - SEGMENT INFORMATION

The reportable segments are determined by the products and services offered,
primarily distinguished between banking and mortgage banking operations. Loans,
securities, deposits and servicing fees provide the revenues in the banking
operation, and single-family residential mortgage loan sales provide the
revenues in mortgage banking. All operations are domestic.

Prior to the Company's acquisition of Reserve in October 2004, mortgage banking
operations were performed by CFBank. While the chief decision-makers monitored
the revenue streams of the various products and services prior to 2005, the
identifiable segments were not material and operations were managed and
financial performance was evaluated on a Company-wide basis. Accordingly, all of
the financial service operations were considered by management to be aggregated
in one reportable operating segment. As such, no segment information is included
for the previous periods.

The accounting policies used are the same as those described in the summary of
significant accounting policies. Segment performance is evaluated using net
income. Goodwill is allocated to mortgage banking. Income taxes are allocated
and transactions among segments are made at fair value. Information reported
internally for performance assessment follows: Parent and Other includes
activities that are not directly attributed to the reportable segments, and is
comprised of the Parent Company and elimination entries between all segments.

<TABLE>
<CAPTION>
                                               Mortgage   Parent and   Consolidated
                                     Banking    Banking      Other         Total
                                    --------   --------   ----------   ------------
<S>                                 <C>        <C>        <C>          <C>
2005
Net interest income (expense)       $  5,266   $    23      $ (321)      $  4,968
Provision for loan losses               (674)       --          --           (674)
Net gain (loss) on sales of loans        (19)      488          --            469
Other revenue                            364        --          33            397
Impairment loss on goodwill and
   intangibles                            --    (1,966)         --         (1,966)
Depreciation and amortization           (394)     (103)         --           (497)
Other expense                         (5,334)     (728)       (302)        (6,364)
                                    --------   -------      ------       --------
Loss before income tax                  (791)   (2,286)       (590)        (3,667)
Income tax expense (benefit)              44      (182)       (239)          (377)
                                    --------   -------      ------       --------
Net loss                            $   (835)  $(2,104)     $ (351)      $ (3,290)
                                    ========   =======      ======       ========

December 31, 2005
Segment assets                      $169,151   $ 2,411      $1,459       $173,021
                                    ========   =======      ======       ========
</TABLE>


                                      -57-

<PAGE>

NOTE 25 - ARBITRATION

In December 2005, CFBank terminated the President of Reserve. The former
President filed a request for arbitration against CFBank and contends that
CFBank owes him $600 for breaching an employment agreement between him and
CFBank by discharging him without just cause. CFBank responded by denying that
it breached the employment agreement in that CFBank had just cause to discharge
him for flagrant misconduct and malfeasance, alleging causes of action for
breach of contract, breach of fiduciary duty, and breach of duty of loyalty. The
arbitration is in the discovery stage and an outcome can not be determined at
this time.


                                      -58-

<PAGE>

CENTRAL FEDERAL CORPORATION
AND CFBANK
BOARD OF DIRECTORS

Mark S. Allio
Chairman, President & Chief Executive Officer
Central Federal Corporation
Chairman & Chief Executive Officer
CFBank

David C. Vernon
Vice-Chairman
Central Federal Corporation and
CFBank

Jeffrey W. Aldrich
Former President
Sterling China Co.

Thomas P. Ash
Director of Governmental Relations
Buckeye Association of School Administrators

William R. Downing
President
R.H. Downing Inc.

Gerry W. Grace
Former President
Grace Services, Inc.

Jerry F. Whitmer, Esq.
Of Counsel
Brouse McDowell

CENTRAL FEDERAL CORPORATION
OFFICERS

Mark S. Allio
Chairman, President & Chief
Executive Officer

David C. Vernon
Vice-Chairman

Eloise L. Mackus, Esq.
Senior Vice President,
General Counsel & Secretary

Therese A. Liutkus, CPA
Treasurer & Chief Financial Officer

Laura L. Martin
Assistant Secretary

CFBANK
COLUMBUS DEVELOPMENT BOARD

Dr. Steven J. Yakubov
Interventional Cardiologist
Mid Ohio Cardiology and Vascular Consultants

James J. Chester
Partner
Chester Willcox and Saxbe, LLP

R. Parker MacDonell
President - Columbus Region
CFBank

John L. Mead
Owner
Little Turtle Golf Course

Louis A. Nobile, Jr.
Former President
Bank One Lima

Robert F. Parsons
Director of Development & Marketing
Communities in Schools, Columbus Inc.

CFBANK
EXECUTIVE OFFICERS

Mark S. Allio
Chairman & Chief Executive Officer

David C. Vernon
Vice-Chairman

Raymond E. Heh
President & Chief Operating Officer

R. Parker MacDonell
President - Columbus Region

Eloise L. Mackus, Esq.
Senior Vice President, General Counsel & Secretary

Timothy M. O'Brien
Senior Vice President, Mortgage Operations

Therese A. Liutkus, CPA
Treasurer & Chief Financial Officer

William R. Reed
Senior Credit Officer

CFBANK
OFFICE LOCATIONS

CALCUTTA, OHIO
49028 Foulks Drive
Calcutta, Ohio 43920
330-385-4323

COLUMBUS, OHIO
4249 Easton Way
Suite 125
Columbus, Ohio 43219
614-334-7979

FAIRLAWN, OHIO
2923 Smith Road
Fairlawn, Ohio 44333
330-666-7979

WELLSVILLE, OHIO
601 Main Street
Wellsville, Ohio 43968
330-532-1517

MORTGAGE OPERATIONS & SERVICES
1730 Akron-Peninsula Rd.
Akron, Ohio 44313
330-945-7000


                                      -59-

<PAGE>

Corporate Data

Annual Report

A copy of the Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission will be available March 30, 2006 without charge upon written
request to:

Therese A. Liutkus, CPA
Treasurer and Chief Financial Officer
Central Federal Corporation
2923 Smith Road
Fairlawn, Ohio 44333
Phone: 330-576-1209
Fax: 330-666-7959
Email: TerriLiutkus@cfbankmail.com

Annual Meeting

The Annual Meeting of Shareholders of Central Federal Corporation will be held
at 10 a.m. on Thursday, May 18, 2006 at the Fairlawn Country Club, 200 North
Wheaton Road, Fairlawn, Ohio.

Shareholder Services

The Registrar and Transfer Company serves as transfer agent for Central Federal
Corporation shares. Communications regarding change of address, transfer of
shares or lost certificates should be sent to:

The Registrar & Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Phone: 800-368-5948


                                      -60-
</TEXT>
</DOCUMENT>
